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Tobacco Industry in Transition the Tobacco Industry in Transition •i_r, _ : #w .1o nt. Md' rYrM$ ! i 1ip1 ' _f awret ysrswldsw ° . :' ! • '; : a 1 : I The Tobacco Industry in Transition The Tobacco Industry in Transition Policies for the 1980s Edited by William R. Finger North Carolina Center for Public Policy Research, Inc. LexingtonBooks D.C. Heath and Company Lexington, Massachusetts Toronto Library of Congress Cataloging in Publication Data Main entry under title: The Tobacco industry in transition. 1. Tobacco manufacture and trade-Government policy-United States. 2. Tobacco manufacture and trade-United States. I. Finger, William R. II. North Carolina Center for Public Policy Research. HD9136.T6 338.1'7371'0973 81-47064 ISBN 0-669-04552-7 AACR2 Copyright © 1981 by North Carolina Center for Public Policy Research, Inc. All rights reserved. No part of this publication may be reproduced or transmit- ted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without permission in writing from the publisher. Published simultaneously in Canada Printed in the United States of America International Standard Book Number: 0-669-04552-7 Library of Congress Catalog Card Number: 81-47064 Contents Acknowledgments ix Introduction William R. Finger Xi Part I The Tobacco Program and the Farmer 1 Chapter 1 Early Efforts to Control the Market-And Why They Failed Anthony J. Badger 3 Chapter 2 The Federal Tobacco Program: How It Works and Alternatives for Change Charles Pugh 13 Chapter 3 Landmarks in the Tobacco Program Charles Pugh 31 Chapter 4 The Tobacco Franchise for Whom? Charles K. Mann 37 Chapter 5 Can Tobacco Farmers Adjust to Mechanization? A Look at Allotment Holders in Two North Carolina Counties Gigi Berardi 47 Chapter 6 Changes in the Structure of the Flue-Cured Tobacco Farm: A Compilation of Available Data Sources Robert Dalton 63 Chapter 7 Resources on Tobacco Production and Marketing Robert Dalton 75 Part II Alternatives for Tobacco Farmers 91 Chapter 8 Vegetable and Fruit Crops: Viable Alternatives for Tobacco Farmers Frank Adams 93 Chapter 9 Industrial Growth : An Alternative for North Carolina's Tobacco Farmers J. Barlow Herget 103 Chapter 10 Tobacco for Protein : A Revolutionary Upheaval? Bruce Siceloff 109 Part III World Leaf Sales Expand-But U. S. Share Shrinks 117 vi The Tobacco Industry in Transition Chapter 11 Tobacco 's Global Economy : Is North Carolina Losing? Joseph A. Kinney 119 Chapter 12 Open Trade and Modernized Tobacco Program: The Keys to an Expanded U.S. Flue-Cured World Market Hugh C. Kiger 131' Chapter 13 American Leaf Exports on Decline: Imperial Tobacco Limited Closes Its Last American Primary-Processing Plant John Campbell 145 Chapter 14 Making the Third-World Marlboro Country Albert Huebner 151 Part IV Corporate Diversification and International Expansion 157 Chapter 15 Diversification and International Expansion: The Future of the American Tobacco Manufacturing Industry with Corporate Profiles of the "Big Six" James Overton 159 Chapter 16 R.J. Reynolds Industries: A Hundred Years of Progress in North Carolina J. Paul Sticht 197 Chapter 17 A Future of Great Promise - for Tobacco and for Philip Morris George Weissman 199 Chapter 18 World Tobacco: A Portrait of Corporate Power Frederick F. Clairmonte 203 Chapter 19 Labor Displacement in Tobacco Manufacturing: SomePolicy Considerations Elizabeth Tornquist 221 Chapter 20 Valuable Vehiclesfor Long-Term Gains John Maxwell 229 Part V The Risks of Smoking: Rights and Ramifications 233 Chapter 21 Tobacco and Health: An Introduction Harriet Kestenbaum 235 Contents Vii Chapter 22 Warning Citizens about the Hazards of Smoking : Where We Are in 1981 John M. Pinney 241 Chapter 23 Tobacco and Health: A Societal Challenge E.L. Wynder and D. Hoffman 247 Chapter 24 Cigarette Smoking and Coronary Heart Disease: A QuestionableConnection Carl C. Seltzer 267 Chapter 25 Some Legal Aspects of the Smoking-and- Health Controversy J.C.B. Ehringhaus, Jr. 279 Chapter 26 Legal and Policy Issues Concerning Smoking and Health to Be Faced in the 1980s Joel D. Joseph and Marcy S. Kramer 287 Chapter 27 Resources on Smoking and Health Harriet Kestenbaum 295 Part VI Politics of Tobacco: Policymaking under a Cloud of Smoke 311 Chapter 28 The Politics of Tobacco in North Carolina: "A Load Not Easy to Be Borne" Ferrel Guillory 313 Chapter 29 In the Public Interest ... Not a Constitutional Birthright: An Interview with Former U.S. Secretary of Agriculture Robert Bergland Blaine Harden 319 Chapter 30 The Weed William F. Buckley, Jr. 325 Index 327 About the Contributors 336 About the Editor 340 Acknowledgments The North Carolina Center for Public Policy Research, Inc., is an indepen- dent nonprofit research and educational institution. The Center's purpose is to enrich the dialogue between private citizens and public officials, and its goal is the stimulation of greater interest in public affairs and a better understanding of the profound impact government has each day on the life of every citizen. A nonpartisan organization, the Center