Tobacco Documents Online

The Tobacco Industry in _ Transition Policies for the 1980s ~ ~ ~ ~ Edited by William R. Finger North Carolina Center for Public Policy Research, Inc. c LexingtonBooks y -D.C. Heath and Company Lexington, Massachusetts Toronto o ~ ~ -

Contents Part I Acknowledgments Introduction William R. Finger The Tobacco Program and the Farmer ix xi 1 Chapter 1 Early Efforts to Control the Market-And Why They Failed Anthony J. Badger 3 Chapter 2 The Federal Tobacco Program: How It Works and Alternatives for Change Charles Pugh 13 Chapter 3 Landmarks in the Tobacco Program Charles Pugh 31 Chapter 4 The Tobacco Franchise for Whom? Charles K. Mann 37 Chapter 5 Can Tobacco Farmers Adjust to Mechanization? A Look at Allotment Holders in Two North Carolina Counties Gigi Berardi 47 Chapter 6 Changes in the Structure of the Flue-Cured Tobacco Farm: A Compilation of Available Data Sources Robert Dalton 63 Chapter 7 Resources on Tobacco Production and Marketing Robert Dalton 75 Part II Alternatives for Tobacco Farmers 91 N ~ Chapter 8 Vegetable and Fruit Crops: Viable Alternatives Cn `o for Tobacco Farmers Frank Adams 93 ~ ~ Chapter 9 Industrial Growth: An Alternative for North Carolina's Tobacco Farmers J. Barlow Ilerget 103 .Is Chapter 10 Tobacco for Protein: A Revolutionary Upheaval? Bruce Siceloff 109 Part III World Leaf Sales Expand-But U. S. Share Shrinks 117 V

vi The Tobacco Industry in Transition Chapter 11 Tobacco's Global Economy: Is North Carolina Losing? Joseph A. Kinney 119 Chapter 12 Open Trade and Moderaizesi Tobacco Program: The Keys to an Expanded U.S. Flue-Cured World Market Hugh C. Kiger 131 Chapter 13 American Leaf Exports on Decline: Imperial Tobacco Limited Closes Its Last American Primary-Processing Plant John Campbell 145 Chapter 14 Making the Third-World Mariboro Country Albert Huebner 151 Part IV Corporate Diversifrcation and International Expansion 157 Chapter 15 Diversification and International Expansion: The Future of the American Tobacco Manufacturing Industry with Corporate Profiles of the "Sig Six" James Overton 59 Chapter 16 R.J. Reynolds Industries: A Hundred Years of Progress in North Carolina l. Paul Sticht 197 Chapter 17 A Future of Great Promise-for Tobacco and for Philip Morris George Weissman 199 Chapter 18 World Tobacto: A Portrait of Corporate Power Frederick F. Clairmonte 203 Chapter 19 Labor Displacement in Tobacco Manufacturing: Some Policy Considerations Elizabeth Tornquist 221 Chapter 20 Valuable Vehicles for Long-Term Gains John iWazwell 229 Part V The Risks of Smoking: Rights and Ramifications 233 Chapter 21 Tobacco and Hea[th: An Introduction Harriet Kestenbaum 235

Contents vii Chapter 22 Warning Citizens about the Hazards of Smoking: Where We Are in 1981 John M. Pinney 241 Chapter 23 Tobacco and Health: A Societal Challenge E.L. Wynder and D. Hoffman 247 Chapter 24 Cigarette Smoking and Coronary Heart Disease: A Questionable Connection Carl C. Seltzer 267 Chapter 25 Some Legal Aspects of the Smoking-and- Health Controversy J.C.B. Ehringhaus, Jr. 279 Chapter 26 Legal and Policy Issues Concerning Smoking and Health to Be Faced in the 1980s Joel D. Joseph and Marcy S. Kramer 287 Chapter 27 Resources on Smoking and Health Harriet Kestenbaum 295 Part V1 Politics of Tobacco: Policymaking under a Cloud of Smoke 311 Chapter 28 The Politics of Tobacco in North Carolina: "A Load Not Easy to Be Borne" Ferrel Guillory 313 Chapter 29 . In the Public Interest ... Not a Constitutional Birthright: An Interview with Former U.S. Secretary of Agriculture Robert Bergland Blaine Harden 19 Chapter 30 The Weed William F. Buckley, Jr. 325 Index 327 About the Contributors 336 About the Editor 340

