Ottawa – March 8, 2004  -  Suggestions that Imperial Tobacco will end its “top-up” payments to Canadian farmers were welcomed by Physicians for a Smoke-Free Canada (PSC).

 “This hidden subsidy should have been ended years ago,” said PSC executive director, Cynthia Callard.  “By artificially sustaining tobacco farming in Canada tobacco manufacturers have made tobacco farmers highly dependent on Big Tobacco.  Worse, this subsidy has been an anchor on public health progress against tobacco use, both in Canada and abroad.”

 Canada’s three major tobacco companies pay Ontario tobacco farmers a premium of approximately 30% on the tobacco they purchase for their Canadian operations.  “Over the past decade, the average annual subsidy payment to each Canadian farmer has been about $50,000,” said Callard.  “This means that each tobacco farmer receives more in cigarette manufacturers’ subsidies than many Canadian farmers earn in total farm income.” 

 By subsidizing tobacco farming, Canadian tobacco companies have kept production in Canada higher than is economically sustainable.  “The tobacco companies select the leaves they want for Canadian cigarettes, and the remaining tobacco is subsequently dumped into the world market,” said Callard.  “This dumping of tobacco leaf – (‘dumping’ is the sale of a product at a price below the cost of production) – means that Canadian smokers, when they buy their cigarettes, are unwittingly contributing to the spread of artificially cheap tobacco on the global market.”

 After reviewing the annual reports of the Ontario Flue-Cured Tobacco Marketing Board since 1977, Callard concluded: “The subsidies were negotiated between the farmers and the cigarette manufacturers to sustain Canadian tobacco farming in the face of lower world prices, and to dump poorer quality leaf tobacco on the world market.” 

 “This subsidy undermined the efforts of the Canadian government to help tobacco farmers find healthier ways of making a living,” said Callard.  In the late 1980s, Agriculture Canada paid over $100 million to Canadian farmers to switch to alternate crops.  Although the plan resulted in fewer farmers, it did not result in markedly less acreage because the tobacco farmers found creative ways of receiving the transition payments and keeping their land in production.

  “Sadly, the tobacco companies and farmers were aided in their efforts to export artificially cheap Canadian tobacco by Agriculture Canada,” said Callard.  As recently as this fall, the current Minister of Agriculture, Mr. Bob Speller, traveled at public expense to China as a representative of the former Minister of Agriculture. During this trip, he promoted tobacco exports to China with a delegation from the Ontario Flue-Cured Tobacco Growers Marketing Board.”

 PSC hopes that the recently-convened Tobacco Roundtable will focus on a real and reasonable scenario for tobacco – one where neither the Canadian taxpayer, nor the smoker, subsidizes the manufacture nor export of a commodity which kills 5 million people world-wide each year.  A World Bank report estimated that each 1,000 tonnes of tobacco produced drains the global economy $39 million as a result of early mortality and disability. 

 “Complaints by Canadian tobacco farmers should be put in context,” concluded Callard. "In the past 15 years, this small farming community has already received $100 million in transition payments from the federal government, over $1 billion in subsidy from cigarette manufacturers, and $20 million from the Ontario government.  During this same period, over 500,000 Canadians have died prematurely from consuming this farm product, with an aggregate loss of 8 million life-years.  The cost to the Canadian economy in this period is estimated at $200 billion.”

 “Any effort to keep 800 farmers in an activity that kills 47,000 Canadians each year is reprehensible.”