Tobacco cultivation in Bangladesh’s Teesta Irrigation Project area has been increasing in recent times as the Water Development Board has been unable to provide adequate water supplies to rice farmers, according to a story in The Daily Star.
The story said that a number of agronomists, physicians and environmentalists had expressed their concern over the increase in tobacco farming.
But some farmers have little choice. One farmer was quoted as saying that his land was situated along a remote part of a side canal where water hardly reached, and to avoid uncertainty, he had cultivated tobacco, which required the least irrigation.
During a recent visit to villages in the project area, a Star correspondent said he had found that tobacco has been cultivated on thousands of acres of land on the sides of narrow Teesta canals.
And Union Parishad [local government] chairman at Ramnagar [in the Feni District of the Chittagong Division], Mizanur Rahman, was quoted as saying that cultivation of tobacco had been almost doubled in the project area in the past couple of years because many farmers did not get access to irrigation facilities.
South Africa is at risk of losing its tobacco-growing industry if British American Tobacco Southern Africa (Batsa) switches to buying tobacco from overseas, according to a story in the Business Day.
Batsa recently notified the country’s only tobacco processor, Rustenburg-based Limpopo Tobacco Processors (LTP), that it might have to consider buying foreign tobacco should the illicit tobacco industry gain further traction.
Christo van Staden, the MD of LTP, was quoted as saying that the move would put the existence of his company in doubt.
“With an estimated global over-production of tobacco leaf expected this year and declining markets, it will be impossible for LTP to find alternative markets for these huge volumes of tobacco,” Van Staden said.
According to the story, Batsa said it was considering the switch because of the deteriorating market conditions for the tax-paying portion of the industry.
In December 2018, research firm Ipsos said cigarettes selling for less than the tax of R17.85 per pack owed to the SA Revenue Service had grown market share by more than 25 percent, from 33 percent to 42 percent in three months.
It was not spelt out why Batsa would find it necessary to switch to buying tobacco from overseas if illicit tobacco products increased their share of the domestic market, but presumably it believes that it can buy tobacco cheaper from elsewhere.
Van Staden said his short-term request to the Government was not to impose any further increases in excise taxes on cigarettes in 2019, because that would simply make the non-tax-paying products even cheaper by comparison with legal products.
LTP buys and processes most of SA’s tobacco crop from about 100 commercial farmers and about 150 emerging farmers. The industry is said to employ 10,000 farm workers with 35,000 dependents.
The Tobacco Board of India has been asked to take the steps necessary to address the poor domestic and overseas demand for the flue-cured tobacco currently being auctioned in the state of Karnataka, according to a story in the latest issue of the BBM Bommidala Group newsletter.
The call was said to have been made by Javare Gowda, president of the VFC Tobacco Growers of Karnataka, though it wasn’t spelt out what sorts of steps should be taken.
At the time the newsletter was issued, growers in Karnataka were said to have sold 40 million kg of flue-cured tobacco for an average price of Rs145 per kg.
The auctions so far had comprised sales of 14 million kg of low-grade leaf at an average price of Rs120 per kg; 18 million kg of medium grades for an average of Rs144 per kg; and [presumably] eight million kg of bright grades for an average of Rs161 per kg.
The auction season started on a high note in September with 2.4 million kg being sold during the first eight days of sales and with the average price going above Rs150 per kg within the first 2-3 weeks.
But since then, demand has fallen off and prices have declined, causing growers to become concerned.
A Board official was quoted as saying that, more than three months after the start of auctions, as much as 50 million kg of tobacco was yet to be sold.
And this is a relatively small crop. The Board had fixed the 2018-19-season volume at 99 million kg, but heavy rains in the region are believed to have reduced the harvest to 90 million kg.
A minister in Malawi’s government has issued a stinging attack on the living conditions of tobacco-farm workers.
The Minister of Labor, Youth, Sports and Manpower Development Grace Chiumia said that tobacco tenants were living in appalling conditions in which a family of seven could be sharing a small shack made of grass and covered with mud, according to a Malawi News Agency story.
Chiumia was speaking during a visit to Kasungu on Wednesday to inspect tobacco estates and farms, and to check on child labor.
