The South Brazilian tobacco crop for 2024/2025 will cover 309,982 hectares, marking a 9.08 percent increase from the previous crop, reports Kohltrade, citing the Brazilian tobacco growers’ association, Afubra.
Paraná state recorded the largest growth at 13.63 percent, with 83,981 hectares planted. Santa Catarina follows with 11.78 percent, with 94,212 hectares planted and in Rio Grande do Sul, 131,789 hectares were planted, reflecting a 4.6 percent rise.
More than 138,020 families will be involved in in this year’s tobacco crop, 3.57 more than in the previous season.
“We are emerging from two very profitable harvests for many tobacco growers, leading to high profitability,” said Afubra President Marcílio Drescher. “As a result, more land is being dedicated to tobacco cultivation, with families returning to this crop. However, these developments are concerning. An increase in cultivated area during a period of stable weather could lead to higher production levels, which may negatively impact producers’ income.”
In terms of production volume, the initial estimate indicates a boost of 37.08 percent, leading to a total production of 696,435 tons in southern Brazil. This includes 630,539 tons of Virginia tobacco (36.52 percent), 54,624 tons of Burley tobacco (44.07 percent), and 11,272 tons of Common tobacco (36.45 percent).
Representatives from grower organizations and tobacco companies are currently calculating the production costs for the 2024/2025 harvest. Price negotiations are expected to commence once this assessment is completed.
Public authorities and representatives of the tobacco supply chain celebrated the Sixth Official Opening Ceremony of the Tobacco Harvest at the Afubra Expoagro Park in Rio Pardo, Rio Grande do Sul, Brazil.
Afubra President Marcilio Drescher said that, following the recent short crop (see “The Great Scramble”), the sector is anticipating a normal year in terms of quality and productivity. “However, the crop is marketed after harvest and we feel anxious and hopeful in expectation for a good price,” he added.
SindiTabaco president Valmor Thesing stressed the economic significance of tobacco to the state, and the importance of the integrated tobacco production system. “The opening of the tobacco harvest is a joyful and rejoicing moment that emphasizes the relevance of the tobacco supply chain,” he said in a statement. “It is a century-old crop that generates income and employment, brings in foreign currency and generates taxes.”
Rio Grande do Sul produces 43 percent of all tobacco in southern Brazil, which in the 2023-2024 growing season harvested 508 million kg. In Rio Grande do Sul alone, tobacco employs almost 70,000 farmers in approximately 200 municipalities.
Clair Kuhn, secretary of agriculture, livestock, sustainable production and irrigation, highlighted the availability of new financial resources to help growers with irrigation. “Tobacco farmers have never had the chance to get resources from the government. Now they have that opportunity,” said Kuhn. According to the secretary, 264 projects have already been approved, with an additional 400 undergoing evaluation.
The value of Brazil’s tobacco exports could surpass $3 billion this season, according to the interstate tobacco industry union SindiTabaco.
During an Oct. 30 meeting of the Sectoral Chamber of the Tobacco Production Chain, stakeholders shared information on the sector’s performance during the most recent growing season and their expectations for the upcoming crop year.
According to the Ministry of Development, Industry, Commerce and Services, Brazil shipped 316 million kg of leaf tobacco between January and September, representing a 14 percent reduction compared to the same period in 2023.
Production volumes were down 16.12 percent, to 508.04 million kg, in 2023–2022 due to excessive rainfall during the growing season. However, the depressed volume boosted the average price by almost 28 percent (see “The Great Scramble,” Tobacco Reporter, May 2024).
In dollar terms, the value of the shipments to date are up 3.44 percent to $2.03 billion. The largest export destinations for Brazilian tobacco were Belgium, China, the United States, Indonesia and Egypt. In 2023, Brazil exported 512 million kg worth $2.73 billion to 107 countries, with the European Union acquiring the bulk (42 percent) of Brazilian leaf exports.
SindiTabaco’s newly appointed president, Valmor Thesing, credited Brazil’s integrated system for the sector’s strong performance. “This is a demonstration that our integrated system is fully active, generating income, jobs and revenue,” he said in a statement.
