Virginia tobacco growers in the North of the Philippines are concerned about a fall in leaf prices that has occurred, and about what they see as a lack of government support for their industry, according to a story in The Manila Bulletin.
“I did not plant Virginia tobacco anymore on my more than 10 ha this season due to very poor prices for the last two years,” Mayor Josefino Miranda, a tobacco farmer for more than 40 years, was quoted as saying.
Miranda said that because of government neglect, tobacco farmers had been deprived of their income and livelihood.
Farmers in Santiago (Ilocos Sur Province) interviewed by the Manila Bulletin claimed that about 20 percent of the land area in the town had not been planted this year with flue-cured tobacco because of concerns about low prices. This year, farmers were said to have shifted to corn.
However, Miranda added that half of the land in the eastern part of the town was planted to tobacco this year. “There are still farmers who planted tobacco along the Eastern side of our town, hoping there will be good prices this year,” he said.
Meanwhile, tobacco growers are opposed to a proposal that is calling for a unitary tax rate of P30 on all cigarette packs, regardless of price. They believe the proposal is anti-tobacco and warn that it would probably kill the domestic leaf tobacco industry.
Mario Cabasal, who, as president of the National Federation of Tobacco Farmers Association and Co-operatives, represents the 55,000 tobacco farmers nationwide, told the Bulletin that if the unitary tax were implemented, demand for the sorts of low-grade tobacco being produced locally would vanish because cigarette manufacturers would probably cease to produce local-class products.
Malawi’s President, Peter Mutharika, has fired the country’s Tobacco Control Commission (TCC) CEO Dr Albert Changaya, according to a story in The Nyasa Times.
No reason was given for the move, though Changaya was said to have been redeployed to the ministry of Agriculture, Irrigation and Water Development.
Meanwhile, David Luka, who had deputized for Changaya at the TCC, has taken over as acting CEO.
Mutharika recently vowed that Malawi would keep supporting its tobacco industry, the mainstay of the economy, despite the activities of the anti-smoking lobby.
Tobacco accounts for more than 60 percent of Malawi’s total exports and contributes about 10 percent of its gross domestic product.
The value of Turkey’s exports of leaf tobacco and tobacco products exceeded $1 billion last year, 10 percent up on the value of such exports during 2015, according to a story in the Daily Sabah.
The value of tobacco product exports amounted to $652 million, while the value of tobacco leaf exports reached $358 million.
The tobacco product exports comprised mainly cigarettes sent to Middle Eastern countries, which were worth about $501 million.
Iran was the biggest importer of Turkish cigarettes in 2016, followed by Bahrain and Saudi Arabia.
The US was the main export destination for leaf tobacco produced in Turkey, followed by Belgium and Russia.
Tobacco exports generated the highest foreign currency income for Turkey after hazelnut exports, said the head of Aegean Exporters’ Association Mahmut Özgener.
Özgener added that Turkey had modern tobacco processing facilities and that if legislation were altered so that Turkey could process tobacco imported from overseas, the value of Turkey’s tobacco exports would soon reach $1.5 billion.
The number of tobacco growers in Zimbabwe has increased by 15 percent to 81,301 this farming season, reports The Chronicle, quoting statistics from the Tobacco Industry and Marketing Board (TIMB).
During the same period last year 70,412 farmers had registered to grow the golden leaf.
The 2016-2017 farming season has so far recorded 14,283 new growers with a total of 91,805 hectares having been put under tobacco.
At present, 76,775 ha are under dry land tobacco while 15,030 are under irrigation.
During the same period last year, 87,755 ha were planted under tobacco.
The golden leaf is one of Zimbabwe’s major foreign currency earners and last year the crop generated about $933 million from 164.5 million kilograms that were exported to 65 countries around the world at an average price of $5.67 a kilogram.
The government in Zimbabwe says it is prepared to open flue-cured tobacco auction floors next month – once farmers are ready to deliver their leaf, according to a story in The Chronicle.
The Minister of Agriculture, Mechanization and Irrigation Development, Dr. Joseph Made, was said to have told ZBC News that tobacco auction floors were ready to open in February as long as farmers could deliver enough crop to kick start the marketing season.
The move by the government to open auction floors earlier this year than was the case last year has been welcomed by farmers.