The minister said the way the estate owners kept tenants was not humane. They were rather kept like non-human animals.
“Look at a house a tenant is being kept in, very small and without any ventilation, and you find a family of seven staying in this house,” she said. “You will find the father, mother and the children and sometimes … chickens in the same room. The same room is also used as a kitchen.
“This is bad; how do you think the health of people will be? The estate owners come here and go to sleep in their good houses; how do they feel?”
The minister warned that such behavior should stop immediately. She said if estate owners wanted to grow tobacco and keep people as tenants, they had to provide standard houses.
The minister noted that most of the tenants’ children did not attend school. Some helped their parents while others stayed home.
According to the story, estate manager Yusuf Bonongwe said managers tried their best to keep the tenants ‘safe’ but sometimes the tobacco market was not good, which forced them ‘not to give the tenants the necessary requirements’.
“We cannot do all but we try our best,” he said. “Most of the tenants stay in good shelter that are just good enough to dwell in despite being shacks.”
Bonongwe said that his estate was free of child labor and encouraged workers to send their children to school.
Kasungu has more than 22,000 tobacco farms, according to the district’s labor office.
The Philippine Tobacco Growers’ Association (PTGA) yesterday expressed ‘grave concern’ about proposed increases in tobacco-excise taxes, according to a People’s Television story.
The PTGA said the battery of tax increases was killing the local leaf industry.
In a statement sent to the Philippine News Agency, the PTGA said cigarette taxes had gone up seven times in the past five years, something that had directly impacted leaf production and caused the displacement of a lot of farmers.
“Higher prices have led to a lot of counterfeit cigarettes and these are coming mostly from China and do not use Philippine tobacco,” the PTGA added.
According to data from the National Tobacco Administration, tobacco production went down from 68 million kg in 2013 to 48 million kg in 2017.
The PTGA said that the local tobacco industry had paid about PHP126 billion to the Bureau of Internal Revenue in 2017 alone. But despite its enormous contribution to the Government’s coffers, tobacco farmers were barely surviving.
The group said also that the increases in prices of tobacco products had contributed to a surge in inflation. ‘These cigarette prices have contributed to the spike in inflation to all-time highs,’ it said. ‘Our families are barely coping.’
Several issues are influencing production declines of the Oriental tobacco crop.
By Timothy S. Donahue
Size matters. Oriental is the smallest and hardiest of all tobacco types, which makes growing and harvesting the crop difficult and labor-intensive. For several years, the production of Oriental tobacco has been on the decline.
Production is hindered by several factors, according to two major sources of the coveted leaf. Frederick Cramer, coordinator of Sunel Tobacco Co., one of Turkey’s oldest leaf dealers, says that weather patterns, the cost of production and farmer demographics could further reduce the crop.
One of the primary issues for farmers growing Oriental tobacco is the amount of labor required, especially during the harvest period, according to Cramer. “This is a very difficult problem to overcome,” he says. “There are many factors involved.” Harvesting is tricky because, measuring only 5–10 centimeters (2–4 inches), Oriental tobacco leaves are much smaller than those of Virginia tobacco. There are also more leaves on a single plant. This means harvesting must be done by hand.
According to Dora Gleoudis, managing director of Nicos Gleoudis Kavex, a leading Greek tobacco leaf enterprise and the largest buyer, processor and exporter of local Oriental tobacco, efforts have been made to mechanize the harvesting process, with some success. However, Gleoudis agrees that it is a difficult problem and describes three factors that hinder mechanization.
“First, the uniquely small-sized Oriental leaf makes harvesting very costly from a labor standpoint,” she says. “Then there is the undulating and rather rocky terrain that favors classical Oriental production. Thirdly, the traditional small-scale farm plot sizes diminish any potential benefits from mechanization. Consequently, using the human hand remains the only practical way for Oriental tobacco farmers to harvest their tobacco for the foreseeable future. On small-scale farms, the harvesting and curing can be contained within the family unit, requiring long hours for little return.”