Some 133,000 families were involved in producing southern Brazil’s 2023–2024 crop—6.62 percent more than during the previous season, according to the Brazilian Tobacco Growers’ Association, Afubra. A similar increase was seen in the planted area, which grew 8.57 percent to 284,184 hectares. “In recent harvests, there has been a more satisfactory average return for producers, which ends up stimulating the expansion of area and producers adopting tobacco cultivation,” explained Afubra President Marcilio Drescher.
This year’s firm prices may boost next year’s harvest. “We are wrapping up cultivation in almost all areas, and we have noticed an increase in area, encouraged by the recent return,” said Drescher. “By mid-November, we should have some forecast regarding the cultivated area and the number of producer families involved in the activity,” he added.
The floods that hit Rio Grande do Sul in early May have done significant damage to the Brazilian state’s tobacco-growing sector, according to a survey conducted by the Interstate Tobacco Industry Union (SindiTabaco) and its associate companies.
In all, the floods impacted 1,929 rural properties in 75 municipalities covered by the survey. Candelaria municipality was worst impacted, with 214 tobacco farmers suffering losses. Other heavily impacted municipalities included Agudo (136 affected farmers), Barros Cassal (132) and Venancio Aires (116).
In terms of monetary impact, Venancio Aires was most impacted, with the industry suffering a loss of BRL18.3 million ($3.37 million). Other hard-hit municipalities included Candelaria (BRL16.52 million in losses), Agudo (BRL6.35 million) and Ibarama (BRL5.96 million).
We are confident that, in spite of this tragedy, the production of tobacco in the affected areas should remain close to the projections estimated for the 2024–2025 growing season
The survey also demonstrated that 96 percent of the affected farmers intend to continue producing tobacco. “We need to provide the conditions that make it possible for them to carry on with their activities in the upcoming crop year and, within this context, the associate companies have already replaced the necessary inputs to restore the 2,070 seedbeds of lost seedlings, an investment that amounts to approximately BRL1.6 million,” said SindiTabaco President Iro Schuenke during a meeting with representatives of tobacco growers’ association Afubra, the Federation of Agricultural Workers and the Rio Grande do Sul State Federation of Agriculture.
“We are confident that, in spite of this tragedy, the production of tobacco in the affected areas should remain close to the projections estimated for the 2024–2025 growing season.”
While the industry and the tobacco farmers’ representatives are doing their best to minimize losses, they will require public support to rebuild curing barns and access credit lines, according to Schuenke, who noted that many tobacco farmers also produce food crops.
Buyers have been paying record prices to secure their shares of Brazil’s smaller-than-expected tobacco crop.
By Taco Tuinstra
On March 21, a ferocious storm tore through Brazil’s southernmost state, Rio Grande do Sul. The wind flattened numerous outdoor pavilions at the Expoagro exhibition in Rio Pardo, forcing its organizer, tobacco growers’ association Afubra, to close the event for a day and repair the damaged stands. In a more welcome development, the tempest brought relief from the heat wave that had been making life tough for those toiling in the region’s numerous fields and leaf processing facilities.
But while Expoagro reopened to large crowds and the temperature dropped to more tolerable levels in the wake of the storm, other pressures on the industry continued unabated throughout the selling season. Alliance One Brazil Leaf Production Director Samuel Streck, who has worked in the business for two decades, described this year’s crop as the most challenging in his career, and his view was echoed by many other industry veterans throughout the Brazilian tobacco sector during Tobacco Reporter’s visit to the region in March.
A significantly smaller-than-expected crop, acute labor shortages and record-high prices, along with heightened scrutiny of tobacco farming in the wake of the 10th Conference of the Parties (COP10) to the Framework Convention on Tobacco Control (FCTC), have kept the Brazilian leaf sector on its toes this year.
Having been forced to temporarily cease operations due to storm, Afubra’s Expoagro reopened to large crowds. (Photos and videos: Taco Tuinstra)
Low Yields, High Quality
It wasn’t supposed to be that way. When planting for the 2023-2024 crop started in May last year, the industry predicted a volume increase of about 10 percent over the previous season, when the country’s growers harvested some 605.7 million kg of all tobacco types, according to Afubra.
