CARRERAS Ltd, the large distributor of cigarettes, wants the laws and taxes updated to properly regulate the resurgence of raw tobacco cultivation led by small farmers.

The informal sector produces plants which equate to more than 300 million sticks annually, which in turn hurts Carreras’ imported cigarette volumes. But rather than focus on its volumes Carreras argued that its call for greater regulation comes in support of a wider citizens’ lobby.

“We also continued monitoring the growing, cultivation and sale of raw tobacco, and from what has been observed, we too support the call from several quarters for the Government to regulate this rapidly expanding sector. In fact, the antiquated Tobacco Growing Act of 1972 must be reviewed and amended to effectively respond to this phenomenon,” stated Marcus Steele, managing director, in his statement to shareholders in the 2015 annual report released this week.

Hundreds of tobacco farmers

The company highlighted the cultivation by hundreds of small farmers as a challenge in three separate sections of its 2015 annual report. It’s the most prominent discussion the company has had on the topic since it initially revealed plans in its 2011 annual report to observe the trend.

Carreras wants more balanced and fair taxation on locally grown raw tobacco and imported raw tobacco.

“We are also aware of the efforts by the Government to tighten the also growing importation and inflow of raw tobacco into the country and we urge that there be a balanced and fair application of the new tax regime announced two years ago to all participants, both locally and those importing raw tobacco for sale and consumption. We ultimately believe that as per the call from other quarters, the overall regulating of this growing phenomenon will be best served with the enforcement of the local Tobacco Growing Act by the Government. Indeed, the company strongly supports any process that seeks to bring greater order to the local growing, cultivation and sale of raw tobacco,” stated Carreras in the regulatory section of its 2015 annual report.

Additionally, the Tobacco Industry Regulation Act of 1970 established the Tobacco Industry Control Authority to regulate the industry. It empowered the body to impose rules and a cess on all tobacco farmers. It also empowered the authority to cultivate plantations, promote best practices and grade the quality of tobacco in the island.

The company first highlighted the raw tobacco resurgence five years ago following a report by Rural Agricultural Development Authority (RADA). The report indicated that some 600 farmers were growing the raw tobacco spread out on 300 acres of land cultivating 496,000 pounds annually — equivalent to more than 225 million sticks. Carreras, in subsequent annual reports, upped that figure to 300 million sticks.

Early in its observations Carreras indicated a need to make a commercial response to the growth. It later introduced a roll your own cigarette but still complained in later annual reports.

“Raw tobacco cultivation continued to command the attention of management and, in recent times, we have been endorsing the call by some local groups for the enforcement of the Tobacco Growing Act, which regulates the growing, cultivation and harvesting of tobacco. Our support for its enforcement is primarily driven by the fact that over the last three years, there has been exponential growth in tobacco cultivation, and upon examining the conditions under which tobacco is being grown in Jamaica, we believe that it is in the best interest of all stakeholders, including the Government, for regulatory measures to be put in place,” added the 2015 annual report.

Last year, the Government launched a strategy aimed at discouraging the cultivation of tobacco in Jamaica. Under the initiative, tobacco farmers who chose to join the plan would receive training for alternative crops. It formed part of measures under the Framework Convention on Tobacco Control aimed at generally restricting the use of cigarette smoking and discouraging its production.

Carreras made net profit after tax of $622.9 million on gross operating revenue of $2.6 billion for its June first quarter 2015, or six per cent higher net income year-on-year. The higher profit came despite new taxes. In March, Government announced an increase in the special consumption tax on cigarettes from $10.50 to $12, set to raise $488 million as part of wider measures to raise $10.3 billion for the budget. Government previously initiated an increase on this product in January 2010 where there was an increase from $8.50 per stick to $10.50 per stick.