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PMFTC Rings in the Changes – PART 2 Source from: Tobacco Asia 10/16/2013  Chris Nelson retired from his role as president of PMFTC on May 1 after 32 years working in the tobacco industry and 10 years service in the country during which the company saw its investment in the Philippines flourish. Tobacco Asia was granted an exclusive interview with Nelson, recently in which he discussed a wide range of topics including the political challenges he faced on arrival and the support for Filipino tobacco farmers that he espouses.
Political challenges For some executives, arriving in a new country and learning to navigate the cultural divide while overseeing the startup of a sophisticated manufacturing facility might seem daunting but Nelson was able to assimilate very easily. "There were very few challenges in terms of culture," he revealed. "I can easily adapt in any environment. Before working in Manila, I was already in Asia since 1983 working as market manager in another tobacco company, Gallaher Limited, for Saudi Arabia and Yemen. I've been to different countries in the Middle East since then. I am proud to say that the people of PMPMI/PMFTC adhere to the highest standards of professionalism. They are world class and very hard working. I have worked with them for the last 10 years very well." On arrival, Nelson had to cope not only with the opening of the new manufacturing facility but also to plunge headfirst into the often murky quagmire that is Philippine politics. "When I came to Manila in 2003, the Philippine government was about to sign into law the bill that is now Republic Act 9211 (Tobacco Regulation Act of 2003)," Nelson recalled. "We were for a fair regulatory framework to govern the local tobacco industry hence we supported the passage of the bill. I have openly declared PMPMI's support for its passage. At the same time, I was pleased that most of the proposed provisions of Philip Morris during the public hearings were adopted and reflected in RA 9211. We were even invited by Malacanang to grace the signing of the bill into law in June, 2003. I was there to represent the company. "Another challenge that we had to face at that time was the passage of an excise tax law that would be acceptable to the government, the tobacco industry and the other stakeholders. We engaged the Executive Branch and participated in the public hearings conducted by Congress. The result was Republic Act 9334, also known as The Excise Tax Law on Alcohol and Tobacco Products of 2004." On August 19, 2010, PMI inaugurated its Php600-million (US$14.3 million) regional tobacco leaf warehouse facility at the Subic Bay Freeport Techno Park. PMI chose the former American naval base as the site of its leaf regional hub in Asia-Pacific again because of its strategic location.
Nelson has long been a friend and supporter of Philippine tobacco farmers. He has been vocal in his promotion of their interests and active in providing meaningful support, financial as well as agricultural and social. Tobacco farmers represent a significant segment of the Philippines agricultural community and the domestic industry relies on their input. While today Philippine tobacco farmers are producing some excellent qualities and varieties of tobacco, but this has not always been the case. Tobacco farmers have had to overcome a number of issues, including salty tobacco, poor grading methods, typhoons and taxation issues. "Over a decade ago, local tobacco farmers were producing the salty and off-type variety of tobacco which most cigarette manufacturers started rejecting in 2003," Nelson revealed. "By that time, local tobacco farming was dubbed as a 'sunset industry', with production levels reaching its lowest from 2004 to 2006, in stark contrast to the glory years of the tobacco industry in the 1990s when the Philippines was a major exporter of burley and Virginia tobacco. Industry players and the National Tobacco Administration (NTA) worked together to address the situation. The Market-Driven Quality Tobacco Production Program was implemented. This initiative was done through the Tobacco Contract Growing System which provides local farmers a ready market for their produce, with the necessary technology and assistance in terms of production inputs like seedlings and fertilizers; modern post-harvest facilities; market access; and even incentives for compliance with good agricultural practices, exceeding production quotas, among others. "Today, the situation had been reversed in that from producing salty, low-grade rejects, Filipino tobacco farmers now grow world-class tobacco that command high farm-gate prices in the local market. Unmanufactured tobacco exports have now reached 40 million kilos, or more than 50% of total farm produce," Nelson said. "The tobacco industry started to rebound in 2007 and maintained steady growth at an average of 17.5%, according to the NTA. In 2006, production was at its lowest level at 36.5 million kilos: this figure rose to 79.33 million kilos in 2011. The Isabela burley is globally considered to be one of the best types of tobacco for manufacturing cigarettes, with volume increased from more than 7 million kilos to 19.4 million kilos." "On