At first, the weather conditions appeared to validate that assessment, but then El Nino hit. The recurring weather phenomenon, which typically boosts precipitation in South America, had been anticipated but turned out much more intense than normal. From mid-July until the end of November, El Nino dumped unprecedented volumes of rain on southern Brazil, leading to flooding in lower lying areas. Accompanied by many sunless days, the wet conditions depressed yields not only in Rio Grande do Sul but also in Santa Catarina and Parana, the three southern states that together account for 98 percent of Brazil’s tobacco production. (The remaining volumes grow primarily in Bahia and are used to make cigars.)
Crop
Hectares planted
Production (million kg)
Leaf export earnings
2023
261,740
605.7
$2.66 billion
2022
246,590
560.18
$2.24 billion
2021
273,356
628.49
$1.31 billion
2020
290,397
633.02
$1.47 billion
2019
297,310
664.36
$1.99 billion
2018
297,460
685.98
$1.85 billion
2017
298,530
705.93
$1.96 billion
2016
271,070
525.22
$2.01 billion
2015
308,260
697.65
$2.06 billion
2014
323,700
731.39
$2.35 billion
2013
313,575
712.75
$3.09 billion
Sources: Afubra/SindiTabaco
Instead of a 10 percent boost, the industry was now looking at a 20 percent drop in volume from 2023. By late March, Afubra was expecting about 470 million kg of flue-cured Virginia (FCV) and roughly 40 million kg of burley.
But even as the excessive rainfall slashed yields, it worked wonders for leaf quality. Brazil’s 2024 crop boasts good color, uniformity and smoking properties, according to buyers. High oil levels give this year’s leaf a better visual appearance than in 2023. What in the previous year was predominantly light orange to orange is this year orange to deep orange, observed Kohltrade in a recent crop report. “It’s perfect, in my opinion,” said Kohltrade Account Executive Simone Velasques.
And it’s not just looks that set this crop apart; the tobacco smokes exceptionally well, according to Eduardo Renner, president and CEO of CTA-Continental. “That’s also the feedback we are getting from customers,” he said. On the flipside, the rain also suppressed nicotine levels in this year’s tobacco. According to Jay Barker of YTL, the excess rainfall has resulted in below-average chemistries across the board. Because the wet season followed three consecutive dry ones, the gap in nicotine levels between the current crop and the previous one is greater than normal, which may challenge some customers in creating their desired blends.
Andie Spies of Hail and Cotton (left), and Eduardo Renner at CTA’s Venancio Aires headquarters
Chasing Tobacco
The combination of low volume and high quality, along with a persisting post-Covid-19 tobacco shortage at the global level, sparked a scramble among tobacco companies in Brazil to secure their requirements. As a producer of sought-after flavor tobacco, Brazil has only two true competitors on the world market—Zimbabwe and the United States. Zimbabwe, where El Nino brought drought instead of rain, is also looking at a smaller crop this year (albeit from a record volume in 2023), according to that country’s Tobacco Industry and Marketing Board. United States FCV production, meanwhile, has been stable for three years at just below 140 million kg, TMA figures suggest.
The shortage has been aggravated by the fact that last year some customers didn’t buy everything they needed because they were expecting cheaper tobacco this year. Coming out of the pandemic, many customers adopted a wait-and-see approach, carefully managing their stocks to avoid buying at high prices. Now, with inventories running out, those who didn’t buy last year had to buy this year.
According to local traders, Brazil’s leading tobacco buyers alone needed more leaf than the entire volume that was expected to come to the country’s market in 2024. Throughout the season, the vertically integrated companies—BAT, Philip Morris International, Japan Tobacco International and China Tobacco—were buying far above list prices, paying top rates for all grades and leaving independent traders with no choice but to follow their lead.
Simone Velasquez (center)
The result has been an unprecedented escalation of leaf prices and an acceleration of deliveries. In mid-March, farmers were receiving up to $5.50 per kilogram of green tobacco, according to Kohltrade. For processed leaf, customers were paying up to $9.50 for grades that cost perhaps $5 only three years ago. “Prices are up, up, up,” observed Afubra President Marcilio Drescher.
Daison A. Kohl, who grows 2.7 hectares of tobacco in Vale do Sol, said he has never in his time on the farm witnessed such high prices and such fierce competition. Unlike many of his neighbors, Kohl contracts only with one buyer. Yet throughout the buying season, his phone rang nearly daily with representatives from other companies asking him to sell his leaf to them instead.
