Cuba will reduce the tobacco planting area by about 10 percent in the 2021-2022 season due to a lack of supplies, reports Market Research Telecast.
According to Granma, the official newspaper of the Communist Party of Cuba, only 22,550 hectares out of the initially planned 25,000 hectares have been planted with tobacco this season.
Farmers in Pinar del Río, which typically accounts for 65 percent of the island’s tobacco production expect to plant only 13,921 hectares this year—the smallest area dedicated to tobacco in the province over the past decade.
Meanwhile, rains from Hurricane Ida last August and resource constraints have delayed the planting of some 3,000 hectares until January, beyond the optimal time.
Cuba’s tobacco exports reached $507 million in 2020, according to Habanos, which markets Cuba’s renowned cigars.
The sector employs some 200,000 workers on the island, rising to 250,000 at the peak of the harvest.
In the 2021/2022 growing season, hectarage of tobacco planted in Zimbabwe was up 9 percent to 43,389 ha compared to 39,488 ha during the previous year, reports The Chronicle.
According to the Tobacco Industry and Marketing Board, 16,836 ha were for irrigated tobacco compared to 15,170 ha the year before while 26,253 ha were for tobacco under dry land compared to 24,318 ha previously.
Philip Morris International has published its Agricultural Labor Practices: 10-Year Anniversary Report. The report recognizes the company’s decade-old agricultural labor practices (ALP) program, which launched in 2011 with the aim to eliminate child labor and to achieve safe and fair working conditions on farms where PMI sources tobacco.
“In marking the 10-year anniversary of our ALP program and the International Year for the Elimination of Child Labor, we have developed a comprehensive report to reflect on the progress we’ve made while acknowledging that accelerated action is more urgent than ever,” said Jennifer Motles, chief sustainability officer, PMI, in a statement. “We are acutely aware that poverty and inequality are at the root of child labor and other human rights issues. Through our focus on living income, we aim to build resilience in our farming communities, provide new and alternative sources of revenue, and improve income levels and households’ livelihoods.”
Updated in 2019 to include its living income target, PMI’s ALP program is an ambitious and comprehensive effort to improve labor practices in a global agricultural supply chain. The report reaffirms the company’s commitment to continue protecting, promoting, and supporting the socioeconomic well-being of tobacco-farming communities. This includes the ambition to achieve 100 percent of its contracted farmers paying at least the legal minimum wage by 2022, zero child labor in its tobacco supply chain by 2025, 100 percent of its contracted farmers making a living income by 2025, and 100 percent of contracted farmers supplying tobacco to PMI to have basic water access by 2025 and access to basic sanitation and hygiene by 2030.
These strategic ambitions continue to build on ALP targets already achieved in previous years, which include providing safe and decent accommodation to workers, and ensuring 100 percent of farmers and workers have access to personal protective equipment for the application of crop protection agents and prevention of green tobacco sickness.
These strategic ambitions continue to build on ALP targets already achieved in previous years, which include providing safe and decent accommodation to workers, and ensuring 100 percent of farmers and workers have access to personal protective equipment for the application of crop protection agents and prevention of green tobacco sickness.
Through our focus on living income, we aim to build resilience in our farming communities, provide new and alternative sources of revenue, and improve income levels and households’ livelihoods.
In commemoration of the 10-year anniversary, PMI is also partnering with Verité to integrate its learnings into an open-source toolkit that will aid companies, suppliers, and producers in driving improvements in labor practices of agricultural supply chains around the world. The initiative, called the “Verité Farm Labor Due Diligence Toolkit,” is part of an action pledge Verité has made in support of the International Year for the Elimination of Child Labor.
The toolkit will draw on the insights developed during Verité’s collaboration with PMI on the ALP program, as well as Verité’s work with other clients. PMI will join a coalition of other private-sector sponsors convened by Verité to support the toolkit initiative, helping to prioritize, develop and promote the materials to be included within.
“By continuing to collaborate with our partners such as Verité, we further strengthen our foundations, scale our efforts, and share our learnings to improve agriculture labor practices,” said PMI Head of Social Impact Anna Kletsidou. “As the company delivers a smoke-free future, we are expanding into electronics—leveraging our ALP learnings, PMI remains alert to environmental and social impacts created by this supply chain and is developing robust strategies to address them.”
Since its implementation, PMI’s ALP program has showcased the importance of partnership, digitalization, and continuous improvement. Earlier this year, PMI commissioned a publication focused on climate justice and the interconnectivity between environmental and social issues, recognizing the impact of climate change on human rights and the need to develop coherent and inclusive strategies.
Chinese investors are negotiating to purchase leaf tobacco from the Dominican Republic, a development that could significantly boost exports from the Dominican Republic, reports The Dominican Today.