Harvesting is especially problematic on larger farms, according to Gleoudis. She says that contracting and even just finding workers is becoming more difficult, not to mention costly. “These factors have increased the cost of the production quite drastically and are reflected in the ever-increasing prices paid by the industry to the growers to assist them in recovering their costs,” she says. “Inroads were also made to simplify the traditional curing methods; however, these proved entirely unsuccessful.”
Cramer says another obstacle to mechanization is cost; the machines are very expensive. “Who is going to finance these machines?” he asks. “The other alternative to reduce cost is the Vento curing system, but that has issues with the quality.” Typically, Oriental tobacco is sun-cured. In the Vento system, a “sock” is filled with loose leaves and air is blown through the sock to keep a uniform density. It is then hung in the barn and covered by a plastic sheet. “Many Oriental tobacco farmers do not have enough experience to cure in these conditions. It also requires an additional investment for the curing tent/barn,” says Cramer.
Rainy days and old age
Other issues facing Oriental tobacco farmers are the weather and aging farmers. Gleoudis says that these issues have been affecting Oriental tobacco production for many years. “The survival of tobacco production as a whole is not perceived as a priority by the EU—quite the opposite, in fact,” she says. “Weather is unpredictable, and small-scale farming is not something that younger generations are interested in following. The difficult economic conditions prevailing at present may draw some back to farming, but it is unlikely this will be [a] long-term solution.”
The average age of the Oriental tobacco farmer is about 52, according to Cramer, and the age will continue to increase as the industry loses 3 percent to 4 percent of its farmers per year. The rates of decline in a given year depend on how the competing crops are doing. “The main carrot for the farmer to grow tobacco is that we advance-pay an estimated 50 percent of the farmer’s anticipated income,” says Cramer, explaining that the advance is paid in installments from the time that the contract is signed until the start of harvesting and baling.
“Social insurance is key for the young farmer, but the cost is high, so we cannot afford to pay it, and there are no government subsidies to tobacco farmers. All the cost must be carried by the manufacturer, which makes it very expensive. There just isn’t much incentive for the younger generation to continue the family’s tobacco farming business.”
Oriental tobacco needs dry, warm summer weather in order to produce high-quality tobacco. The crop also needs dry conditions once it is transplanted, according to Cramer. “A few rains will not have too much of a negative impact on quality, but as we experienced [in 2018], the rains were heavy during transplanting, and then the continuous heat at temperatures above 35 degrees C burned/scorched the weak leaves,” he says. “Oriental is drought-resistant, but it needs a good, rainy winter to allow for enough moisture for the plant to develop during the hot, stressful months of summer.
Gleoudis says that the weather conditions during the 2018 growing season were unusually adverse. “Heavy rains in springtime and an unusually cooler summer resulted in a reduced crop of mediocre quality, affecting virtually the entire Balkan Peninsula,” she says. “This has impacted not only Oriental tobacco crops but also other nontobacco crops, notably olives, wheat and vegetables. This, however, was a possible seasonal issue and not necessarily related to climate change.”
Cramer says these extremes are becoming the norm, and the erratic weather is deteriorating the yield and quality of the Oriental production year after year. “We see this more and more frequently now,” he says.
Next generation
Regulation is also making an impact on the Oriental tobacco market, as it is with all tobacco products. However, recently proposed bans on additives for tobacco products may help increase demand for the product, but production is unlikely to increase, according to Gleoudis.
“For a number of years, Oriental production pretty much met demand, although recently, we have seen demand start to exceed supply, and this increased demand may lead to higher prices. However, production of classical Oriental is unlikely to increase in the short term due to the problems of an aging farmer base and the cost of labor we have already discussed.”
There is some hope. As the tobacco landscape changes and with new products continually coming to market, these new devices could have an impact on the Oriental tobacco market. However, opinions vary on whether the impact will be positive or negative. Cramer says that while the banning/reduction of additives should have a positive impact on Oriental usage—especially of the top grades—those gains could also be offset by products such as Philip Morris International’s iQOS heat-not-burn (HnB) device and the rapidly growing vapor industry.