Kohl had to disappoint them all. “It doesn’t matter how much they offer; the tobacco is just not there,” he said. Merchants have been telling their customers a similar story. Whereas in a more typical year, they may exaggerate and say, “there is no tobacco” as a price negotiation tactic, this season it is simply a statement of fact.
The scramble for tobacco has also greatly accelerated the purchasing process, leaving some receiving stations struggling to keep up with the influx of leaf. At the time of Tobacco Reporter’s visit, leaf merchants were expecting farmers to run out of tobacco by the end of April—two months earlier than in 2023. “Customers who come late to Brazil may not find what they are looking for,” warned Velasques.
Leaf tobacco exports have earned Brazil an average of more than $2 billion annually over the past decade.
Labor Scarcity
For the growers, the 2024 marketing season has been a mixed bag. Even with record per-kilo prices, the additional income may not make up for the reduced weight that they are bringing to market, according to Afubra. Kohl, who suffered a 26 percent drop in yield from last year, said that as long as the companies continue paying above list prices, his operation will remain profitable this year. “But if they resort to paying list prices, it will be a problem,” he said.
While the cost of inputs such as fertilizer have been coming down from their Covid-19-induced and Ukraine war-induced spikes, a long-running shortage of labor has worsened in recent years, impacting both farmers and tobacco factories. But whereas tobacco buyers can mechanize operations such as rack loading and stripping, farmers have fewer options. With an average property size of 10.5 ha and an average area devoted to tobacco of only 3.29 ha, according to Afubra, the typical tobacco farm in southern Brazil is simply too small to justify the investment in equipment. What’s more, many of the tobacco growing activities lend themselves poorly to mechanization. There are no machines for delicate tasks such as sucker control and topping, for example.
Meanwhile, aware of their growing scarcity, farmhands have started driving harder bargains. In Vale do Sol, they have organized themselves in collectives, forcing farmers to negotiate with groups instead of individuals, according to Kohl. To guarantee a group’s labor throughout the growing season, he must pay a premium on top of the already inflated salaries.
Determined to control their cost of production, Kohl and his wife, Solange, carry out many of the tobacco farm activities, including land preparation, themselves. They hire labor for the first, second and third reapings, when the leaves are still thin and easily damaged and speed is of the essence. “If we don’t harvest quickly during that time, we will lose quality,” said Kohl. From the fourth reaping onward, the tobacco is thicker and less fragile, allowing the Kohls to harvest by themselves and save money on labor.
Their workload has been lightened a bit by a recent switch from bundles to loose leaf. In the past, growers in Brazil would classify their tobacco according to quality and color and then tie the leaf into bundles—a laborious process that could take up to two months. As demand increased, some buyers told farmers to skip this step and deliver the tobacco in loose form instead. The practice spread rapidly and has now been adopted by all merchants. After drying the tobacco, the farmer can take his tobacco directly from the barn to the bale and put it on a truck, not only saving time and labor but also greatly accelerating the speed of delivery.
While some buyers at first worried about how the new practice would impact processing, those concerns turned out to be manageable. “Loose leaf is not necessarily the best way to receive tobacco in terms of the feeding table and the presentation of each grade, but we quickly realized it’s possible,” said Streck. According to Renner, the process remains the same. “You can still tip and thresh the leaf because it is straight laid.”
Farmer Succession
The Kohls are happy with the change to loose leaf, as it allows them to focus on other farm activities. As they work their fields, they are occasionally joined by their oldest son of 34, who has no interest in farming but feels a duty to help on some evenings after he’s done with his day job. Their middle son (25) by contrast “does not even want to see the tobacco,” according to Kohl, while their youngest (8) is too little to work on the farm. (Brazilian law requires tobacco workers to be at least 18 years of age, and following intense industry-led awareness campaigns, the country’s sector today is considered a role model in in eradicating child labor.)
The Kohls’ family dynamics hint at another challenge facing Brazil’s tobacco business: farmer succession. Like their counterparts around the world, many rural youngsters in Brazil aspire to work in the city, which has led to an exodus of skills and talent from the countryside. “Keiner will die Finger mehr dreckig machen”—nobody wants to soil their fingers anymore—observes Solange, who, like many people in southern Brazil, is more conversant in German than English as a foreign language.
