The tobacco sales floors in Lilongwe (Photo: Taco Tuinstra)
Malawi’s President Lazarus Chakwera wants tobacco farmers to switch to other cash crops because he sees no future in the golden leaf, reports The Voice of America.
At the opening of tobacco selling season on Tuesday, Chakwera said Malawi should switch to other cash crops like cannabis, which was legalized last year for industrial and medicinal use. In preparation for cannabis cultivation, the country recently created a Cannabis Regulatory Authority.
Tobacco currently contributes more than 60 percent of the country’s export earnings, but demand for the leaf has been declining due to growing health awareness and global anti-smoking campaigns.
“We need an exit strategy to transition our farmers to crops that are more sustainable and more profitable,” Chakwera said.
“I am therefore calling on the Ministry of Agriculture to begin consultations with all stakeholders to come up with a timeframe within which Malawi’s economy will be completely weaned from tobacco.”
We need an exit strategy to transition our farmers to crops that are more sustainable and more profitable.
In the meantime, Malawi should promote greater competition in the tobacco industry by attracting more leaf buyers beyond the current nine, Chakwera said, suggesting that competition would increase prices.
In March, Malawi’s government signed an agreement with tobacco leaf buyers and set a minimum price of about $2.30 per kg. In the past, buyers would offer as little as $0.50 per kg of tobacco.
Skeptics said it could be difficult for tobacco farmers to switch to cannabis, citing skills and climate conditions, among other considerations.
Tobacco Reporter detailed the challenges facing Malawi’s tobacco sector in its July 2017 print edition (See “On the Map.”)
Governor Gerardo Morales has suggested that tobacco farmers in Argentina’s Jujuy Province begin growing cannabis to offset declining tobacco sales, reports The Buenos Aires Times.
“Cannabis is one of the most important projects that we have, and it’s going to generate more profits than lithium and solar energy,” said Morales, whose provincial government has worked to foster marijuana production in the region’s dry, sunny terrain for export.
“I hope that with this [growing cannabis market] we will begin a change in diversification and that 10 years from now we will stop planting tobacco and plant cannabis,” he said.
Tobacco producers, however, were not undividedly enthusiastic. Pedro Pascuttini, president of the Jujuy Tobacco Chamber, said his group would fight to continue producing tobacco.
He added, however, that the group was not completely closed to the idea. “We hope that it will be treated in a way in which they explain to us what it is about, and we are listened to,” he said.
Ten years from now, we will stop planting tobacco and plant cannabis.
Last month, Argentinean lawmakers sent a bill to legalize the production of medicinal cannabis to Congress after a decree authorized personal cultivation for the same purposes last year.
“The global industry for medical cannabis will treble its turnover in the next five years,” Argentina’s President Alberto Fernandez predicted in March.
Zimbabwe wants to create a $5 billion tobacco industry by 2025, reports Bulawayo24, citing Agriculture Minister Anxious Jongwe Masuka.
Speaking at the opening of the Zimbabwe tobacco marketing season on April 7 in Harare, Masuka told stakeholders that the government would increase funding of both large-scale and small-scale tobacco farmers to increase output.
Masuka said agriculture remained one of the key sectors in the quest to transform the country into an upper-middle-class economy.
According to the minister, plans are underway to increase tobacco production to 300 million kg per year.
The Tobacco Industry and Marketing Board expects sales of about 200 million kg this year, up from 184 million kg in the previous season, due to favorable rains.
Tobacco merchants expect to spend around $500 million on Zimbabwean tobacco this year, generating much-needed foreign currency for the country.
The industry is also one of the largest employers in a country suffering from widespread unemployment, despite vast agricultural and mineral resources.
The global tobacco market size was valued at nearly $850 billion in 2019.
Zimbabwe’s tobacco farmers were optimistic about the upcoming marketing season as the markets opened April 7, according to a report in The Chronicle.