was formed in 1977 by a diverse group of private citizens "for the purposes of gathering, analyzing, and disseminating information concerning North Carolina's in- stitutions of government." The North Carolina Center for Public Policy Research, Inc., gratefully acknowledges the assistance of the Ford Founda- tion, which provided funds to support this study. The entire staff of the Center participated in the preparation of this book. Those who helped with conceptualization and research included Susan Presti and Robie Patterson. Robert Dalton of the staff wrote two of the chapters in part I. Sallye Branch Teater copyedited the entire manuscript and assisted with production. Jenny Shaia typed each article and disposed of many technical problems. The project was administered by the Center's former executive director, Fred Harwell, who contributed editorially and otherwise from conceptualization through final proofs, by the current executive director, G. Rankin Coble. In addition, Jennifer Miller, a writer and editor, provided invaluable assistance on many chapter drafts, particularly in parts I (agriculture) and IV (corporate); and Harriet Kestenbaum, a public-health planner, reviewed the voluminous literature on tobacco and health in helping to design part V (health). Numerous people with busy schedules were willing to take time out to provide information and answer questions. Drs. Charles Pugh and Dale Hoover, both agricultural economists at North Carolina State University in Raleigh, were especially helpful on questions about the tobacco-farm pro- gram. Drs. Verner Grise and Robert Miller, both agricultural economists at the U.S. Department of Agriculture, provided the latest data and informa- tion on changes in the farm program. This book would not have been possible, of course, without the cooperation of all of the contributors. Many of them juggled crowded schedules and long-standing commitments to participate in this project. Without their many sacrifices, we could not have produced this book. ix Introduction William R. Finger Many scientists now feel that some 55 million American smokers volun- tarily endanger their health every day by smoking: that it is the nation's number one preventable cause of disease and death. At the same time, policymakers who understand American agriculture believe that the 600,000 American families dependent on income from tobacco crops are the single remaining example of the Jeffersonian ideal, a small-farm yeomanry. How can a government respond to the needs of the tens of millions of Americans dependent on the tobacco economy, nurture a dying small-farm heritage, and build a society based on good health all at the same time? "I've argued that the two [the smoking issue and the farm issue] should be separated,". former U.S. Secretary of Agriculture Robert Bergland says in an interview for this book . " We should take the smoking issue head on and decide if we are going to ban smoking and restrict its use. Then we have to consider not only the production of tobacco , but its importation. We haven't done anything about the health issue if we simply eliminate price supports." In 1964, the U.S. surgeon general concluded in his landmark report, Smoking and Health , that cigarettes are a health hazard. This finding prompted a series of studies and the implementation of many regulations that have permanently altered the western world's perception of tobacco. The most dramatic indication of smoker concern is the rising popularity of low- tar (15 milligrams or less) brands. As late as 1970, low-tar brands com- manded less than 5 percent of the market; today their share is almost 50 per- cent. Besides spending hundreds of millions of dollars to introduce low-tar brands on the domestic market, American manufacturers (as well as leaf- exporting concerns) are investing more and more of their resources and energy in developing the third-world market, where few regulations on tobacco have been implemented and where per capita consumption is in- creasing. While health concerns have refocused consumer demand and corporate futures in the last fifteen years, agriculture and international trade changes have transformed the tobacco industry from production through distribu- tion . As late as 1972, only 2 percent of the flue-cured crop was harvested mechanically; today the figure is approaching 50 percent. Mechanization, combined with such changes in the federal farm program as permitting the lease and transfer of allotments, has precipitated a labor displacement of ir- reversible proportions, a decrease in the number of tobacco farms, and an increase in the size of farms that remain. xi xii The Tobacco Industry in Transition Meanwhile, tobacco production is expanding in Africa, Asia, and Latin America and now poses a serious threat to continued American dominance of the world leaf market. Total American exports increased during the last twenty years, but the U.S. share of the world's flue-cured market dropped from 61 percent in 1960 to 27 percent in 1979.
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