t Acknowledgments The North Carolina Center for Public Policy Research, Inc., is an indepen- dent nonprofit research and educational institution. The Center's purpose is to enrich the dialogue between private citizens and public officials, and its goal is the stimulation of greater interest in public affairs and a better understanding of the profound impact government has each day on the life of - every citizen. A nonpartisan organization, the Center was formed in 1977 by a diverse group of private citizens "for the purposes of gathering, analyzing, and disseminating information concerning North Carolina's in- stitutions of government." The North Carolina Center for Public Policy Research, Inc., gratefully acknowledges the assistance of the Ford Founda- tion, which provided funds to support this study. The entire staff of the Center participated in the preparation of this book. Those who helped with conceptualization and research included Susan Presti and Robie Patterson. Robert Dalton of the staff wrote two of the chapters in part I. Sallye Branch Teater copyeditcd the entire manuscript and assisted with production. Jenny Shaia typed each article and disposed of many technical problems. The project was administered by the Center's former executive director, Fred Harwell, who contributed editorially and otherwise from conceptualization through final proofs, by the current executive director, G. Rankin Coble. In addition, Jennifer Miller, a writer and editor, provided invaluable assistance on many chapter drafts, particularly in parts I (agriculture) and IV (corporate); and Harriet Kestenbaum, a public-health planner, reviewed the voluminous literature on tobacco and health in helping to design part V (health). Numerous people with busy schedules were willing to take time out to provide information and answer questions. Drs. Charles Pugh and Dale Hoover, both agricultural economists at North Carolina State University in Raleigh, were especially helpful on questions about the tobacco-farm pro- gram. Drs. •Verner Grise and Robert Miller, both agricultural economists at the U.S. Department of Agriculture, provided the latest data and informa- tion on changes in the farm program. - This book would not have been possible, of course, without the cooperation of all of the contributors. Many of them juggled crowded schedules and long-standing commitments to participate in this project. Without their many sacrifices, we could not have produced this book. ix

2 2 Warning Citizens about the Hazards of Smoking: Where We Are in 1981 John M. Pinney The Office on Smoking and Health was established in March 1978 as part of the Office of the Assistant Secretary for Health and Surgeon General. The office serves as the focal point for all Department of Health and Human Services smoking-and-health activities. Its responsibilities include the plan- ning, coordination, and development of public information and educa- tional initiatives and maintenance of a Technical Information Center which collects, organizes, and disseminates research information on smoking and health to a worldwide audience. The long-range goal of the office is to reduce deaths, disabilities, and health-care costs associated with cigarette smoking. The office prepares an annual report to Congress on the health conse- quences of smoking. The most recent report, which was issued in January 1981, focused on the health consequences of smoking the changing cigarette product. This chapter discusses the changes that have occurred on smoking habits, smoking programs, and the cigarette itself, and the significance of these changes for the cigarette industry and the public health. It has been sixteen years since the surgeon general issued his report on smoking and health that showed cigarettes to be the chief cause of lung cancer and a contributor to heart disease, lung disease, and other causes of illness and-early death. So far, surprisingly little harm has come to America's tobacco growers. In 1965, they grew 977 million pounds of cigarette tobacco and the average price was 65 cents. Last year, growers produced 1.8 billion pounds and received S1.40 a pound for it. Costs have gone up in sixteen years, and the value of the dollar has gone down, but the tobacco economy still appears sound and relatively prosperous. No harm at all has come to the industry that manufactures cigarettes. Cigarettes gave the companies $1.6 billion in profits in 1977. But two changes have taken place that will have enormous significance for the tobacco economy in the future. The first change is that the market for cigarettes in the United States is getting smaller and smaller. More people are quitting every year and fewer young people are taking up the habit. Tobacco-growing in this country is being supported more and more This chapter summarizes the material presented in the 1981 surgeon general's report. 241

242 The Tobacco Industry in Transition by its exports to foreign countries. The second change is the new, low-yield cigarette. Almost half the cigarettes sold in the United States today are those yielding 15 milligrams of tar or less, whereas sixteen years ago such cigarettes commanded almost no share of the market. It is difficult to believe that the market for cigarettes will not continue to shrink. A survey made by the Roper Organization for the Tobacco Institute in 1979 revealed that 58 percent of adults (40 percent of smokers, 69 percent of nonsmokers) believed that cigarette smoking is hazardous to health. Another survey, conducted in North Carolina by the Charlotte Observer, showed that 63 percent of adult Carolinians believe so, too. A University of Michigan survey of high-school seniors, also in 1979, showed that 63 per- cent of high-school seniors think that smoking a pack of cigarettes per day is a great risk to health. Sixty-six percent said this of drinking four or five drinks nearly every day and 42 percent said this of using marijuana regu- larly. The move to lower and lower yield cigarettes is likely to continue Nothing in the history of marketing has involved more advertising dollars or represented a greater shift in buying preferences than this, not even the current shift from large to small cars. The new cigarettes appear to satisfy smokers, and the advertising has been very strong, based as it is, on the fear- arousing theme that big numbers are bad and small numbers are good. As these changes continue, what role should the government play, par- ticularly the federal government? Role of Government Health Agencies So far, there has been relatively little government intervention. In 1969, Congress passed a law that barred cigarette advertising on radio and televi- sion and required that warning labels be placed on cigarette packages. A relatively small amount of money (albeit a great deal of effort) has been ex- pended on efforts to warn people against smoking. But the federal tax on cigarettes remains where it was set in 1952, at eight cents a pack, and there is no significant movement anywhere in the federal establishment to end tobacco price-supports. Nor has there been significant action by state or local governments. For a time in the late 1960s and early 1970s, state legislatures were busy raising cigarette taxes, but this trend appears to have slowed. There have also been steps taken by state governments, and even more by local governments, to set up regulations governing smoking in public places. Cigarette interests have tried to stir up great excitement about these regulations, and report- edly have spent considerable amounts of money in trying to resist them, but it is doubtful that the regulations have much influence on cigarette con- sumption. They are the result of, not the cause of, public concern.