The Dominican Republic is already the world’s leading exporter of cigars.
Local industry representatives indicated that the Chinese investors are interested in the Olor Dominicano variety, which the large international cigar companies operating in the country use to manufacture their best blends.
The Dominican Republic exports cigars to 142 countries, according to José Guillermo López, a board member of Asociación de Desarrollo de la Provincia Espaillat.
López said the country has sufficient lands to expand tobacco cultivation. “We have the land capacity to plant four or five times more than what is being planted, without counting the potential of the south.”
The south’s problem of water shortages, he added, has been solved by investments in irrigation canals.
Tobacco farmers in Zimbabwe and Malawi have voiced concern over growing of the leaf under contract, saying the agreements are structured to benefit contractors, leaving them perennially in debt.
The Zimbabwe government, for its part, is unhappy that as much as 95 percent of the crop is financed by contractors, most of which are backed by offshore financial institutions. As a result, net foreign currency inflows into the country are only a small fraction of the value of exported tobacco, according to the Reserve Bank of Zimbabwe.
For example, net foreign currency inflows over the past two years were $87million from $1.6 billion worth of tobacco that was exported.
To reverse the trend, the government will, from the October 2021 to the March 2022 growing season, directly support farmers under a $60 million loan facility created under the recently launched Tobacco Value Chain Transformation Plan.
Broadly, the plan seeks to localize 70 percent of tobacco cultivation financing, increase output to 300 million kg per season, expand local value addition and create a $5 billion industry by 2025.
Shadreck Makombe, who farms tobacco in Gweru, 200 km south of Harare, welcomed the decision, saying the funding will not only benefit farmers but also help resuscitate auction floors, which now account for 5 percent of leaf sales. Under the current financing model, he told Tobacco Reporter, contractors are getting the lion’s share of proceeds while farmers are getting little, making it impossible for them to retool and go back to the fields without returning to contractors for more support.
“Whatever the farmers were getting through contractors is only going back to them, as the funds and inputs provided would be repaid at premium interest. So basically, the farmer becomes a worker of contractors,” he said.
Makombe, who is also the Zimbabwe Commercial Farmers Union president, said if the $60 million is well managed and distributed, it will leave farmers at a better position to repay as they will be assured of a profit if they work efficiently.
“There’s no way farmers can do it alone. Yes, large-scale farmers may do that, but generally, the middle-income and small-scale [growers] need to be assisted,” said Makombe.
Zimbabwe is Africa’s No. 1 producer of tobacco by volume. It produced 210 million kg this year, an increase from 185 million kg in 2020.
However, farmers complain that some contractors inflate prices of inputs, charge high interest rates and unilaterally determine producer prices.
In a Sept. 7, 2021, briefing to journalists in Harare, Publicity and Broadcasting Services Minister Monica Mutsvangwa said the Tobacco Value Chain Transformation Plan aims to boost farmer viability and independence as well as increase net foreign currency earnings. The strategy is not meant to supplant contractors, she said, but to push the industry to contribute more to the gross domestic product (GDP), foreign currency earnings, employment and farmers’ incomes.
“The strategic objectives of the plan are to localize the funding of tobacco to complement external funders, to raise tobacco production and productivity from 262 million kg to 300 million kg by 2025 and to diversify and increase the production of alternative crops, such as medicinal cannabis, and increase their contribution to the farmers’ incomes to 25 percent by 2025,” she said.
The plan also aims to increase the level of value addition of tobacco from 2 percent to 30 percent. Furthermore, she said the plan will incentivize investors to set up cigarette manufacturing plants locally so that the country exports less raw or semi-processed tobacco.
Tobacco Association of Zimbabwe President George Seremwe urged the government to involve farmers in working out disbursement modalities for the financing localization facility to succeed.
“Without the involvement of farmers and farmer organizations, we will fail,” he warned.
An average of 120,000 households, mainly smallholders, grow tobacco in Zimbabwe, according to the Tobacco Industry and Marketing Board (TIMB). They often lack resources to finance production, and because they lack collateral security, they do not qualify for bank loans, hence their reliance on contractors.
“This fund is meant to support 50,000 hectares (ha) of tobacco production, so ideally, if all applicants who apply are growing one hectare, that means 50,000 farmers will benefit,” said TIMB spokesperson Chelesani Moyo. “The funding facility aims at boosting production using local funds as the country works toward driving the tobacco sector into the $5 billion industry by 2025.”
Shasha Tobacco, a Zimbabwean leaf merchant, does not foresee the government-backed financing localization plan crowding out contractors.