The marketing season, which traditionally starts between February and March, was delayed due to Covid-19. The country expects to benefit from high demand with projected volumes at around 200 million kg. An initial crop assessment report indicates that farmers planted 125,177 hectares of tobacco this season compared to 117,049 hectares last season.
TIMB statistics show that by March 19, 2021, a total of 145,625 farmers had registered for tobacco production and selling.
Farmers also look forward to good prices as they have produced a high-quality crop due to the favorable rains.
Under a new foreign currency retention scheme, farmers will receive 60 percent of their tobacco earnings in U.S. dollars and 40 percent in local currency. Last year, the ratio was 50-50.
“The foreign currency will help us break even and remain with a profit,” said George Seremwe, president of the Tobacco Association of Zimbabwe.
The foreign currency will help us break even and remain with a profit.
Earlier, farmers’ representatives had warned of a debt trap facing Zimbabwean tobacco growers.
Last year, farmers complained after they were hit by the fixed official exchange rate at the start of the season, which did not reflect the real market value exhibited by the volatility of the local currency at that time.
The Tobacco Industry and Marketing Board (TIMB) and the Reserve Bank of Zimbabwe have built up a set of rules to ensure both contractors and farmers are committed and act fairly.
Copies of legally binding contracts were submitted to the TIMB, and the deadline was last September. The contracts had to be supported by proof of inputs distributed using paid up invoices or payment plans with suppliers.
Zimbabwe’s 2021 tobacco marketing season will open on Wednesday with a new payment system that will pay farmers within minutes rather than days after selling their product, reports The Sunday Mail.
“There is no need for tobacco growers to go even one day without being paid,” said Vangelis Haritatos, deputy minister of lands, agriculture, fisheries, water and rural resettlement. “The systems are so efficient that they have guaranteed us that within 10 minutes that some form of payment will be arranged. So the farmers come in with the produce, they deliver and almost immediately the account is credited; we don’t see any challenges, the money is coming in.”
In the past, payment for tobacco deliveries could take days to be processed.
Haritatos said the ministry would not tolerate side marketing.
“We keep encouraging and telling our farmers that farming is indeed a business,” he said. “Through the TIMB [Tobacco Industry and Marketing Board], the systems are all integrated; they all talk to each other. So if [I] have been contracted to TIMB and I try and sell my product to another floor or another contractor, basically I will be blocked because the systems talk to each other.”
Last week, the Reserve Bank of Zimbabwe said it had put in place effective payment procedures to ensure merchants and farmers can retain or be paid 60 percent of their net revenue in foreign currency and 40 percent in local currency.
The TIMB has adopted a stricter and stringent regime of Covid-19 health protocols that restrict access to the floors to one person per delivery.
Under the new rules, flea markets and hawking will not be permitted around the premises of tobacco auction floors.
A new joint venture brings security to the supply of Latakia tobacco.
By George Gay
It’s easy to become sold on the idea that tobacco and nicotine products exist to satisfy the demands of people who don’t want to consume them because, bizarre as this narrative might appear to be, it is the one mostly offered up by the general media. Tobacco and nicotine consumers are portrayed as hapless addicts in need of saving by those who know that they know best. Even now, with the traditional tobacco wars largely behind us and with the former combatants from both sides of those wars seemingly marching in step toward a joint vision of a world freed from tobacco smoking, skirmishes, perhaps less intense than those of the tobacco wars but probably more numerous, are still being fought. What once pitched tobacco interests against anti-tobacco interests now pitches the forces of harm reduction against those of the quit-or-die brigades, pitches those who come bearing the gifts of less risky products against those who offer only blood, sweat and tears.
But if the focus is switched from that of the combatants to that of the users of tobacco and nicotine products, a different picture emerges: one in which many of these consumers quietly get on with enjoying their various habits. Take, for example, a recent story told by Chuck Stanion, who took “A closer look at Latakia tobacco” in Tobacco Talk on the Smoking Pipes website. His story is both interesting and informative, but what caught my eye particularly were the comments that followed it, which were clearly generated by an uncommonly calm online community of informed pipe smokers who were looking for and keen to share knowledge about blends, products and much else. Many of them clearly sought out pipe tobaccos that listed Latakia as part of their blends.