PMFTC is looking to expand tobacco production in Mindanao, the Philippines, according to a Business World Online story quoting the Agriculture Secretary Emmanuel F. Piñol.
Piñol said the company was looking at Mindanao for expansion because of its favorable conditions.
Unlike in Luzon, where the conditions made tobacco farming viable only once a year, Mindanao’s conditions would allow tobacco farming all year round.
Piñol said PMFTC, an affiliate of Philip Morris International, had concluded a visual inspection over the weekend of a 5,000 ha property in North Cotabato, which was previously a banana plantation owned by Sumitomo Fruits.
Asked about the initial feedback from PMFTC, Piñol said: “I heard it looks okay, but I have not received an official report from them”.
Sought for comment, the National Tobacco Administration (NTA) administrator Edgardo D. Zaragoza said the NTA welcomed such developments but they had yet to receive details of PMFTC’s plan.
“They’re still eyeing [areas] and they keep looking for areas but they haven’t informed us yet,” he said. “Sometimes they just inform us when they’re about to start.”
Should an expansion project go ahead, it could mean a monthly income of around P60,000 for each farmer, Piñol said, citing the PMFTC team’s estimates.
Aside from North Cotabato, tobacco-growing provinces in Mindanao include Zamboanga del Sur, Bukidnon, Misamis Oriental, and Maguindanao.
The provincial government of Ontario, Canada, is refusing to rescind fines imposed on farmers for exceeding their authorized tobacco acreages, according to a story in the Ontario Farmer.
A spokesman for Ontario’s Ministry of Finance, Scott Blodgett was reported as having said that the ministry endeavored to treat taxpayers in a fair and transparent manner, adding that the growers could seek an impartial review by filing a notice of objection with the ministry’s advisory, objections, appeals and services branch.
Blodgett was responding to a letter from Toby Barrett, the member for the provincial parliament for Haldimand Norfolk.
Barrett is representing at least a dozen tobacco growers in Norfolk and Brant counties who are facing fines of C$2,500 (US$1,860) each for exceeding their authorized tobacco acreages.
In his letter, sent to Ontario’s Finance Minister Charles Sousa, Barrett urged the government to rescind the fines and work toward setting out a clear and concise policy that is followed each growing season and reinstating a clear and concise communication process with growers.
Blodgett was said to have noted that the Ontario Flue-Cured Tobacco Growers’ Marketing Board had been conducting crop cut-downs ‘earlier’, but that in January 2015, the ministry had assumed this responsibility.
He said that while there had been no crop cut-downs or fines assessed for excess acreage during the 2015 growing season, during the 2016 season there had been a high rate of non-compliance where registered producers had grown excess acreage.
He added that the ministry had had time to evaluate the information and decide the best course of action “to balance support for the industry and support for the legislation by addressing non-compliance”.
A Sri Lankan inventor and entrepreneur has designed a special automation system for feeding paddy husks to tobacco curing barns, according to a story in the Daily News.
The inventor, H. J. Weerasinghe, of Dambulla, is a supplier of cured tobacco to Ceylon Tobacco Company (CTC).
Weerasinghe said that traditionally paddy husk was fed manually to the barn and that because of the imprecise nature of this operation the tobacco could become overheated.
Because of this, Weerasinghe added, he had designed a system that automatically applied the paddy husk so as to heat the tobacco to the required temperature.
The new system is said to minimize environmental pollution. It generates no paddy-husk ash that has to be disposed of, though a liquid, which was not specified in the report, is left behind.
The automatic barn is said to have a greater daily capacity than manual barns have.
Weerasinghe said he was ready to market the system at a price of about Rs65,000.
Meanwhile, Michael Koest, CTC’s CEO and MD, said the company had been amazed with the invention and would help it to be marketed overseas where traditional methods were used to cure tobacco.
CTC has operated in Sri Lanka for more than 100 years, during which time it has become an integral part of the country’s agriculture and business sectors.
The company’s involvement in the agricultural sector extends over 70 years with tobacco growing operations having started in the 1950s.
Cambodia’s Ministry of Commerce is calling on unmanufactured-tobacco dealers to apply for licenses to export their tobacco to Vietnam, according to a story in The Khmer Times.
Vietnam agreed in October to waive all duties on annual imports of 3,000 tons of unmanufactured tobacco from Cambodia.
