Swedish Match Lights Up FDA With Proposal
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Kevin Godbee - Dec 5, 2014
- 6 min read
Fred Brown
Several years ago, a sundown farmer walked his fields of tobacco, looking, watching and wondering about the future. His farm, roughly 300 acres, had been in his family for more than 200 years. Many of his ancestors arrived along the Tennessee-Kentucky border shortly after the end of the Revolutionary War and settled upon rich valley croplands to raise crops, especially tobacco.
During the South’s Civil War, the family had to defend the land from marauding troops from both Union and Confederate. Good tobacco was as necessary as food in the war.
In a brief tour, the farmer pointed out a graveyard where the family had buried its dead over the two centuries. They had become part of the soil, he said, just as his soul was also part of the soil.
As the young farmer walked and looked, he pointed to several tobacco barns brimming with the brown leaf. But, he said, he didn’t know how much longer he would be in the business of selling tobacco. There didn’t seem to be anything coming over the horizon except bad news.
In the near term, though, he was able to hang on. Tobacco had been the go-to crop for many Southern farmers. They depended on it to provide money for those hard-to-describe items in a farm family budget–a new tractor part; new clothes for the kids as another school year began; a new truck; roofing for a barn; fencing for a few heads of cattle; and seed for new crops.
But a relentless perfect storm approached. Tobacco in its various forms ran into a social brick wall and became public anathema beginning with the Surgeon General’s Report of 1964. By the 1980s-90s cigarette manufacturers were fighting off lawsuits right and left.
Then on Nov. 23, 1998, the tobacco industry collectively approved a 46-state Master Settlement Agreement, at the time it was the largest such settlement in history, totaling nearly $206 billion to be paid through the year 2025.
Tobacco farmers discovered they were now in a new business environment: they would have to make deals with the large tobacco manufacturers, the big cigarette-tobacco buying firms as tobacco auction warehouses folded one after the other.
Thus, a critical part of the Southern farm family fell away. Tobacco crop allotments, so important in the past having been started in the Great Depression, faded away and finally ended the first of 2014.
"The Fair and Equitable Tobacco Reform Act of 2004, signed by President George H.W. Bush on Oct. 22, 2004, ended the Depression-era tobacco quota program and established the TTPP (Tobacco Transition Payment Program)," according to a report by the Farm Service Agency, an arm of the U.S. Department of Agriculture.
"The program provides annual transitional payments for 10 years to eligible tobacco quota holders and producers. Payments began in 2005 and continue through 2014. Payments are funded through assessments of approximately $10 billion on tobacco product manufacturers and importers."
Read that last sentence as taxes assessed on tobacco manufacturers and importers. There are no free lunches.
Another excellent source of information on the economics and politics of tobacco–if you are even more interested in that sort of minutia–can be found on an IRS page dealing with tobacco and taxes.
All this is to bring us to an interesting current crossroads.
A recent article in the Sunday New York Times says the Swedish tobacco giant, Swedish Match, is attempting to influence the U.S. Food and Drug Administration to alter its regulation and policy on tobacco products.
You might recall that the FDA (known in tobacco circles as Fear and Dread Administration) took over control of tobacco regulation in the U.S. with the stroke of a pen by President Barack Obama when he signed into law The Family Smoking Prevention and Tobacco Control Act, commonly referred to as the Tobacco Control Act.
That law, signed June 22, 2009, gives FDA authority to regulate the manufacture, distribution, and marketing of tobacco products to protect public health.
The law brought in a new era of regulation for tobacco that continues to hobble tobacco companies today.
Enter Swedish Match. The big Nordic tobacco company says its snus, a packet of tobacco you tuck between the lip and gum–think of it is chewing tobacco light–is less harmful than other tobacco products.
Swedish Match has petitioned the FDA to re-write the tobacco rules, which has the potential to change prevailing thinking around federal tobacco policy.