taxation, PMFTC with all other stakeholders actively campaigned for moderate and reasonable tax increases that would provide stable and predictable revenues to the government., Nelson said. "We expressed our position to legislators, government executives, business groups, media, and consumers. The crucial vote took place in the Senate in December 2012 when it ratified the bicameral conference report that provided for two-tier tax structure on cigarettes and tax rate increases by as much as 1000% for the low-priced brands, and a unitary rate by 2017. That Senate voting was a close one with 10 senators supporting the unprecedented increase, while nine were against it led by senate president Juan Ponce Enrile, who feared the significant impact on the tobacco farmers. Nelson looks back fondly on his time at the helm, and he has good reason to be proud of the legacy he leaves behind. "We have numerous achievements in terms of the company's market share, finances, production volume, and the organization," he said. "But, the creation of PMFTC Inc. on February 25, 2010 that combined selected assets of PMPMI and Fortune Tobacco Corporation is the greatest feat. The combination opened a lot of opportunities for both companies that resulted in the continued growth of the business. The number of employees grew from 500 to over 4,000 today. "I will also cite that for two consecutive years - 2011 and 2012, PMFTC was No. 1 in production volume, let us say the biggest production center in PMI, exceeding the production volumes of Indonesia and Russia during the same years." Obviously retirement will mean some significant changes for Nelson, not least of all the fact that he has devoted over thirty years of his life working in the tobacco industry. What will he miss the most? "A significant part of my life revolved around the company – the business and the people" Nelson admitted. "Personally, I will miss the daily excitement of working with the organization, and crunching time and talents in addressing the challenges put forth by the government, competitors, tobacco control advocates, and other sectors. I shall also miss the action of dealing with numerous challenges that eventually delivered positive results. Those successes we had were rewarding." Nelson's role will be taken over by Paul D. Riley, a twenty-year PMI veteran. "Paul Riley is well qualified to take the lead for a large market like PMFTC," Nelson said. "He is extremely good, well experienced, and with his exposure in sales he will do a great job. I can say, he is the right person for the job. I want to take this opportunity to wish him the best of luck because I think everyone needs luck. I am fortunate to have all the luck I needed during my career. I do not have any advice as I know he is more than capable to lead PMFTC. He is a great choice for the company. So what does the future hold for Chris Nelson? "I have been thinking about retiring for a long time. There were a lot of considerations, and at 54, I think it is an appropriate time to step down from a high-pressure job and look at other aspects," Nelson said. "Working with PMFTC, in PMI, and the tobacco industry was great. It was a difficult decision because I will miss the people and the action, but retiring will allow me to spend time with my family who made continuous sacrifices for 27 years. I am looking at some possible directorships, I will continue my involvement with charity work, and be part of non-profit organizations that help uplift the lives of people and communities. PMFTC has more than 5,000 contracted farmers from the Virginia tobacco-growing Ilocos region and from the Burley tobacco-growing Cagayan Valley region and the province of Occidental Mindoro. "Over the years, we were able to transform the way how they farm tobacco through various farmer assistance programs," Nelson revealed. "Pursuant to PMI standards, PMFTC avidly promotes Good Agricultural Practices (GAP) Guidelines & Assessment and the Agricultural Labor Practices (ALP) Code with all PMFTC contracted farmworkers and traders. This initiative covers a comprehensive campaign against child labor and forced labor in all facets of tobacco farming, fair treatment to all tobacco farmworkers, observation of fair working hours with due compensation, ensuring a safe work environment, freedom of association, and compliance with the law on labor and employment. "In 2010, we have introduced the use of venturi furnaces to the farmers producing flue-cured Virginia. The venturi furnace is designed primarily to cut fuel wood consumption up to 28% and gives 75-88% chance of producing high grade tobacco which translates to more income. Also, we started optimizing the curing barns used by our farmers to better process tobacco leaves. The Curing Barn Optimization Project aims to reduce fuel wood consumption by at least 30% and save 13 man-hours on the curing process. "This year we launched the Tobacco Clipping project which promotes a new method replacing the traditional tobacco sticking. This new method of Tobacco Clipping is safer, better, and more efficient. Through this method, farmers will have more time for their family. All these projects resulted to more income on the part our farmers." Enditem Related Updates |