And this is not surprising. Because of the way that it is processed, Latakia provides distinctive notes to the aroma and taste of the blends in which it is included. Mostly, these blends are pipe tobaccos, but, apparently, Latakia has also been used in snuff, and there is currently talk of its possibly being used in other tobacco products such as cigarillos and waterpipe tobaccos.
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Improving efficiency
My attention was drawn to Stanion’s story by Frederick de Cramer, a doyen of the Turkish oriental tobacco business who, in November 2020, through his consultancy, Cramer Tobacco, linked with ASTAB in a joint venture partnership, part of whose aim is to expand ASTAB’s Latakia tobacco production and sales, which currently go to the U.S. and countries of the EU.
ASTAB was set up in 2007 by Haldun Babacan and Selcuk Karagozler, former Tekel employees who both graduated from the Tekel Tobacco Technology department of Istanbul University and who, during their time with Tekel and other companies, between them built up a wealth of experience in tobacco grading, purchasing, blending and processing. This experience translated into expertise and put them in an ideal position to tackle the growing need to improve the efficiency and thereby lower the cost of oriental tobacco production, which had undergone little change for decades.
Their efforts led in part to the development and patenting of the automated loose-leaf oriental tobacco curing system known as the Vento system, which provided for the expansion of the Izmir crop by more than 10,000 tons in the East Adiyaman area. But they were also involved in the development of an oriental tobacco harvesting machine, even though, because of the nature of this tobacco and the environments in which it is grown, for a long time it was thought that it would not be possible to automate and mechanize such harvesting. And they developed other methods of harvesting, including one in which the mid-rib of sun-cured Virginia is removed at harvesting, before the lamina is cured using the Vento system. This method reduces costs because it bypasses the need for costly traditional curing and does away with the need for expensive threshing equipment. Not only that, but it is also said to result in a more even cure and, therefore, a better quality tobacco.
Meanwhile, following the passage three years ago of a law allowing for the growing of hemp in Turkey, ASTAB produced machines for extracting fibers from the plant’s stem and producing yarn for the textile industry, and, since then, in collaboration with textile companies, it has produced high-quality cloth from hemp. But its latest project, begun in 2018 in cooperation with Birol Yigiter, a leaf tobacco expert who started his career at Austro Turk, has seen it embrace Latakia production.
Currently, the Latakia production process starts with the purchase of high-quality Izmir tobacco from the classical production areas, though the company has plans to run trials with Basma, Yayladag and other classical oriental varieties. The tobacco is shipped to ASTAB’s warehouse in Izmir where it undergoes an initial process in which the leaves are cleaned and separated. Then, in line with demand, these tobaccos are placed in barns where they are exposed for two to three months to smoke generated by burning the branches of a type of wild Mastica shrub or small tree, smoke that gives the tobacco its unique aroma and smoking quality.
The Mastica shrub that is used in this process grows only in the eastern Mediterranean, and ASTAB obtains its supplies from a pine forest that grows adjacent to where it has built its barns and that it rents from the Turkish Forestry Department. To ensure that its Latakia business remains viable, ASTAB uses the Mastica sustainably, with branches being harvested in such a way that the shrubs regenerate within two years to three years.
After the tobacco leaves are smoked in the barns, they are reconditioned and screened for nontobacco materials, broken lamina, scrap and other unacceptable tobacco. Then they are packed in 50 kg cartons ready for shipment to customers.