The tobacco duty waiver was part of the Bilateral Trade Enhancement Arrangement under which Cambodia received from Vietnam a preferential zero tariff on 39 products.
The agreement between Cambodia and Vietnam was signed several years ago and has been renewed every two years, according to ministry spokeswoman Soeung Sophary.
Heng Piseth, provincial director of the Tbong Khmum agricultural department, was said to have told the Khmer Times that the duty waiver was good news for tobacco farmers, as well as for merchants and exporters because the tobacco market was uncertain and farmers were worried.
“The market for tobacco is not good and depends very much on merchants. However, if there is a certain market from Vietnam that lets us have a chance to export, then tobacco farmers can survive,” said Piseth.
“They would not have to worry about the market anymore,” he added.
Tobacco farms are said to take up about 1,000 ha of land in Tbong Khmum province.
Demand for classical oriental tobacco remains remarkably stable.
By George Gay
Greece is thought to have grown about 18.5 million kg of classical oriental tobacco in 2016, made up of about 12 million kg of Basma and about 6.5 million kg of Katerini. If these estimates turn out to be correct (this story was written at the beginning of December, when both varieties were still being delivered), this is a small crop, even by the standards of the past 10 years, during which production has not been supported by subsidies. In 2015, the crop was about 21.5 million kg, so the drop from 2015 to 2016 will have been of the order of 14 percent.
Yields of both the Basma and Katerini crops were said to have been down because of dry weather, which, by way of compensation, created an excellent-quality Katerini crop and a good, above-average quality Basma crop, and because of a disease problem that was more severe than is usual. But the Katerini crop was down, too, because fewer farmers than in the past decided to grow this variety.
Part of the reason for this lack of interest among farmers was no doubt because of price, a problem whose most recent incarnation started in 2013 when all four of the main classical oriental tobacco producing and exporting countries, Bulgaria, Greece, Macedonia and Turkey, harvested big crops that, taken together, amounted to about 140 million–145 million kg and created an oversupply. The following year, quality suffered, with some observers declaring that the Greek tobacco was of the worst quality for 20 years; so again, prices were down. Prices were raised for the 2015 and 2016 crops, but not by enough to entice the required number of lapsed growers back to Katerini or new growers to enter the field.
Despite the difficult economic situation in many oriental origins, the industry struggles to attract growers and workers.
Making the job easier, slowly
Looking ahead, Nikos Allamanis, doyen of the Greek classical oriental tobacco industry, said Greece believed that it could sell a 2017 crop of 23 million–25 million kg made up of about 14 million kg or more of Basma and 9 million kg or more of Katerini. Given reasonable weather conditions, it seems that the Basma target will be reached, but there is doubt about the Katerini crop. To raise the estimated 6.5 million kg of 2016 to 9 million kg in 2017 would mean, even given reasonable weather, an expansion of the area planted to this variety. Contracts for the 2017 crop have to be completed by the end of April, so there is still time for new and returning Katerini growers to sign up, but how many will do so is in doubt.
One question that arises here concerns why, with Greece’s economy in the doldrums, would farmers not jump at the chance to grow some, or some more, Katerini. Well, the answer perhaps has to do with the fact that growing tobacco is not an easy task, that it has to be carried out away from the bright city lights, so that young people especially are not overly keen to become involved, and that it is one where producers can earn enough to survive, but little more.
Price increases, when they occur, are often small, and growers are urged—and helped—to raise their incomes by increasing yields through the planting of improved seeds, employing good agricultural practices and the introduction of automation systems where possible. This is all very well up to a point, and some growers undoubtedly benefit from the fact that automation allows them to cut down on labor. The trouble is, it takes some time for the specialist oriental tobacco automation systems to be improved to the point where they can move from the test phase to general use—to the point where they can start improving yields and, therefore, raising grower incomes. For instance, Frederick de Cramer, coordinator at Sunel, told Tobacco Reporter in an email that the Vento, or “sock-curing,” method of drying tobacco, which has been tested in Turkey for some years now, was expanding, though the quality of the cured leaf was still “not too impressive.” The system needed to be further improved, he said, and farmers, who generally supported the system, still had to be educated in using it.