A 2023 survey conducted by the Federal University of Rio Grande do Sul at the request of the Interstate Tobacco Industry Union (SindiTabaco), revealed that with an average monthly income of BRL11,755.30 ($2,234.75), tobacco farming families in southern Brazil are relatively well off, earning considerably more than the average Brazilian family. The Kohls, for example, live in a spacious, well-built home equipped with plenty of conveniences and some luxuries, including a small swimming pool. Within agriculture, too, the golden leaf continues to generate the best returns, according to industry sources, contradicting the narrative pushed by certain nongovernmental organizations that tobacco leaves growers in poverty.
Nadia Fengler Solf
But while the earnings from tobacco farming exceed those of other crops, the golden leaf is also more demanding. Unlike some other agricultural products, the farmer cannot just plant it and watch it grow. A good tobacco farmer, notes Kohl, must constantly keep an eye on the plants. “The weather can change things very quickly,” he said. “If rain comes, it puts the leaves on the plants and—boom—they become big overnight. And if you don’t go in and take the flowers off and the wind comes, it can topple the plants.”
With no one lined up to take over the farm, the Kohls’ tobacco volumes will disappear from Afubra’s production statistics after they retire. “We have another 10 years, and then we’ll be gone,” said Kohl. Unfortunately for tobacco buyers, their situation is not exceptional. According to the University of Rio Grande do Sul study, 27 percent of the growers in southern Brazil have no succession plan.
Acutely aware of the demographic drain, the tobacco industry has been looking for ways to keep young adults in the countryside. Originally set up by SindiTabaco and its associate companies to help combat child labor in rural Brazil, the Growing Up Right Institute (also see “Alternatives for Adolescents,” Tobacco Reporter, April 2021) now also runs programs educating young people on the verge of adulthood about the opportunities on the farm. By teaching youngsters how to optimize farm operations through technology and professional management, the institute hopes to convince them that they can live good lives in the countryside.
According to program manager Nadia Fengler Solf, the initiative has had some success. Upon graduation from the program, she said, many students have a completely new perspective on the possibilities in the countryside. Some decide to develop their family properties, investing in new technologies and diversifying their business, while others elect to pursue degrees in agriculture.
Solagne Kohl (left) and Daison A. Kohl grow 2.7 hectares of tobacco near their home in Vale do Sol. According to a study commissioned by SindiTabaco, tobacco growers are considerably better off financially than the average Brazilian.
COP Fallout
But even as the industry is working to keep farmers interested in tobacco, others are campaigning to steer them away. At COP10 in Panama, delegates vowed to step up action on Articles 17 and 18 of the treaty, which call for the promotion of economic alternatives for tobacco workers and the protection of the environment and health of tobacco workers, respectively. According to a speaker at this year’s Americas Regional meeting of International Tobacco Growers’ Association in Santa Cruz do Sol, the Panama COP could be the first to have a direct impact on the farm.
SindiTabaco President Iro Schunke dismisses the talk about alternative crops in Southern Brazil as unrealistic. “If we had another crop that generates the same income, farmers would have switched long ago on their own accord,” he said. Part of the problem, he explains, is the small average size of farm properties. “To replace the money from one hectare of tobacco, you need to grow 7 hectares of soybeans or 10 hectares of maize.” The pressure for diversification, meanwhile, is unnecessary, according to Schunke. “Tobacco farmers in Brazil are diversified already,” he said. While generating between 60 percent and 70 percent of the average grower’s income, tobacco claims only 20 percent of their property, according to SindiTabaco. Part of the money earned from tobacco is used to plant supplemental crops.
“If we had another
crop that generates
the same Income,
farmers would have
swItched long ago on
theIr own accord.”
Brazil was one of the most vocal proponents of stricter tobacco controls at COP10, a position that Schunke considers odd, given that leaf tobacco accounts for 11 percent of Rio Grande do Sul’s exports, employs more than half a million farmworkers and earned Brazil an average of more than $2 billion annually through exports over the past 10 years (see chart). Schunke attributes the government’s tough stand to pressure from nongovernmental organizations and the exclusion of tobacco stakeholders from health policy debates along with an ideological aversion to capitalism.
