The Case of Brazil:

The Case of Brazil:
Although Brazil is the world’s largest exporter of tobacco, it is the multinational companies that
make the majority of the profit. Two U.S.-based companies, Universal Corporation and Dimon
Inc., have contracts with nearly half of Brazil's tobacco farmers, while Souza Cruz, a subsidiary
of British American Tobacco (BAT), contracts with most of the rest.14 Farmers must sign a
contract in advance promising to only sell their crop to one company and then are legally bound
to purchase seeds, fertilizers and pesticides from that same company.15 The companies
determine how much land will be cultivated and how much of each type of fertilizer and
pesticide must be used. Company inspectors make regular visits to the farms to make sure
their guidelines are being followed. Even though Brazilian leaf sells for about half the price of
U.S.-grown leaf, apparently it is still not cheap enough for the companies.16 In the past, prices
for different grades of tobacco fluctuated according to supply and demand. Following a growers’
strike in the late 1980s, however, the companies “tightened the pricing noose” by banding
together. In an effort to keep production costs even lower, the tobacco companies now “decide
prices among themselves, and punish growers heavily should they decide to sell
elsewhere....the big companies join together to estimate the growers’ cost of production plus a
modest margin. To help enforce their control, the companies hold back a share of the farmer’s
payment until the entire harvest is delivered.” Farmers who try to withhold their crops over
grading disputes often have their crops seized by police acting on behalf of the companies.