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A sought-after niche
At first, volumes were minimal, and it was only in 2020 that ASTAB enjoyed its first year of substantial production, which raises a question. Why would a company want to get into the Latakia business, especially a company that already has a number of arrows to its bow? After all, putting it mildly, pipe tobacco is a niche product even within the range of OTPs, and Latakia is a niche ingredient in the blends of pipe tobaccos. On top of that, it is clearly a tobacco requires a lot of skill, effort and time for production.
Well, according to de Cramer, while Latakia is a niche product, it is nevertheless much sought after by those pipe tobacco manufacturers that use it in their blends. Additionally, he said, the countries where this tobacco had traditionally been produced, Syria and Cyprus, had, for various reasons, been unable to maintain production of the volumes and qualities required by the market. Throw in the idea that it would not be possible, without an effort that would eclipse any possible returns, to produce Latakia outside of the eastern Mediterranean, and such an enterprise takes on a much more appealing aspect.
And, of course, between them, Birol, Haldun and Selcuk had the leaf expertise and technical know-how that allowed them to quickly get to grips with the processes involved. After only one year and using a prototype container-sized curing barn, they managed to produce a high-quality Latakia that customers approved. And from there, they were able to go ahead with building six barns in 2019, which gave them an annual capacity of 10,000 kg of Latakia.
These barns, which are steel framed buildings covered in corrugated sheet and insulation material, have simple furnaces built under them where the Mastica branches are burnt. Within the barns, trays, on which the tobacco leaves are spread evenly, are stacked one on top of the other on mobile racks that can be rotated about the barn to ensure an even processing of the tobacco.
It is a measure of the early success of this project that, as this story was being written in early January, ASTAB was confident enough to start building, on land adjacent to where its curing facilities stand, another seven barns, which should be ready for use during the first quarter of 2021. Part of the reason for the confidence in this project is down to the fact that the high-quality tobacco necessary for producing Latakia, along with the materials for curing it, are available locally. And to that can be added the fact that Turkey, with its relatively low labor costs and a currency that mostly can be depended on to fall in value against the dollar and euro, is ideal for producing Latakia, which involves a process that is labor intensive, in large part because the furnaces need near-constant attention. In addition, the team that comprises the joint venture is confident that there is still room for improvement in its barns and processes and that even better results can be achieved in the future.
This should be music to the ears of manufacturers developing pipe tobacco blends because, by their nature, any niche ingredients will raise concerns about continuity of supply. And Latakia is clearly an important and intriguing type of tobacco for those charged with such developments. In his story, Stanion quotes Jeremy Reeves, head blender at Cornell & Diehl, as saying that it takes only a little Latakia to characterize a blend. But, at the same time, he was quoted as saying that it was wrong to give the impression that it was a “strong” tobacco because, in fact, it was remarkably mild. It burnt at relatively low temperatures and was forgiving on the palate.
According to an entry in my 1984 edition of the Tobacco Encyclopedia, Latakia tobacco was originally produced in Syria and took its name from the region where the oriental tobacco that was used in the special curing process was originally grown. At that time, the plant was apparently stalk-cut when ripe, sun cured and afterward fumigated over open fires of green wood, which produced copious amounts of smoke. “This gives the tobacco a distinctive spicy aroma without its undergoing real fermentation; the precise flavor depends on the particular wood used,” the encyclopedia entry says.–G.G.
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
Tobacco farmers in Zimbabwe are facing a vicious debt trap, reports The Zimbabwe Independent, citing the Zimbabwe Tobacco Association (ZTA).
The government payment system ensures tobacco growers receive only part of their income in U.S. dollars with the remaining share being paid in Zimbabwean dollars at an inflated exchange rate.
Because most Zimbabwean growers have borrowed U.S. dollars from their contractors to finance their operations, this means they will have difficulties repaying their loans.
Of the approximately USD600 in export earnings generated annually by farmers only USD150 is flowing into the country, according to the ZTA.
For the longer part of last year, farmers were paid 50 percent of their revenues in forex with another half being paid in Zimbabwean dollars at a fixed rate of one U.S. dollar to 25 Zimbabwean dollars.
