Tobacco News

Cigarette maker, British American Tobacco (BAT), will on Monday afternoon know its fate as the control board meets to determine what action to take on the firm over a crop insurance policy that the State agency says is illegal.

The crop policy developed by UAP Insurance in partnership with Chancery Wright was recently introduced to farmers in Western Province contracted by BAT.

But Kenya Tobacco Control Board reckons that BAT and UAP have gone against the anti tobacco legislation introduced in 2007 which bars the promotion of cigarettes.Common position

“I cannot on my own say the specific action we will take, but we are meeting as a board so as to take a common position. Several options are open to the board and we will make sure that BAT and UAP Insurance do not get away with this because we have the law on our side,” said Prof Peter Odhiambo, the chairman of the board.

“We will deal firmly with companies that collude with cigarette manufacturers to break the law. Insuring tobacco farmers is another way of increasing the production of tobacco which is detrimental to public health. Farmers should consider alternative crops,” said Prof Odhiambo.

The possible action the state agency might take include stopping the marketing of the insurance cover and taking the twin firms to court in what promises to be a protracted legal battle as both UAP and BAT are digging in for a fight.

“The Tobacco Control Act does not dictate what crops anyone should grow neither does it dictate the parameters of business association or communication between industry players. It is, therefore, perfectly legitimate for us to engage with our contracted farmers and continually work together for their welfare” said Julie Adell-Owino –head of corporate and regulatory affairs, for BAT Kenya.

Already, about 1,000 farmers contracted by the multinationals have signed up for the product, most being from Western, Nyanza and Eastern provinces.

In 2007, the government enacted an anti tobacco law which among other things outlawed smoking in public as well as promoting of tobacco and its by-products—a move that saw BAT stop advertisement and sports promotion.

The Tobacco Control Act 2007 gives authority to the regulator to control smoking in public places and prohibit the promotion of tobacco products through the media and the sale of cigarettes to children.

Anti tobacco activists and lawyers said punishing BAT and UAP insurance will be down to the interpretation of the law since the Act does not expressly bar farmers from taking out insurance cover for their crops.

Anti tobacco crusaders say the new insurance product marketed by BAT and UAP Insurance violates section 24 of the Act which prohibits the promotion of tobacco products by means of testimonials or endorsements.

“The new product violates the law, because it is an indirect advertisement of tobacco that is likely to influence and shape attitudes, beliefs and behaviour of the public, while underestimating the dangers of tobacco,” said Mr Vincent Kimosop, a lawyer at the Institute of Legislative Affairs.

But BAT Kenya rejected the claims saying its contracted farmers have incurred financial losses to the magnitude of Sh150 million over the past three years and that crop losses due to natural calamities have impacted the accuracy of planning and forecasting as it gets less than expected crop leaf.
“Our contracted tobacco farmers make the choice to take up the crop insurance, and are not compelled to do so. If any party were forcing the hand of the tobacco farmers, then all 5,000 of BAT contracted tobacco farmer would have had to take up the cover rather than the 1,000 who have voluntarily done so,” said Ms Adell-Owino.

BAT says earnings by its contracted tobacco farmers have been on the increase pointing to the benefits of the crop to farmers in Nyanza and Western regions.

In 2008, BAT paid its contracted farmers Sh369 million while in 2009, it paid Sh532 million and this year’s projection pegged at Sh660 million.

By Jim Onyango, Businessdailyafrica