AGRICULTURALLABOR PRACTICESPROGRESS UPDATE 1/2019

MexicoACCOMMODATIONSince 2011, PMI has been working withsuppliers to implement the Agricultural
Labor Practices (ALP) program to eradicate
child labor and other labor abuses, toachieve safe and fair working conditions
and a decent livelihood on all farms where
our tobacco is sourced. In 2018, as part ofPMI’s ALP program we deployed our ‘Step
Change’ approach to achieve significant
improvements in areas where persistentissues were occurring. One of our focus
areas identified is the provision of adequateaccommodation for farm workers with theobjective to make necessary investments
to help farmers address all accommodation
issues by 2020. In this first 2019 ALP
Progress Update, we will present ourefforts to achieve the accommodation
objectives in three of the countries where
we source tobacco: Mexico, South Africa,and Argentina.

SouthAfrica

Argentina

MEXICOIn the 2017 and 2018 Sustainability
Reports, we shared an illustration ofour Step Change approach focusing on
the intensive efforts in Nayarit, Mexico,
to address the poor living and working
conditions of migrant workers in tobacco
growing areas. Every year, these migrant
workers come from Mexico’s highlands
and settle in tobacco growing areas for theseason.
In 2017, PMI and our supplier Tabacodel Pacífico Norte (TPN – a subsidiary of
Universal Corporation) conducted an indepth analysis of this complex and deeprooted problem. We developed a planwith the objective to provide adequate
accommodation and working conditions
to all migrant workers and create theconditions to ensure that they do not
sleep in tobacco fields. To achieve this,we developed an integrated approachcomprising the following action items:• 25% increase on the piece-rate paid toworkers;• Awareness campaigns in the workers’communities of origin;• Extension of the opening hours andincreased capacity of five childcare centers
for the children of migrant families; and• Support to farmers to provide adequate
accommodation, transportation, as well as
sanitation and access to clean water;• Non-renewal of contracts with farmers
not demonstrating commitment to theobjective.
In order to support farmers to provide
adequate accommodation, PMI and TPN
began by training all field Staff on thenew objective and equipping them withtools to address these issues (e.g., a list ofminimum housing standards aligned withlocal standards of living). In addition, during
the first year of implementation, a costcompensation was given to the farmers
providingadequateaccommodation,transportation, as well as sanitation andclean water access to their workers.
We engaged a third‑party NGO (Fundación
Mexicana de Apoyo Infantil – FAI) toestablish a set of monitoring indicatorsand independently assess the housing andworking conditions.
In 2018, FAI monitored around 381 farms
with two visits per farm on average. The
outcomes were encouraging. FAI reported
that 93% of migrant workers no longer lived
in the tobacco fields or worked at night,
and 87% of them had access to adequate
accommodation. PMI and TPN will continue
working with both farmers and workers
to provide adequate living and working
conditions and to achieve PMI’s Step
Change target.

SOUTH AFRICA
PMI continues to identify and make efforts
to improve the working and living conditionsof labor within our supply chain as part of its
Agricultural Labor Practices (ALP) program. In
2017, during the Control Union assessmentof Universal Leaf South Africa (ULSA), ourtobacco supplier in South Africa, it was foundthat 89% (of 16 farms visited) of workers
accommodation in Limpopo, as well as 65%
in the Eastern and Western Cape, wereinadequate. In 2018, ULSA worked with 72
contracted farmers which typically operatelarge commercial farms (average farm size of14 Ha) with 31 workers living on each farm,on average.
To ensure PMI’s ALP workers accommodation
standards are met, together with our strategic
partner Verite and ULSA, we developed an
action plan to address this issue and ensure allaccommodation provided to workers is safe,
clean and conforms to the country’s laws.
In 2017, a pilot project was undertaken in
Limpopo where 54 rooms were constructed.
The outcomes of the pilot created significant
improvements for the farmers and workers
and were endorsed by the South African
Department of Labor. Following this, in linewith PMI’s Step Change approach, we rolled
out of a full-scale initiative that covered allcontracted tobacco farms in 2018, withexpected completion by December 2019.
In 2018, accommodation improvements
focused on the most serious needs inLimpopo. To-date, 80% of the project plan for
Limpopo has been completed with 174 rooms(58 units) constructed and fully meeting thestandard.
In 2019, the accommodation improvements
will continue at the remaining 4 farms in
Limpopo and at all farms in the Eastern andWestern Cape.

BEFOREThe accommodation improvements willencompass a total of 243 new rooms, 326
renovated rooms (including 408 glass
replacements) and 83 toilets, benefitting 564
workers and their families. We are confident
that we will achieve the target of providing
adequate accommodation to all contracted
farms in South Africa by the end of 2019,ahead of PMI’s global timeline of the end of2020.

AFTER

ARGENTINA
Since 2018, PMI’s affiliate in Argentina(Massalin Particulares S.R.L), implemented
the ALP Step Change journey, focusing,among other topics, on improving farmworker’s accommodation in order to meetthe standards set by PMI’s Agricultural
Labor Practices (ALP) Code. Massalin
Particulares contracts directly 462 flue
cured farmers, each farm has an average
tobacco growing area of 20 hectares and asignificant number of workers living there
71% of farmers provide accommodation,around 1.900 workers living on the farms),
especially during harvesting season.
During 2018, PMI worked with Massalin
Particulares to assess workers’ living
conditions through a detailed farm by farm
monitoring performed by Field Technicians.
Based on the findings, the Field Technicians
agreed individual action plans with thefarmers to improve living conditions on thefarms.
The work was focused on a set of “criticalstandards”, agreed with Verite that had tobe addressed as a priority. These are: water
availability, sanitation facilities, secure
electricity system, cooking area separated
from sleeping areas, enough beds for family
members and housing area free of toxic
elements.
Almost 151 farmers (out of421) were
found not meeting at least one of the criticalstandards: 56% of them already made thenecessary improvements and the remaining

44% are implementing the agreed actionplans in order to fully meet the standards by
Q2 2019.
Other indicators, considered “noncritical” but, if not met, still inadequate
living conditions according to PMI’s ALP
standards (e.g., warning signs, waste
management, furniture, soap availabilityand cleaning), are expected to be provided
by all relevant farmers by Q4 2019 andsuccessfully achieving PMI’s goals set out
following the Step Change approach.

We welcome your feedback. If you have comments or suggestions,please contact sustainability@pmi.com

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