The company’s finance and administration executive, Augusta Ajento, expected the loan facility not only to create employment but also to facilitate capacitation of the downstream. The packaging, fertilizer manufacturing, banking and insurance industries will benefit from more funding into tobacco cultivation, he said. The interest burden to be borne by farmers, he added, is likely to decline because a portion of funds that ordinarily would have been obtained offshore by contractors will now be available locally at lower cost.
“I don’t see any threat to contract farming because what it does is maybe improve efficiency and reduce overpricing. It improves efficiency on the part of [the] contractor because they will now be competing with the open market because at the moment, farmers have got no option; they have to go [with] the contractor, and they are contracted at the contractors’ terms. Such arrangements leave farmers with no alternative of sourcing financing, but [the contractors] are now given an opportunity and option to source their needs from various suppliers to improve on their returns,” he said.
Shasha contracts 4,800 growers yearly, and Ajento was optimistic it will retain them, citing the company’s investment in building relationships.
“The farmer will ask, ‘Was I getting a fair deal from the contractor or a raw deal?’ If it was a raw deal, the farmer will leave you. If the inputs were overpriced, they will also leave you, but if you were professional in your approach, they will stay put,” he said.
On the future of contract tobacco farming, Ajento called for increased technical support to farmers so that they can produce more per hectare as well as improve leaf quality. This, he said, can be achieved through regular training.
“We give agronomist services to our farmers. We just don’t give inputs; we employ what we call leaf techs and agronomists who move around teaching farmers best practices in tobacco farming,” Ajento said of Shasha.
Malawi President Laments Farmers’ Low Bargaining Power
At the opening of Malawi’s selling season in April, President Lazarus Chakwera expressed dissatisfaction at what he said were “dubious” levies imposed on farmers by contractors who support production of 80 percent of the Malawian leaf. He lamented farmers’ low bargaining power.
Protests at trading floors over low prices are common in Malawi. In February 2015, unions petitioned the government to change contract farming legislation to better protect their rights.
“It’s better to withdraw and let those companies do the work. It’s not in order for a farmer to spend time growing tobacco and later earn less. This is disgusting,” farmer David Chirwa told Malawi24 in August.
Other farmers threatened to quit contract tobacco farming and take up farming maize, groundnuts and soyabeans.
Malawi is the world’s most tobacco-dependent country. The golden leaf accounts for up to 40 percent of the nation’s exports, 60 percent of foreign currency earnings and 11 percent of its GDP.
However, a top buyer of Malawi’s crop insisted his company pays growers well.
“For us, the trend is different,” said Limbani Kakhome, director of corporate affairs and communications at Japan Tobacco International Leaf Malawi. “Our grower retention rate is over 95 percent year-on-year for the past five years or so, and the queue of growers asking to join our contracts is endless. We also are working with growers to diversify their farm revenue income streams.”
Last year, Malawi growers sold 114 million kg, with output growing to 123.7 million kg this year. Of that crop, JTI bought 40 million kg, according to Kakhome.
A Malawian think tank says that while grower numbers have declined, yields and acreage have risen.
According to the Malawi Agricultural Policy Advancement Agenda (MwaPata) there has been movement into and out of tobacco cultivation by farmers depending on market and growing conditions, but a larger share of households is dropping cultivation than adding tobacco.
The percentage of households growing tobacco declined from 15 percent in 2009–2010 to 6 percent in 2015–2016 and to 5 percent in 2018–2019. The area under tobacco cultivation declined from 147,000 ha in 2009–2010 to 82,000 ha in 2015–2016 but rose to 92,000 ha in 2018–2019.
Despite the decline in participation rates and the rise in total acreage over time, tobacco output only declined from 130,000 tons in 2009–2010 to 100,000 tons in 2015–2016, and it rose back up to 120,000 tons in 2018–2019.
MwaPata said the average area under tobacco cultivation increased from 0.40 ha in 2009–2010 to 0.53 ha in 2018–2019. At the same time, average yields increased from 984 kg/ha in 2009–2010 to 1,281 kg/ha in 2015–2016 to 1,372 kg/ha in 2018–2019. —D.J.
The Brazilian states of Rio Grande do Sul, Santa Catarina and Parana produced 569.54 million kg of tobacco in 2021–2022, 9.38 percent less than during the previous growing season, according to an announcement from the tobacco growers’ association Afubra relayed by Kohltrade.
The planted area shrunk by 9.78 percent to 243,590 hectares (ha) in this year. Afubra expects yields to average 2,310 kg per ha compared with 2,299 kg per ha in the previous growing season.
The volume reduction was expected, according to Afubra President Benicio Albano Werner. “We had already estimated that there would be a reduction of 8 [percent] to 10 percent, on average, in southern Brazil,” he said. “This is not negative; on the contrary, it is necessary since, for several harvests, Afubra and the entities representing tobacco growers warn of the need to adapt our product offer to market demand.”