“These new products could cause the demand for tobacco to drop substantially. We know that they do use Oriental in iQOS; however, the total tobacco volume in a heat-not-burn device is much less than in a traditional cigarette. That could have a critical impact on the demand,” he says. “Also, Oriental tobacco producing countries such as Greece, Bulgaria and the Former Yugoslav Republic of Macedonia are decreasing their volumes due to various factors such as cost, competing crops, farmer erosion, etc. These issues could help keep Turkey as the largest producer, and the country still has a chance to continue supplying in the years to come.”
Gleoudis disagrees. She believes that if HnB products use a higher percentage of Oriental tobaccos than traditional cigarettes, it bodes well for the crop. “Oriental tobacco carries a uniquely complex combination of flavors and sensations,” she says. “It is unlikely that synthetic flavors will ever closely mimic the true nature of classical Oriental tobacco. In any case, regardless of weather conditions, it is likely Oriental tobaccos will prevail. The crop’s unique taste and aroma are essential ingredients in both traditional and next-generation tobacco products. There is still a bright future for Oriental tobacco.”
The 22nd Century Group yesterday submitted a Modified Risk Tobacco Product application with the US Food and Drug Administration for the company’s very low nicotine content (VLNC) cigarettes.
The company previously filed a Premarket Tobacco Application (PMTA).
‘Together, these important applications seek the FDA’s authorization to commercialize the company’s VLNTM cigarettes and to advertise that the VLNTM cigarettes contain 95 percent less nicotine as compared to the 100 leading cigarette brands in the United States,’ the company said in a press note.
Zimbabwe is expecting flue-cured tobacco deliveries to exceed 250 million kg in 2019, according to a Zimbabwe Broadcasting Corporation story.
In 2018, flue-cured tobacco deliveries reached a record high of 252 million kg and, whereas the 2017-18 season saw 103,000 farmers register to grow tobacco, the current season has seen 166,000 growers registered.
The 61 percent increase in growers is not expected to be reflected in the level of production, however, because the increase in registrations is thought to be largely to do with administrative changes.
The increase in registrations has been influenced by the need for growers to obtain individual numbers so that they benefit from the introduction of foreign currency incentives.
Changes to the way that payments are made to growers have made it difficult for the 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.
Tobacco production has been on the increase during the past because of the way the market has been organized and the recent introduction of an input scheme by the government.
The Philippines’ leaf-tobacco industry is putting on a brave face despite Government plans to discourage consumption – and fund the health sector – by raising the excise tax on tobacco products, according to a Business World story.
While high excise tax rates had a big impact on production figures and livelihoods, they would not kill the industry, said Robert L. Seares, administrator of the National Tobacco Administration. “As long as there is market demand for quality tobacco, our farmers will still continue to produce tobacco,” he said.
“In terms of profitability, tobacco production is not yet a sunset industry.”
Seares said that the Philippines’ industry was now focused on achieving a higher volume of exports based on the quality tobacco, particularly Burley, that local farmers could produce.
“Tobacco leaf production in the Philippines has been reduced to only 48 million kg in 2017 from 65 million kg five years earlier. Our five-year data (2013-2017) shows that the number of tobacco farmers and area planted to tobacco plunged by 40 percent to 34,465, and 43 percent to 22,704 ha, respectively,” Seares said.
The excise tax rate on cigarettes has been going up and tobacco production has been going down since the passage of the Sin Tax Reform Law in 2012.
And with another proposed increase in excise, tobacco growers are faced with a serious threat of losing their primary source of income.
New areas in the Lalmonirhat district of Bangladesh have been put under tobacco during the current season, according to a story in The Daily Star.
To encourage the cultivation of tobacco on land where previously it was not grown, tobacco companies are said to have given free seeds to farmers in five upazilas (villages) and assured them that their tobacco would be bought from their doors, at fair prices.
The Star said that sources working with tobacco companies in Lalmonirhat had said that 20,000 acres of land had been brought under tobacco cultivation this year, up from 10,000 acres last year.
Aditmari Upazila Agriculture Officer Ali Noor said farmers were not encouraged officially to grow tobacco because it was harmful for the soil, the environment and health.
But because the soil in the district was suitable for tobacco farming, tobacco companies provided support for farmers to grow it.
