Category: Leaf

Plea for farmers
If the next sin tax increase were to be pushed through, the Government should help tobacco farmers and small retailers cope with the potential revenue loss they will suffer, according to a story in The Philippine Star quoting the Governor of the Ilocos Norte province, Imee Marcos.
The expected higher revenue from sin tax collection must be used to bankroll alternative, agriculture-related livelihoods for affected tobacco farmers, Marcos said.
Under Republic Act 7171, tobacco-producing provinces such as Ilocos Norte with an annual average production of not less than one million kg of Virginia tobacco are entitled to 15 percent of the excise tax collections from locally-manufactured cigarettes.
At the same time, Marcos wants the Government to crack down on cigarette smugglers and manufacturers of counterfeit tobacco products, which, she said, ‘are killing the country’s two million tobacco farmers’.
She asked the Government to study carefully the impact of any massive cigarette excise tax increase on poor people such as farmers and sari-sari store owners.
“Fake cigarettes seized in 2018 hit a record-high of P20.250 billion, depriving the government of much-needed revenues,” said Marcos, who is running for the senate.
Legal cigarette sales have decreased as prices have more than tripled since 2013, and this, according to the National Tobacco Administration, has translated into a drop in tobacco-farm output of as much as 20 million kg annually.
February 11, 2019
Universal focused on leaf
In announcing Universal Corporation’s nine-months’ results to the end of December, chairman, president, and CEO George C. Freeman, III, said the company remained committed to strengthening its market share and investing for growth in its core tobacco business.
“As we recently announced, we are expanding our leaf purchasing, processing, and grower support services in the Philippines, as part of a new leaf supply arrangement with one of our major customers [Philip Morris International Management SA], who had previously purchased and processed their own tobacco,” Freeman was quoted as saying. “This arrangement will increase the efficiency of the supply chain in that origin by providing procurement synergies and economies of scale.
“Another aspect of improving efficiencies and reducing costs in the supply chain is ensuring that our operations and footprint support and reflect global market demand for leaf. Customer demand over recent years for tobacco sourced from Tanzania has declined. As a result, we have undertaken a review of the Tanzanian leaf tobacco market and our operations there. The review is ongoing, and we have decided to substantially reduce our permanent workforce and have incurred an impairment charge on certain assets there.
“This move and the expansion of services in the Philippines are consistent with our continued focus on effective rationalization of global leaf procurement supply chains, appropriate with changes in our customers’ leaf tobacco requirements to maintain strong and stable markets into the future.
“Looking forward, we expect that our fourth quarter shipments will be strong. We are, however, continuing to monitor container and vessel availability, particularly in Brazil, which may shift some shipments into the first quarter of fiscal year 2020.”
Freeman reported net income for the nine months ended December 31 at $72.8 million, or $2.87 per diluted share, compared with $75.1 million, or $2.94 per diluted share, for the same period of the prior fiscal year.
Operating income of $100.4 million for the nine months ended December 31, which included restructuring and impairment charges of $19.4 million in Tanzania, decreased by $10.3 million compared to operating income of $110.7 million for the nine months ended December 31, 2017.
February 8, 2019
Grower registrations up
Grower registrations for Zimbabwe’s 2019 flue-cured tobacco marketing season, at 169,772, are up by 46 percent on those of the previous season, 116,525, according to a story in The Herald citing figures from the Tobacco Industry and Marketing Board.
Of the registered growers, 41,021 were said to be ‘new’.
In 2018, flue-cured tobacco deliveries reached a record high of 252 million kg, but it is unlikely that this year will see an increase on that volume commensurate with the increase in registered growers.
In part this is because it is difficult to know how accurate registration figures are. For instance, a Zimbabwe Broadcasting Corporation story at the end of last year put the number of registered growers at 103,000, though, given when the story was published, it is possible that this was the number of registered growers who had delivered tobacco for sale.
More significantly, though, is the fact that the increase in registrations is likely to be largely due to administrative changes. That is, the increase in registrations has been influenced by the need for growers to obtain individual numbers so that they can benefit from the introduction of foreign currency incentives.
