Brazil - Tobacco Reporter

Legislators to Vote on Brazilian Vape Ban

Brazil’s Senate’s Economic Committee was scheduled to vote on bill this week that would legalize e-cigarettes in Brazil, reports Prensa Latina.

South America’s biggest country currently prohibits the manufacture, import, marketing, distribution, storage, transportation and advertising of vapes.

The vote on the text has been repeatedly postponed due to a lack of consensus among legislators.

Despite the ban, which has been in place since 2009, e-cigarettes are reportedly widely available in Brazil.

August 23, 2024

Brazilian Tobacco Suitable to Ship to China

On Aug. 9, the Interstate Tobacco Industry Union (SindiTabaco) hosted a meeting to formalize the closure of the tobacco pre-inspection procedure for the 2023/2024 crop year, one of the requirements of the bilateral trade protocol between Brazil and China. The meeting was held in hybrid format, with the virtual presence of the technicians from the General Administration of Customs China (GACC) and the representative of the Ministry of Agriculture, Livestock and Food Supply (MAPA) and of the National Organization for Brazilian Phytosanitary Protection (ONPF), Pedro Carneiro Abreu.

Other authorities from Brazil and China attended the event as well.

“This is a primordial moment for compliance with the protocol. The samples were collected in a very effective manner, and it is with great satisfaction that I inform you that no pests were detected in the collected samples. This once again corroborates the quality of the Brazilian tobacco. China is one of our largest importers of tobacco, and this partnership plays a fundamental role for the continuity of the businesses between the two countries. We are sure that we will continue making strides in this relation,” commented Abreu from MAPA Brasilia.

“Our participation consists in representing this commitment, which is also shared by minister Carlos Favaro, besides acknowledging this activity as relevant for the entire country. In our understanding, this expresses our responsibility with regard to the Chinese inspection organs,” said Jose Cleber de Souza, superintendent at MAPA RS.

The MAPA was in charge of collecting the processed tobacco samples and sending them to the Central Analytical Laboratory of the University of Santa Cruz do Sul (UNISC) for laboratory tests that confirm the phytosanitary status of the product prior to shipment. Roque Danieli, tax auditor and head of MAPA’s Plant Health and Inputs Inspection Service in RS, presented details about the pre-inspection activities.

“During these 23 days in which we worked jointly with the GACC representatives, in virtual format, it was possible to attest to the quality of the 2023/2024 crop and demonstrate that, at field level, the 2024/[20]25 crop is now under cultivation with all the necessary cares in compliance with the requisites set forth on the protocol. The integrated production system gets the credit for the fact that tobacco is the commercial crop that uses the least amount of pesticides at field level, a result of the constant work of the farm extension agents. We hope that the presentation of the works is cause for satisfaction, and next week, we shall send the final report to Brasilia to be forwarded to the GACC,” Danieli said.

Zhang Nan Zhengrong, Leader of the China Leaf Company Delegation, presented the pre-inspection report to the attendees of the meeting jointly with the technician responsible for the Central Analytical Laboratory of UNISC, professor Adriana Dupont Schneider. She gave details of the analyses.

“This year, we analyzed a total of 54 lots with samples collected in eight companies. The laboratory activities took 24 days, and they certified the phytosanitary safety with regard to the nine quarantine pests set forth in the agreement, of which, six are types of insects, two weeds and the fungus known as blue mold. All the results were negative for the pests included in China-Brazil trade protocol,” said Schneider.

“Tobacco is an agricultural crop that suffers harsh criticism but has been vigorously defended by the MAPA,” said SindiTabaco President Iro Schuenke. “This has a lot to do with the social and economic importance of the crop for our country, especially for the South Region. China is our second-largest importer, coming only after Belgium, and every year purchases big amounts of our tobacco. And this is the moment for a special mention of the farmers that cultivate tobacco in Brazil who, along with the farm extension agents, have performed all the necessary works for our compliance with the necessary requisites that have kept Brazil as top leaf exporter over the past 30 years.”

August 14, 2024

Brazil Volume Down, Earnings Up

Brazil exported 195.26 million kg of leaf tobacco from January to June, down 8.82 percent from the same period in 2023, according to MDIC/ComexStat. The value, however, increased by 7.56 percent to $1.24 billion. China, Belgium, the United States, Indonesia and Egypt were the top destinations for Brazilian tobacco during the period.