Warning Citizens about the Hazards of Smoking 243 The worry that smokers and nonsmokers alike have about cigarette smoking is reasonable and sensible, as reasonable and sensible a worry as any other serious threat to health. In our society today, cigarette smokers are statistically twice as likely as nonsmokers to suffer heart attacks, and ten times as likely to die from lung cancer. The word about these risks has been getting around. I believe it is the clear responsibility of the public- and private-health establishment, and of the educational establishment-no- tably the U.S. Department of Health and Human Services, the American Medical Association, the American Cancer Society, other voluntary and professional health agencies, and all our schools-to pass this word around in every way possible. But it is not these messengers which are changing the tobacco outlook, it is the message. It is the responsibility of a government health agency to continue to warn citizens about the hazards of smoking. Congress has recognized this in its appropriations, and it has also given the Public Health Service respon- sibility for research into the causes and effects of the smoking habit. Ap- proximately $32.6 million in research funds are being used this year (1980-1981) to carry on this research, look into the question of less haz- ardous smoking, monitor smoking trends, and investigate smoking be- havior. The Public Health Service shares responsibility for research with other agencies. Much of the early work in identifying cigarette hazards was done by private agencies such as the American Cancer Society, other federal agencies such as the Veterans Administration, and foreign groups such as England's Royal College of Physicians. This research continues. Some of it, and some very good research, is also being funded by the tobacco industry. Public Health Service Research Priorities Of all the research issues, the most important at present concern low-yield cigarettes. Some observers see this new product as a final solution to the. problem, one that will reduce cigarette-caused illnesses and deaths to "tolerable" levels. Others see them as something that can only delude smokers by giving them false hope. During 1980, the Public Health Service reviewed the health conse- quences of low-yield cigarettes and the health effects of tobacco additives (such as flavor enhancers, which are used extensively in low-yield cigarettes) under two congressional directives: (1) the Public Health Cigarette Smok- ing Act of 1971, which requires annual reports on the health consequences of smoking; and (2) the Health Services and Centers Amendments of 1978, which specifically call for an investigation of the risks of additives and low- yield products. We concentrated our research on four types of questions.

244 The Tobacco Industry in Transition First, what is the relevance today of past information on the nature and hazards of smoking? The cigarettes that are being smoked today are very different from those smoked in the 1940s and 1950s and new kinds of cigarettes are continuing to appear. Recently, manufacturers have intro- duced cigarettes that are advertised as yielding less than one milligram of tar. Our researchers are, obviously, looking at a moving target. Second, how do the tar and nicotine levels, which are measured by machines and do not necessarily represent the smoker's actual intake of smoke, correspond to the actual hazards a smoker faces? Individuals who switch to lower-yield cigarettes may negate whatever advantage there may be, in whole or in part, by inhaling more deeply, smoking more, and smok- ing greater proportions of their cigarettes. Even how a person holds his cigarette can affect his intake of smoke, by blocking the movement of air that passes through the filter into the smoke stream. Third, are tar and nicotine by themselves adequate indicators of hazard? There are some 4,000 known compounds in cigarette smoke; the amounts of these compounds are not reduced equally when tar and nicotine are reduced. Carbon monoxide is a case in point. Some conventional filter cigarettes may, in fact, deliver more carbon monoxide than nonfilter cigarettes. Finally, and perhaps most important, how can we assess the overall benefits of switching from higher- to lower-yield cigarettes? From present evidence, it appears low-yield cigarettes may have significant advantages in reducing the risk of lung cancer. But they may not be reducing the risks of some other diseases. There is apparently no evidence, for example, that switching has any effect in reducing the risks to the fetus that are incurred when a mother smokes during her pregnancy. At the present time, the Public Health Service has this advice to give to the smoker: 1. Switching from high-yield to low-yield cigarettes is a good thing. The Public Health Service's formal position is that, "the preponderance of scientific evidence continues to suggest that cigarettes with lower `tar' and nicotine are less hazardous." 2. However, shifting to a less hazardous cigarette may in fact increase the hazard if more cigarettes are smoked or are inhaled more deeply. 3. And, most important, even the lowest-yield cigarettes present health hazards very much greater than would be encountered if no cigarettes were smoked at all. The Public Health Service is publicizing this information and is asking others in the health and educational communities to do the same. But at the same time, the Public Health Service is subjecting these recommendations

Warning Citizens about the Hazards of Smoking 245 to the most careful scientific scrutiny and will continue to do so. The health of some 55 million citizens is at risk because they smoke cigarettes. They are entitled to learn what science has to tell them about the nature and extent of this risk.