We plead with the authorities to review the foreign currency retention level before the start of the selling season.
On the black market, however, one U.S. dollar fetched up to ZWD165 during the first quarter of 2020.
While the government has recently increased farmers’ foreign currency retention to 60 percent, it is insufficient to solve growers’ problems, according to the ZTA.
“Growers’ viability will not improve with the retention levels announced, and we plead with the authorities to review the foreign currency retention level before the start of the selling season,” said ZTA CEO Rodney Ambrose.
Zimbabwe’s tobacco markets are scheduled to open April 7.
Tobacco farmers’ profits have been declining while debts owed to contractors in U.S. dollars have been mounting. Industry representatives have also called on the government to stop basing the pricing of contract tobacco, which makes up 95 percent of national production, on the minimum of tobacco prices paid on the auction floors.
Japan Tobacco International (JTI) Leaf Malawi has released MKW581 million ($739,381) of collateral to its contracted growers to assist them during the lean farming season and help them cope with the economic impact of the Covid-19 pandemic, reports Malawi24.
The growers paid the money to JTI at the beginning of the farming season as security to enter into contracts with the company.
JTI Leaf Malawi Corporate Affairs and Communications Director Limbani Kakhome said that this money is given back to the growers to help with their day-to-day livelihood needs as well as production costs.
He added that tobacco production is quite involving financially and therefore the company feels duty bound to help its growers meet production demands to come up with top quality tobacco.
“This is the more reason why for more than four years we have been undertaking this program. We give out the funds between January and February because around this time, there are just many activities that require money.
“Over the years, the quality index of tobacco produced by our growers when compared with quality from other countries has been growing steadily. This is attributed not only to the quality of extension services we provide to growers but also to other programs like this,” he explained.
A total of 8,000 growers have received money through the initiative.
Tobacco Reporter covered the Malawi market in-depth in its June 2017 issue. (See “On the Map.”)
Farmers in Pinar del Rio, Cuba’s primary tobacco producing province, have planted 16,189 hectares of tobacco to date, exceeding the plan of 15,800 hectares of tobacco for the current growing season, reports Prensa Latina.
According to the agricultural specialist of the Tabacuba group in Pinar del Rio, Virginio Morales, the farmers have fulfilled 85 percent of the harvest plan to date.
Some 3,400 workers are engaged in the processing of the leaf, which has reached 2,445 tons. Since the end of December, more than a thousand workers have joined this work.
Most of the tobacco leaf harvested in the area is used to make premium handmade cigars for export, a luxury product demanded in most international markets.
Vietnam has extended its 3,000-ton duty-free quota for Cambodian dried tobacco leaves for 2021, reports thePhnom Penh Post, citing Ministry of Commerce spokesman Seang Thay.
The extension is part of the renewal process of a bilateral trade facilitation agreement for 2021–2022 reached by the 18th Cambodia-Vietnam Joint Commission meeting on Dec. 22 and yet to be formally ratified, with retroactive benefits for exports.
Cambodia and Vietnam inked the agreement in October 2016 to drop import tariffs on dozens of products to boost bilateral trade and have renewed it every two years since. The goods covered in the deal, however, are determined on a yearly basis.
The kingdom exported 1.38 million kg of dried tobacco to Vietnam last year valued at $4.2 million, down 34.37 percent by volume from 2019, according to ministry data.
Minister of Agriculture, Forestry and Fisheries data shows that Cambodia exported a total of 5.82 million kg of dried tobacco leaves last year, down 14.02 percent from 2019.
The primary destinations for Cambodian leaf are Vietnam, Indonesia, Hungary, the United Arab Emirates, Belgium, South Africa, Greece, Singapore and Germany.
Last year, the area under tobacco cultivation was 5,175 ha, of which 4,875 ha were harvested, producing 6,132 tons, representing a 1 percent drop from 2019.
Improving efficiency
A sought-after niche
