In an age of global competition, small tobacco companies have been swallowed by conglomerates. The remaining decide the prices among themselves, and punish growers who decide to sell elsewhere.
This means disaster for the 160,000 tobacco growers of Brazil, the leading exporters of tobacco. Local officials estimate that 35 per cent of the growers will land up owing more money than they earned. Helio Friedrich, a councilperson in Venancio Aires from the left-of-center Workers Party said, "We have a system in which half a dozen companies are strangling the growers. Each year they come up with a new way to squeeze the growers tighter."
The tobacco companies have legal advantages and tax incentives to help them compete in the world economy. In Rio Grande do Sul, state tax incentives to Souza Cruz, the biggest company, was us $770 million, while Philip Morris received us $195 million.
Guido Knies, a senior manager, said the tax break is suppose to create jobs, but at the Souza Cruz processing plant, the permanent work force has dropped to 180, from 1,000, through a combination of technology and streamlining.
The squeeze on the growers begins at the start of the season, when they take bank loans to buy kits from companies that include seeds, pesticides, herbicides and fertilisers, a plastic sheet to cover the soil and protective gear for applying chemicals. They must not only pay for the kits ; they must also pledge to sell their harvest to the companies.
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