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BAT plans Reynolds tobacco supplier review in 2018
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BAT plans Reynolds tobacco supplier review in 2018

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R.J. Reynolds Tobacco Co.’s third-party tobacco contracts will face a tobacco-supplier review in 2018 by new parent company British American Tobacco Plc.

The review was disclosed last week in the company’s 2017 Sustainable Agriculture and Farmer Livelihoods focus report.

It is the first public comment by BAT on Reynolds’ tobacco-farm contracts since the company completed in July spending $54.5 billion to buy the remaining 57.8 percent of Reynolds American Inc. it did not already own.

BAT mentioned the Reynolds-FLOC issue in a question-and-answer section of the report in which it asked “What actions is BAT taking to address allegations of labor rights issues for migrant workers in U.S. tobacco growing?” Answers were provided by Alan Davy, BAT’s group operations director.

“This is a long-running issue, which, as with any human rights allegation, we take extremely seriously,” Davy said. “We have been working extensively with Reynolds to integrate our businesses and our supply chains.”

BAT sources tobacco leaf from more than 350,000 farmers in 34 countries: more than 90,000 directly contracted by BAT leaf operations and more than 260,000 contracted by third-party suppliers.

Since 2007, the Farm Laborers Organizing Committee had conducted occasional adversarial inquiries during the question-and-answer session of Reynolds’ annual shareholders meeting, as well as peaceful street protests after the meeting. Reynolds did not hold a shareholder meeting in 2017.

According to the N.C. Growers Association, FLOC represents about 2,000 farmworkers in the state.

FLOC has identified a number of problems at tobacco farms in North Carolina, including fatalities, pay below the minimum wage, child labor and a lack of water and breaks during work. Studies by researchers with Wake Forest Baptist Medical Center have documented such conditions.

In recent years, FLOC requested that Reynolds support its efforts to require its tobacco suppliers to guarantee laborers freedom of association, including recognition of the right to collective bargaining. FLOC also is pushing for tobacco growers to pay a living wage of $15 an hour.

Before BAT completed taking full ownership of Reynolds, FLOC president Baldemar Velasquez visited BAT’s board of directors to directly make his case.

BAT said it had conducted in 2015 an independent, on-site review of its U.S. tobacco leaf suppliers.

“It found no evidence of any wrongdoing, but did highlight some areas for improvement, which the suppliers addressed,” Davy said.

BAT said it supports Reynolds and FLOC’s involvement in a multilateral council, formed in 2011, that is made up of other tobacco manufacturers, growers, advocacy groups and labor officials to take up the farm labor issues.

“We believe the most effective and practical way of dealing with the issues is by encouraging all the parties in the U.S. to get around the table and talk,” Davy said.

“Together, they are working on initiatives to improve workers’ experiences and promote compliance with the laws that protect workers’ rights.”

BAT statement

In September, FLOC voted unanimously to conduct a national boycott of Reynolds’ Vuse product, the top-selling electronic cigarette. As of August, Vuse’s top market share was 29.8 percent, sold at more than 111,000 U.S. retail outlets.

“Reynolds has still not signed an agreement with FLOC that would affect real change on the ground by guaranteeing farmworkers freedom of association and implementing a grievance mechanism that farmworkers could use to resolve issues without fear of retaliation,” FLOC spokeswoman Catherine Crowe said in September.

Nicandro Durante, BAT’s chief executive, said in a statement that the company “has been working in partnership with tobacco farmers for more than a century.”

“Over that time, we’ve evolved our approach to take advantage of new opportunities, focused on creating value for the future of our business and the farmers we work with.”

FLOC said in response to the BAT report that companies such as BAT, “spend a lot of time and effort on glossy reports with fancy figures that aren’t very specific.”

“Since the founding of the Farm Labor Practices Group, not one U.S. tobacco farm worker has better living or working conditions that can be attributed to the group’s efforts.”

FLOC said it believes “BAT better understands that freedom of association is a human right and one the company has to take serious steps to implement in a state, like North Carolina, where the right doesn’t exist in practice.”

“However, to date, we have not seen any such changes, so we continue to call on BAT to do the right thing and sign an agreement.”

FLOC lawsuit

On Wednesday, FLOC filed a lawsuit in an attempt to block enforcement of Senate Bill 615, the N.C. Farm Act of 2017, which it claims limits the ability to conduct its activities on behalf of workers in the state’s vegetable and tobacco farms.

A last-minute amendment to the bill forbids farming operations from collecting union dues from workers.

FLOC’s lawsuit called the law’s restrictions unconstitutional and discriminatory. Gov. Roy Cooper, who signed the bill into law in July, is among the defendants.

FLOC said the bill also makes it illegal for workers to settle a legal claim with union recognition and/or a union agreement that guarantees better working conditions.

“These were introduced by agricultural producers, who are also state legislators, in an unethical manner and (with) little to no debate,” FLOC said.

The law “effectively prevents FLOC from expressing and advancing the interests of its members.”

According to The Associated Press, Republican Sen. Brent Jackson, a Sampson County farm operator, was a primary sponsor of the bill and a chief negotiator of the final compromise legislation that retained the House amendment. Jackson’s farm company decided to leave the North Carolina Growers Association in 2014.

The company was sued last year by several former workers, including FLOC members, seeking back wages and other financial damages. A financial settlement was reached. Jackson did not admit wrongdoing.

A farm worker advocate filed General Assembly ethics complaints against Jackson and another legislator last July over the anti-union language, but a legislative panel quickly dismissed them.

rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

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