Some suspect the government’s position is driven partially by ignorance, with bureaucrats in faraway Brasilia unaware of how much rural communities in the south of the country depend on the golden leaf. “Although hostility against tobacco from agencies all over the globe is the new status quo and the path of least resistance, the fact is, the economic impact to the communities where tobacco is prevalent is very significant,” says Barker.
Santa Cruz do Sul Mayor Helena Hermany believes that Brazil’s national health surveillance agency, Anvisa, grossly underestimates and misrepresents the industry’s economic significance. More than 50 percent of the city’s revenue comes from tobacco, she told participants in the ITGA Americas meeting. “If tobacco does well, we all do well,” she said.
If tobacco does well, we all do well.
It terms of sustainability, the tobacco industry is also performing much better than it is given credit for. “We are doing quite well in terms of soil protection, reforestation and the prevention of child labor,” said Drescher. For example, Brazilian farmers are self-sufficient in curing energy, sourcing wood from dedicated plantations rather than indigenous trees.
According to Renner, sustainability is already an integrated part of everything the tobacco industry does. “Whatever we supply must cover these three capital letters,” he said, referring to the environmental, social and governance considerations that the abbreviation stands for. “What we do for our people, our clients, in our operations and in the communities we work with … our suppliers need to do for us.”
As they prepare for next season in the wake of this year’s short crop, industry stakeholders are keen to avoid a wild swing in the other direction. Emboldened by the high prices and keen to recover their lost volumes, many growers are likely to increase their plantings for the 2024–2025 season. Kohl, by contrast, is cautious, worrying that a surplus next year will depress prices, and he plans to plant the same hectarage as last year.
Others predict that the era of cheap Brazilian tobacco is over, not only due to demand-and-supply factors but also as a result of the considerable investments the local industry has made in sustainability. These investments should serve Brazil well as it moves into the new era, giving the country a competitive advantage against origins with less robust practices. At the same time, leaf merchants insist that the effort should be supported throughout the supply chain. ESG initiatives, after all, come at a cost that should be reflected in leaf prices. “It must be sustainable for all parties,” insisted Renner.
Taco Tuinstra is Tobacco Reporter’s editorial director.
Based in Raleigh, North Carolina, USA, he coordinates the work of staff writers and contributors.
On his watch, Tobacco Reporter has won several awards for editorial excellence.
Since joining the magazine in 1997, Taco has visited more than 75 countries to meet industry representatives in their markets and to report tobacco news firsthand.
Representatives of the leaf tobacco industry discussed global supply and demand, the economic significance of tobacco, and the repercussions of 10th Conference of the Parties (COP10) to the Framework Convention on Tobacco Control (FCTC), among other topics, during the International Tobacco Growers Association’s (ITGA) 2024 Americas Regional Meeting on March 18 in Santa Cruz do Sul, Rio Grande do Sul, Brazil.
Participants in the gathering were dismayed by the attitude of the Brazilian government delegation during COP10. Brazil has been the world’s leading tobacco exporter since 1993. In 2023, the country shipped 512,000 tons of tobacco, earning $2.73 billion, according to the Ministry of Development, Industry and Trade. Yet despite the economic significance of tobacco, Brazil’s COP10 representatives pushed hard for more restrictions on the sector during the Panama meeting.
“I ask the government not to ignore this important production chain, considering that Brazil is an example to the world in terms of good social, environmental and production practices,” said ITGA’s President José Javier Aranda in Santa Cruz do Sul.
Marcílio Drescher, president the Brazilian tobacco growers’ association Afubra, urged tobacco stakeholders to unite in the face of opposition. “There is no such thing as an isolated tobacco sector and the union between producers and companies is very important,” he insisted.
Helena Hermany, mayor of Santa Cruz do Sul, observed that the narrative that reaches government representatives in the capital, Brasilia, is different from reality. “The NGOs totally distort what tobacco means for the growers, the municipalities and the environment,” she said.
ITGA market analysts Ivan Genov described the prevailing tobacco trends in key markets. One of the highlights, he noted, is that Tanzania aims to overtake Zimbabwe to become Africa’s largest producer. He also called attention to a small reduction in cigarette production and the simultaneous increase in demand for next-generation devices, along with the discussions around the disposal of such devices.