Don’t, however, hold your breath on moving the FDA in any direction fast. The FDA is like an enormous iceberg, going whichever way it determines it should go, doing whatever it determines it should do. There is very little control over the FDA and its machinations.
But Swedish Match, though small potatoes by itself, and not very well known outside of Europe, is no trifling bunch.
Here is how they put it on their website: "Swedish Match develops, manufactures, markets, and sells quality products with market leading brands in the product areas: Snus and moist snuff, other tobacco products (cigars and chewing tobacco), and Lights (matches and lighters).
"In Sweden the Group has an independent distribution company. Swedish Match also owns 50 percent of SMPM International (a joint venture with Philip Morris International for snus outside of Scandinavia and the U.S.). In addition, Swedish Match holds a 49 percent ownership interest in Scandinavian Tobacco Group (STG)."
Swedish Match also has the brands of White Owl cigars, Red Man chewing tobacco, Cricket Lighters, Longhorn moist snuff with production units in six countries with the largest in America and Brazil.
Uh, you will note that it holds a near-majority interest in STG, one of the largest pipe tobacco manufacturers in the world.
"(STG) is . . . . world leading in pipe tobacco and the largest manufacturer of cigars in the world," it claims on its website.
STG, you might recall, was created in 2010 with the merger of the former Scandinavian Tobacco Group and the cigar and pipe tobacco business of Swedish Match.
Should Swedish Match prove successful at doing something no other tobacco company has been able to pull off–and that is change FDA’s policies and regulatory position on tobacco warning labels–it could hold large implications for pipe tobacco.
But, make that a big "maybe". The Fear and Dread Administration is the blunt force politicians have chosen to coldcock the tobacco industry, putting it out of business permanently.
In other words, Swedish Match is petitioning the FDA to consider various ranges of health damage listed on tobacco labels, while at the same time saying its product is "less harmful."
Instead of massive inclusion as the FDA is wont to do by collectively saying that all tobacco products are dangerous, Swedish Match is asking the FDA to consider the degrees of harm from various products.
If snus are not as harmful as cigarettes, then pipe smoking should have a place at that table as well. Pipe smokers, it has been shown, live as long as, if not longer, than people who do not smoke, and never have smoked.
Smoking a pipe responsibly (without defining responsibly) has been shown to have proven benefits, such as stress relief and relaxation.
The point here is that if one of the largest tobacco outfits in the world is successful in getting the FDA to change its regulatory policies toward tobacco, then those old tobacco farmers who once roamed fields of browning stalks, may once again find heart to return to sowing and planting.
But don’t put down your bets just yet.
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Written by Kevin Godbee
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Nice work there, Fred! Both the sleuthing and the clear exposition of what is transpiring. Getting the agencies to recognize that there are different levels of harm and risk, depending on the tobacco product, would bring them more into line with what most of us pipsters believe. Now if we could get some rollback on that ‘lie that won’t die’ about second hand smoke….
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What an excellent article, I love the flow of the story. It is great to hear that we have an advocate with such a large presence in the marketplace, I would hope that other players would consider putting forth a collective effort to influence the proposals.
Great stuff, Fred. Wasn’t aware of this potential development.
I want to see the FDA completely destroyed!
A very informative article, Thank You Mr. Brown.
The big if, I see here, is that asking the government to revisit a regulation is to tempt fate. Given the current attitude of the public and the regulators any change will, likely as not, be in the opposite direction from what is being sought by the petitioner. Then there is the “law of unintended consequences” which always must be considered in any action.
Requesting changes in the status quo is a maneuver fraught with danger. There is risk as well as the possibility of reward.
How quickly the very heritage of the great nation of the United States of America is not just forgotten but tossed into the trash. The general public must be educated about the important role tobacco farming played in the birth of such a great nation. Articles such as this one help to put the irrational anti-tobacco mania in perspective by reminding us of our past.
Thanks for piecing together the various developments and their implications for the future of pipe tobacco. One can only hope…
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I would also like to compliment the quality of the writing and organization of the article — not to mention the illustrations.