Double Dysfunction
Along southwestern Ontario's tobacco belt, an industry that was on the wane, and which the federal government attempted to ensure would wend its way into history, is now suddenly resurgent. The coming season's tobacco crop is set to double the size of that seen the previous year, at a time when it was anticipated that tobacco growing was disappearing from Ontario's traditional heartland of the industry.
The federal government's brainstorm program, "Tobacco Transition Program" that gave tobacco growers hundreds of thousands of dollars to retire their tobacco growing and turn instead to other crops has become the very symbol of government intervention failing, and tax dollars wasted.
Under the agreement where farmers received on average $270,000 to halt tobacco growing operations, they were also permitted to rent their land and equipment, while hiring themselves to new licence holders as workers in situ. This created an opportunity for family members to purchase licences, and then proceed in alliance with the original growers to continue the original tobacco farming business.
Of Ontario's 1,083 tobacco growers, only 18 were holdouts; the greater number accepted the transition payments, and some of them honoured the bargain, turning to other crops for their livelihood. Some have managed to make a go of their new crops, others have found them to be a failure; in some instances too many of a single crop being grown, bringing down prices.
To complicate matters even more, the price of tobacco has dropped. There is an abundance of tobacco leaf, since manufacturers have been importing raw leaf from developing countries with low labour costs. No matter which way the farmers turn, they have lost. Many invested in modern tobacco-drying kilns to produce a less toxic product at the urging of cigarette manufacturers and government.
They were then left with the burden of paying off the quarter-million each those new tobacco kilns cost them, to be hit later by the reality of buy-outs and lower prices for crops. And they're also victims of unregulated cheap cigarettes through black market production that have flooded the country.
And since organized crime is heavily involved in contraband tobacco production this becomes one huge, convoluted issue. Made even more complex because of the complicity of First Nations reserves on whose sovereign territory now exists some 50 illegal factories along the St.Lawrence. Legal cartons of cigarettes sell for $80 to $90. Contraband for $6.
The federal and provincial governments are poorer by approximately $2.5-billion in annual taxes as a result of this illicit underground trade. Factor in the fact that criminal organizations become wealthy on this product, and that they deal also in illegal guns and drugs and there's a maelstrom of criminal activities intertwined.
The RCMP appear to be stymied by unco-operative First Nations who refuse to agree with the government's position that they're engaged in an illegal activity. Seizures of contraband tobacco products are huge, but still do little to make an impact on the growth of the market.
Cheaper tobacco products mean less control by authorities and more accessibility for young people. Adolescents who think it's cool to smoke, can afford the illegal product, and don't get screened at the counter by a store-owner obeying the law.
Everyone loses in this complicated scenario; the compromised health of young people, the earning potential of farmers, the taxation capabilities of governments, the control of a troublesome product, and the bottom line of cigarette manufacturers.
But the racketeers are cheering on this brave new world.
The federal government's brainstorm program, "Tobacco Transition Program" that gave tobacco growers hundreds of thousands of dollars to retire their tobacco growing and turn instead to other crops has become the very symbol of government intervention failing, and tax dollars wasted.
Under the agreement where farmers received on average $270,000 to halt tobacco growing operations, they were also permitted to rent their land and equipment, while hiring themselves to new licence holders as workers in situ. This created an opportunity for family members to purchase licences, and then proceed in alliance with the original growers to continue the original tobacco farming business.
Of Ontario's 1,083 tobacco growers, only 18 were holdouts; the greater number accepted the transition payments, and some of them honoured the bargain, turning to other crops for their livelihood. Some have managed to make a go of their new crops, others have found them to be a failure; in some instances too many of a single crop being grown, bringing down prices.
To complicate matters even more, the price of tobacco has dropped. There is an abundance of tobacco leaf, since manufacturers have been importing raw leaf from developing countries with low labour costs. No matter which way the farmers turn, they have lost. Many invested in modern tobacco-drying kilns to produce a less toxic product at the urging of cigarette manufacturers and government.
They were then left with the burden of paying off the quarter-million each those new tobacco kilns cost them, to be hit later by the reality of buy-outs and lower prices for crops. And they're also victims of unregulated cheap cigarettes through black market production that have flooded the country.
And since organized crime is heavily involved in contraband tobacco production this becomes one huge, convoluted issue. Made even more complex because of the complicity of First Nations reserves on whose sovereign territory now exists some 50 illegal factories along the St.Lawrence. Legal cartons of cigarettes sell for $80 to $90. Contraband for $6.
The federal and provincial governments are poorer by approximately $2.5-billion in annual taxes as a result of this illicit underground trade. Factor in the fact that criminal organizations become wealthy on this product, and that they deal also in illegal guns and drugs and there's a maelstrom of criminal activities intertwined.
The RCMP appear to be stymied by unco-operative First Nations who refuse to agree with the government's position that they're engaged in an illegal activity. Seizures of contraband tobacco products are huge, but still do little to make an impact on the growth of the market.
Cheaper tobacco products mean less control by authorities and more accessibility for young people. Adolescents who think it's cool to smoke, can afford the illegal product, and don't get screened at the counter by a store-owner obeying the law.
Everyone loses in this complicated scenario; the compromised health of young people, the earning potential of farmers, the taxation capabilities of governments, the control of a troublesome product, and the bottom line of cigarette manufacturers.
But the racketeers are cheering on this brave new world.
posted by Pieface | 6:59 PM
0 Comments:
Post a Comment
<< Home