Antônio da Luz, chief economist of the Farsul System, highlighted the importance of agriculture. “Fifty years ago, we had 67 percent of people living in the countryside to 33 percent in the city,” he said. “Since 2010, the urban population has outnumbered the rural population and the estimate is that, by 2050, we will have 70 percent of people living in cities and only 30 percent producing food in rural areas.” In such an environment, Da Luz noted, increasing agricultural productivity will be of key importance.
Iro Schünke, the president of the Interstate Tobacco Industry Union (SindiTabaco), unveiled the results of a 2023 study on the socioeconomic conditions of tobacco growers in Southern Brazil, carried out by the Federal University of Rio Grande do Sul. The average per capita family income of tobacco farmers in the Southern Region of Brazil is BRL11,755.30 ($2,344.35), compared with average Brazilian per capita income of BRL1,625, contradicting the narrative pushed by NGOs that tobacco leaves growers in poverty.
Stakeholders highlighted tobacco industry initiatives to preserve Brazil’s native forests and achieve energy self-sufficiency at the Expoagro Afubra 2024 fair in Rio Pardo, Rio Grande do Sul, Brazil, on March 22.
SindiTabaco technical advisor Fernanda Viana Bender presented a number of projects designed to promote forest sustainability in tobacco farming in partnership with the Federal University of Santa Maria (UFSM).
The program aims to cultivate trees to meet tobacco farmers’ fuel requirements while preserving native forests. At 22 demonstration units in Rio Grande do Sul, the UFSM research team, led by Jorge Antonio de Farias, is testing the management of fast-growing trees.
While the programs provide stakeholders with valuable knowledge, Bender says there is still much to learn. “We need to develop a way of thinking that forest production is a tobacco farmer’s business,” she was quoted as saying on SindiTabaco’s website. “Without wood, there is no tobacco curing. However, beyond the demand by the sector, farmers could also get organized to diversify with forest production, thus earning extra income,” she argued.
Farias identified a number of challenges to achieving those goals. “As the farmers possess small farms, land availability is one of the problems that make it difficult to plant trees, and the same holds true for the transport logistics of the production,” he observed.
“At the same time, we witness a sector extremely concerned with the supply of wood of legal origin while the farmers strongly demand wood. The solution goes through the creation of cooperatives or associations capable of articulating this market, and the tobacco sector could be a protagonist in this process. The forest component should become an integral part, when it comes to establishing a rural property, as an alternative source of income,” said Farias.
More than half of the tobacco produced in southern Brazil had been sold by the middle of March, reports Kohltrade, citing figures released by the growers’ organization Afubra. Driven by a short crop, the average per-kilo price was up nearly 20 percent over that paid during 2022-2024 marketing season.
According to the Ministry of Development, Industry and Commerce, Brazil shipped 512 million kg of tobacco in 2023, generating $2.73 billion in earnings. In the first two months of 2023, the country exported 75.3 million kg valued at $492.7 million.
According to information from Emater-RS, tobacco prices reached values above BRL20 ($4.02) per kilo for dry leaf, reaching up to BRL390 per arroba [11.34 kg] for tobacco classified as BO1 in some regions. However, producers expressed concern about the weight of the leaves, which has been lower than anticipated due to heavy rains during the growing season.
Reduced volumes and high prices are also accelerating leaf sales. Industry representatives expect sales, which normally extend to the end of June, to end in late April this season.
Brazil’s tobacco crop has been heavily impacted by the El Nino weather phenomenon this year. When production started in May 2023, the industry expected to harvest 10 percent more leaf than in the 2022-2023 growing season based on the area planted.
While the climate conditions initially supported the expectations for a larger crop, heavy rains from mid-July to the end of November forced the industry to adjust its figures downward. Instead of a 10 percent increase, market watchers are now predicting 20 percent drop in volume compared with 2023.
Rainy growing seasons tend to result in lower nicotine levels. Because this season’s heavy downpours followed three years of drought, which resulted in record high nicotine levels for Brazilian tobacco, there is now an unprecedented gap in the nicotine levels of the 2023 and 2024 harvests, averaging 0.35 percent to 0.5 percent for grades XC to BM, and up to 0.8 percent for grades B and BT.