Another problem with the automation approach has to do with the investment needed. Oriental tobacco transplanting machines have been improved, and they are helping some growers obtain higher yields by providing better spacing between plants and the establishment of better root systems. But such machines are clearly beyond the financial reach of these farmers, given their incomes, so financial support is needed if the use of these machines is to be expanded, and presumably that support must come from tobacco manufacturers—those who hold the purse strings.
Estimates for the total 2016 classical oriental tobacco crop range from about 100 million kg to 120 million kg.
Difficult demographics
Finally, the age profile of oriental tobacco growers has to be a hurdle when it comes to introducing new systems. In Macedonia, where, according to Iqbal Lambat, CEO of Star Tobacco International, the age of oriental tobacco growers is about 28–40 years, learning new techniques is probably not a problem. But it is probably more of a problem in Bulgaria, where this demographic is said to be about 40–50 years old, and it could be difficult in Greece and Turkey, where many growers are older than 55.
Turning such demographics around will not be any easy matter—though, according to Lambat, tobacco farming is still a multigenerational activity in Bulgaria and Macedonia. Greece and Turkey, in times of good economic growth, both experienced migrations of people to the cities, and while these countries have in more recent times suffered economic setbacks, there seems not to have been a rush back to the villages.
Turkey has clearly suffered major political and social problems in recent times, but even though unemployment is said to have increased hugely, it doesn’t seem that tobacco growing is seen as a desirable career choice for too many people. De Cramer said that the 2016 crop of Izmir tobacco, the main Turkish classical oriental tobacco variety, is estimated to be 40 million–41 million kg, which puts it about 7 percent below that of the 2015 crop of 43.56 million kg, and nearly 27 percent short of the contracted amount of 55.28 million kg.
As with the Katerini crop in Greece, however, a compensatory factor is that the 2016 Izmir crop is of good quality. The share of A/AB grade tobaccos within the whole crop is expected to be high, which should be in line with demand given that some manufacturers were unable to fulfil their A/AB grade requirements from the 2015 Izmir crop. The lower grades—kappa and double kappa—could be short, but these can be replaced easily by other varieties that fall into the blend group.
Given the size and makeup of the Izmir crop, Turkish lira prices are expected to rise by about 12 percent, but export prices will probably be offset to some extent because, in the month before this story was written, the lira had been devalued by about 10 percent.
Outlook
On the supply side, there are some positive signs in Turkey. Returns for some competing crops have not been good, and so tobacco, for which half of the green price is paid in advance, is again being seen as providing a more reliable income. And on the demand side, the election of Donald Trump is seen as possibly providing some relief on the U.S. tobacco products market, the EU market seems to have stabilized, and the Russian market is increasing once again. In any case, the 2017 crop is expected to produce about 44 million–45 million kg, which would be an increase on the 2016 crop of about 5–10 percent.
Estimates for the total 2016 classical oriental tobacco crop range from about 100 million kg to 120 million kg. Demand for this type of tobacco has its roots in premium American-blend cigarettes, and rough estimates based on the size of the market for these products and classical oriental tobacco inclusion rates have for years put that annual demand at 120 million, plus or minus. Of course, this premium American-blend sector has been under pressure because its heartland is in the West, where unemployment has risen and wages have stagnated in respect of the people who make up most of the consumers of these products. Undoubtedly, this pressure is down, too, to the illegal trade since it seems to be generally acknowledged that some nonclassical oriental tobaccos are being grown off-piste and finding their way into illicit cigarettes.
But despite the problems that exist, classical oriental tobacco production seems to be remarkably stable. “Generally, demand for classical oriental is stable, and all of the Balkan countries have been consistently meeting demand over the course of the past four years,” Scott Burmeister, regional director for Europe at Alliance One International, told Tobacco Reporter in an email reply to questions. “However, there have been some shifts from one origin to another depending on the availability of higher-quality tobaccos.
“Over the past few years, manufacturers have been rationalizing markets as they reduce blend complexities. Although the rationalizations have not directly affected classical oriental, we have seen that manufacturers are more willing to shift between origins that they believe to be interchangeable, as long as the leaf meets quality expectations.
“The classical oriental market is moving into an undersupply position due to growing yield reductions. Although the quality of the rendered crops appears to be above average, a shortage of certain styles is predicted.”
Virginia tobacco growers in the North of the Philippines are concerned about a fall in leaf prices that has occurred, and about what they see as a lack of government support for their industry, according to a story in The Manila Bulletin.