Changes to the way that payments are made to growers have made it difficult for them to share money after selling their crops because they are no longer paid cash. The money is now being deposited in bank accounts or paid through EcoCash.
February 6, 2019
The impact of climate change
Philip Morris International estimates that climate change could save the company millions of dollars, according to a blog by Kyla Mandel published at Think Progress.
In a newly-released corporate disclosure document, PMI said the higher temperatures and increased rainfall that came with climate change would save the company millions of dollars.
Thousands of corporate disclosures were published by UK-based non-profit CDP (formerly known as the Carbon Disclosure Project) detailing how companies are preparing for a warmer world and how they expect climate change will impact their bottom lines.
‘According to its disclosure, Philip Morris International expects heavier rains will save the company an estimated $10 million,’ said Mandel. ‘This is because steady rainfall is the ideal environment for growing tobacco; the longer the soil is moist, the longer tobacco’s life cycle. In turn, the company says it would be able to increase production and potentially improve the quality of its cigarettes.
‘Meanwhile, the tobacco giant expects higher temperatures – which will help with drying out, or curing, the tobacco leaves – will save the company an additional $1 million each year since it won’t have to use as much firewood to dry the leaves.
‘Extreme rainfall and drought could also negatively impact tobacco production in several ways, the company notes in its disclosure, from the need to pump excess water to disruptions to its distribution.’
PMI reportedly told CDP that, to help combat climate change, the company was working on reducing its carbon footprint by cutting energy usage and greenhouse gas emissions.
And it said that by advertising its sustainability initiatives it might gain better consumer recognition, enhance its brand image, and increase the company’s competitive advantage.
CDP gave PMI an ‘A’ grade for its efforts on climate change.
February 5, 2019
Universal results webcast
Universal Corporation is due to webcast a conference call at www.universalcorp.com on February 7 following the release of its results for the third quarter of fiscal year 2019 after market close on that date.
The conference call, which will begin at 17.00 Eastern Time and which will be in listen-only mode, will be hosted by vice president and treasurer Candace C. Formacek.
A replay of the webcast will be available at the same site through May 7.
Additionally, a taped replay of the call will be available from 20.30 on February 7 through February 21 at (855) 859-2056, using the telephone replay identification number 2691856.
February 4, 2019
Addressing tobacco poverty
The mission of the Foundation for a Smoke-Free World’s Agricultural Transformation Initiative (ATI) is to prepare smallholder tobacco farmers for an era of significantly reduced demand for tobacco, focusing first on populations with the greatest need, according to a piece posted on the Foundation’s website.
The initial focus will be on Malawi.
The piece starts by admitting that growing tobacco has never lifted smallholder farmers out of poverty.
But it then goes on to say that high-quality data and rigorous analysis can shape and inform effective, evidence-based policy creation and resource deployment to diversify economies and lessen country dependence on tobacco – better preparing farmers for the future while strengthening their countries’ economies.
‘The mission of the Foundation’s … ATI … is to prepare smallholder tobacco farmers for an era of significantly reduced demand for tobacco, focusing first on populations with the greatest need,’ the Foundation says. ‘The ATI will use this opportunity to facilitate the establishment of more secure income strategies for farmers and will seek to partner with a diverse set of stakeholders to ensure the success and sustainability of our strategy. ATI activities will target the following outcomes:
1. ‘Higher and more secure income streams, improved food security status, and better overall health for smallholder farmers, their families, and their communities more broadly
2. ‘Increased knowledge and application of cutting-edge agricultural science and technology
3. ‘Reduced economic dependence on tobacco and increased resilience for tobacco-growing nations
4. ‘Reduced environmental degradation due to tobacco cultivation
5. ‘Improved nutritional quality and food security status
‘To achieve this, the ATI will employ a systems approach to understanding local contexts and potential points of intervention, coupled with an investment-oriented model of action. A systems-thinking approach is well suited for tackling complex development problems because it incorporates multifactor analysis and feedback loops to foster better decision-making. Focusing on investment, meanwhile, will ensure that each dollar spent is contributing to building capacity and strengthening local and national economies in a sustainable way – contributing, that is, to a better future for smallholder farmers, their families, and their communities…’
Meanwhile, the piece singles out Malawi as being the country with a uniquely great need where the ATI will focus initially.