Werner said the decline was due also to growers’ frustration with the commercialization of last year’s harvest and competition for alternative crops. More tobacco farmers, he noted, have been diversifying their operations in recent years.
The Leaf Tobacco Deliberative Council, chaired by Yoshitsugu Minagawa, released its report on the consultation for domestic tobacco cultivation area and purchase prices for 2022 in response to a proposal submitted by Japan Tobacco.
The domestic tobacco cultivation area will be set at 3,889 hectares in 2022, a 34 percent decrease compared to the previous year, according to a JT press note. The leaf tobacco purchase price will remain the same at an average of ¥1,924.15 ($16.90) per kilogram for all leaf types.
The total area of tobacco cultivation will decrease to 1,822 ha as a result of 1,729 Japanese leaf tobacco growers indicating intentions to cease tobacco cultivation. The decision follows the release dated July 29, 2021, stating that the council agreed to JT’s proposal to decrease total Japanese cultivation area.
The Leaf Tobacco Deliberative Council confers on matters concerning the cultivation and purchase of domestically grown leaf tobacco in response to inquiries by JT representatives. The council consists of no more than 11 members, appointed by JT with the approval of the Minister of Finance from among representatives of domestic leaf tobacco growers and academic appointees.
Tobacco sales in Tanzania increased to 57 million kg in 2020-2021 from 39 million kg in 2017-2018, reports All Africa, citing Deputy Minister for Agriculture Hussein Bashe.
During 2020-2021, about eight local buying companies had entered into contracts with producers of tobacco countrywide, he said.
Bashe told Parliament the government was continuing to lure farmers by insisting on contract buying, looking for new buyers as well as looking for international markets.
He added that the government was equally eyeing the Chinese market and already the government had brought another seedling of the product and trials had been made, where the sample had been forwarded to relevant authorities for further procedures.
Universal Corp. reported net income of $25.87 million for the six months that ended on Sept. 30, up from $14.78 million in the first six months of 2020. Operating income was $40.42 million, compared with $24.88 million in the comparable period last year. Sales and other operating revenues came to $803.98 million, against $692.84 million in the 2020 period. Operating income from tobacco operations jumped 52 percent to $35.8 million.
George Freeman
“I am pleased with our results for the first six months of fiscal year 2022,” said George Freeman III, chairman, president and CEO of Universal Corp in a statement. “Our tobacco operations have continued to perform well, and our ingredients operations, which include our October 2020 acquisition of Silva International, Inc., are making solid contributions to our results.”
“In the six months ended Sept. 30, 2021, tobacco operations results improved on a favorable product mix consisting of a higher percentage of lamina tobacco and fewer carryover sales of lower margin tobaccos, compared to the same period in the prior fiscal year.
“In addition, our uncommitted inventory level of 11 percent of tobacco inventories at Sept. 30, 2021, was significantly below our uncommitted inventory level of 16 percent of tobacco inventories at Sept. 30, 2020. At the same time, we continue to have logistical challenges related to worldwide shipping availability stemming from the ongoing Covid-19 pandemic.
“To address these challenges, we are working closely with our customers to accelerate tobacco shipments in some origins where vessels and containers have been available while diligently managing slower tobacco shipments in origins with reduced container and vessel availability.”
Following the Turkish government’s decision that all cigarettes produced in Turkey for sale in Turkey must contain 30 percent of Turkish tobacco, Star Agritech International (SAI) has decided to enter the market for locally grown flue-cured Virginia (FCV) and burley tobaccos commencing with the 2022 season.
Based on current cigarette consumption, local manufacturers will require between 25,000 to 30,000 tons per year of locally produced FCV and burley. SAI has therefore opened its agricultural branch office in Mus, Turkey, as the project center.
The office is adjacent to the Turkish Tobacco Cooperative Union on which SAI will lean heavily for tobacco production by its farmer members.
SAI’s project envisages the cultivation 5,000 tons of cured tobacco by 2025, the creation of 110,000-square-meter industrial park encompassing green leaf storage, curing barns, a green leaf threshing line, a hand stripping center, a processed leaf warehouse, a CRES line, a recon line and administration offices.
The complex is slated for phased completion in 2022 and 2023. The project will be initially managed by Yagiz Turk assisted on the technical front by Furkan Aslan and on the leaf front by Gokhan Akca. Other Istanbul functions will provide support as required.
The project is SAI’s second direct involvement in tobacco cultivation after its Cameroon cigar leaf plantations. It is projected stimulate the regional economy and create employment.
At the opening of Malawi’s selling season in April, President Lazarus Chakwera expressed dissatisfaction at what he said were “dubious” levies imposed on farmers by contractors who support production of 80 percent of the Malawian leaf. He lamented farmers’ low bargaining power. 