But while nicotine levels have declined, the quality of Brazil’s tobacco is up significantly, with great maturity and a very good aroma. According to Kohltrade, Brazil’s tobacco this year has a very good and intense “flavor,” including in XC grade. Leaf position is showing good quality, and what in previous years was predominantly “LO” to “OF” light orange to orange, this year is “O” orange to “F” full orange or deep orange.
Overall, the industry expects a small drop in sugar levels.
With the reduction in volumes, competition has been fierce for Brazil’s 2024 crop. All companies are rushing to buy their volumes and serve their customers, greatly inflating the market and accelerating the process of purchasing tobacco.
Industry representatives stressed the importance of considering tobacco growers viewpoints in the tenth Conference of the Parties (COP10) to the Framework Convention on Tobacco Control (FCTC), which is scheduled to take place Nov. 20-25 in Panama City.
During a panel discussion at the Expointer 2023 agricultural and livestock exposition in Esteio, Rio Grande do Sul, which concluded Sept 3, experts highlighted the economic significance of the tobacco industry to Brazil in general and the country’s southern provinces in particular.
“We have almost 600,000 people living directly from the crop,” said Marcilio Drescher, president of the Brazilian Tobacco Growers Association, Afubra, according to a SindiFumo report.
“On average, 51 percent of our income comes from tobacco and is supplemented by diversification. The average property is 10.5 hectares. Farmers support their families on this small area of land and use an average of just 3.29 hectares for tobacco. A small area under tobacco provides an excellent income combined with diversification. In the last harvest, the farmer’s gross income reached BRL88,000 [$17,859] per capita per family, on average, and there’s also the income from diversification,” he said.
The topic of diversification is likely to feature prominently during the COP discussion, given that the FCTC encourages countries to move tobacco farmers into other crops. While supporting agricultural diversification, participants in the Expointer panel discussion lamented the exclusion from the discussions of those most impacted by COP decisions. “We cannot have a discussion on producer diversification without involving the primary stakeholders,” said one panelist.
Rio Grande do Sul’s secretary for economic development, Ernani Polo, stressed his government’s commitment to protecting the tobacco sector. “We know that the industries and the sector are working hard to diversify, but tobacco production is still what keeps producers in the countryside,” he said.
The event was also attended by Iro Schunke, president of the Interstate Tobacco Industry Union; Vinicius Pegoraro, the president of the Association of Tobacco Producing Municipalities; Giuseppe Lobo, executive manager of the Brazilian Tobacco Industry Association; and Gualter Batista Júnior, the president of the Federation of Tobacco Industry Workers and the Santa Cruz do Sul and Region Tobacco and Food Industry Workers Union.
Brazil’s House of Representatives held a public hearing June 15 to clarify the country’s position in the upcoming conference of the parties to the World Health Organization’s Framework Convention on Tobacco Control, which is scheduled to take place in Panama in November (COP10).
The debate had been requested by federal deputy Alceu Moreira, who lamented the degree of “injustice, disinformation and ideologically oriented political correctness” he claimed to have witnessed in the runup to the conference.
“We produce a licit crop; we are not committing a crime,” said Moreira. “We are proud of engaging in constructive debates with the aim to protect a licit crop and we refuse to be reprimanded for growing tobacco.”
As one of the world’s largest exporters of leaf tobacco, Brazil could be heavily impacted by the decisions made at COP10. In the most recent season, the southern region of Brazil alone produced 560 million kg of tobacco, generating BRL9.5 billion ($1.98 billion) for 128,000 farm families.
The public hearing was attended by representatives of the ministry of foreign affairs, the ministry of agriculture and livestock, and the ministry of agrarian development and family farming. The ministry of health declined to take part, saying that the debate was premature, given that the WHO had yet to publish an agenda for COP10.
The tobacco industry was represented by the tobacco growers association Afubra and the interstate tobacco industry union SindiTabaco, among other organizations.
SindiTabaco President Iro Schünke lamented the lack of transparency in the FCTC meetings. “The Framework Convention on Tobacco Control is the worst dictatorship I know, where the real interested parties are not allowed to take part in the debates,” he said.
The tobacco industry, said Schünke, produces a licit crop that generates income and jobs for millions of Brazilians and is committed to sustainable production. “My intervention is to discover what stance the Brazilian delegation will adopt at the upcoming COP 10 meeting and warn about the consequences from a poorly conducted positioning at the COP,” he said in a statement.