According to the Foundation, a 2016 study found that only 25 percent of Malawian tobacco farmers were content with the prices they received in 2014, and about 41 percent of all tobacco farmers have considered switching to alternative crops or livelihoods. About 45percent of all tobacco farmers in Malawi are contract farmers, but no statistically significant differences between independent and contract farmers were found in price satisfaction and desire to switch.
Farm-gate prices of tobacco in Malawi fell by 54 percent between 2012 and 2016.
January 29, 2019
Malawi looks to cannabis
Malawi’s legislators will consider in March a bill to legalize medical cannabis and hemp, as the country looks to reduce its reliance on tobacco, according to a VOA News story relayed by the TMA.
Tobacco was said to account for 13 percent of the country’s gross domestic product and 60 percent of its foreign exchange earnings.
Lesotho, South Africa, and Zimbabwe have already adopted similar measures.
Boniface Kadzamira, a member of Malawi’s parliament who has long pushed for the legalization of cannabis said, “we were the first in this part of Africa to start discussing this thing”. “Those countries that came after us have gone ahead of us and have already started issuing licenses,” he added.
According to the VOA story, anti-drug campaigners worry legalizing medical marijuana will encourage more recreational use but they’re facing an uphill battle against those who argue to regulate the trade and help Malawi’s economy grow.
January 29, 2019
Growers need forex
Tobacco growers in Zimbabwe are pleading with the Government to consider allocating them a higher percentage of foreign currency when they sell their crop during the 2019 marketing season, according to a story in The Chronicle.
This, they say, will mean that they can return to the fields and remain viable.
The growers were quoted as saying that, considering the high costs of production they incurred during this growing season, it would be ideal if they were paid the bulk of their money in foreign currency.
A grower in the Goromonzi district of Mashonaland East Province, Boniface Chitate, was quoted as saying that he was expecting higher prices during this marketing season and part of his payment in foreign currency.
“We need to import implements and these require foreign currency,” he was quoted as saying. “Currently farmers are relying on buying foreign currency at the parallel market and this is not viable.
“The situation is worse for self-financed farmers as we sometimes have to fund our tobacco crop using proceeds from other enterprises. We commend the Government for letting us import some commodities duty-free, but we still require foreign currency,” he said.
January 23, 2019
Leaf marketing delayed
Zimbabwe’s flue-cured tobacco marketing season will be delayed this year because the late arrival of rain held up planting, according to The Zimbabwe Daily quoting the Tobacco Industry and Marketing Board chief executive Dr. Andrew Matibiri.
The dry spell, which most parts of the country experienced, saw many farmers planting several weeks after they normally would, Matibiri said.
The normal tobacco planting time is between September 1 and December 31.
Last year, the marketing season began in mid-February.
Wonder Chabikwa, the Federation of Farmers’ Union president, said the crop situation had improved since rain started to fall in early January.
“We had half a month delay but today it is a good story,” Chabikwa said, before adding that farmers with early crops were already reaping and curing.
“If the situation remains as it is, we expect to have a very good season,” he said.
Meanwhile, Matibiri said that a $70 million tobacco scheme for small-scale farmers had been negatively affected by a lack of foreign currency to procure essential inputs.
“The program was delayed because of price increases,” he said. “We were targeting to distribute inputs to 51,000 farmers but we only managed 11,000.”
January 22, 2019
India sees export opening
Yesterday saw the signing of a protocol under which Indian leaf tobacco will be exported to China, according to a Press Trust of India story published in the Business Standard and The Week.
A statement by the Indian Embassy in Beijing said the protocol was signed by India’s Commerce Secretary Anup Wadhawan and Zhang Jiwen, Vice Minister of General Administration of China Customs, which is responsible for examining market access and quarantine issues in respect of India’s agriculture and allied products.
The revival of the phytosanitary protocol with China would pave the way for the revival of Indian tobacco exports to China and prove economically beneficial to Indian farmers, the statement said.
January 22, 2019