In 2023, tobacco represented 11 percent of Rio Grande do Sul’s exports, according to SindiTabaco, which expects this share to increase. “The expectation is that we are going to export a smaller volume, due to the smaller size of the crop, but with revenue increasing by 10 percent to 15 percent in dollar terms,” said SindiTabaco President Iro Schuenke.

The Brazilian tobacco industry, which is concentrated in the country’s three southernmost states, is still recovering from devastating floods in May.

A survey carried out by SindiTabaco and its associate companies revealed that the storms hit 75 tobacco-producing municipalities and 1,929 farmers, with losses estimated to amount to BRL95 million.

According to Schuenke, the impact of the floods was somewhat mitigated by the high per-kilo prices this growing season (see “The Great Scramble”) and the fact that most farmers had already delivered their tobacco to the dealers due to the small crop this year.

“We regret the one-off losses of some municipalities and tobacco farmers, but we are confident that the size of the tobacco crop in the most affected areas shall remain close to the estimated projections for the 2024/2025 growing season,” he said in a statement.

July 26, 2024

Bearing Fruit

Alliance One’s seed breeders in Brazil are boosting crop quality and yields while improving disease resistance and tolerance for extreme weather conditions.

By Taco Tuinstra

Small may be beautiful, but in some cases, bigger is better. Take tobacco seeds, which range between 0.5 mm and 1 mm in diameter. A single gram of the material can contain a whopping 10,000 seeds.

While that may seem efficient, seeds of that size are also difficult to handle. That’s why Alliance One International (AOI) has installed a pelleting machine at its Global Research, Development and Deployment Center in Passo do Sobrado, Santa Cruz do Sul, Brazil. In a process similar to that used by pharmaceutical companies in pill production, the device coats tobacco seeds with a mix of inert materials, including clay (drug companies use gelatin), to beef them up to more manageable dimensions. The seeds that exit the machine are up to 50 times bigger than the ones that go in, allowing the grower to plant them accurately.

The seed pelleting machine is only one of many investments at the center’s seed industrialization unit, which was inaugurated in January of this year. The facility also houses equipment that performs functions such threshing, grading, upgrading, drying and finishing—capabilities that help improve germination, stimulate healthy, consistent crop development and increase yield. The unit, which sits on an 82 ha farm housing greenhouses, laboratories and other key infrastructure, has an annual tobacco processing capacity of nearly 2 metric tons and the ability to pelletize more than 200,0000 cans of seed for sale each year.

In addition to commissioning new equipment, the unit has been expanding its skills base, hiring agronomists, biologists and agricultural engineers, among other professionals. During the Brazilian crop’s peak period, the center employs approximately 100 people.

The investments are part of AOI’s endeavor to strengthen its global function using existing capabilities. AOI has been a major supplier in Brazil’s tobacco seed market for years, selling not only to its contracted farmers but also to other leaf merchants. Roughly 40 percent of Brazil’s tobacco volume, or more than 100,000 hectares, are produced with AOI seeds, according to the company.

Keen to share the “fruits” of the labor in Passo do Sobrado with its other origins, the seed industrialization unit now also services AOI operations outside Brazil. “Basically, we transformed a local research center into a global research center,” says Helio Moura, AOI’s vice president of global crop science and value chain. Already supplying AOI in Guatemala, Argentina, Turkiye and Thailand, the center is currently in the process of entering additional markets.

According to Moura, the new unit provides the company with greater quality control and makes it possible for all activities to be governed by the company’s internal integrated quality management system. “Improved quality control opens doors to selling our seed in new markets at a faster speed, increases customer and farmer satisfaction, and drives efficiencies within our business,” he says.

Those are important benefits because seed breeding is a finicky, labor-intensive and time-consuming business. For example, plants must be pollinated flower by flower—a delicate process that doesn’t lend itself to mechanization. Getting the necessary approvals and certifications requires time too. When you add up all the steps, creating a new variety can take up to 10 years.

Moura likens the process to a funnel. “You have thousands of breeding lines, then we start selecting and narrowing it down until we are able to launch a better variety than we currently have,” he says, adding that there is always room for improvement. “The latest variety is not perfect, just superior to the previous one,” he observes.

The seed industrialization unit breeds for characteristics such as quality, yields, disease resistance and tolerance for extreme weather conditions, an attribute that has become increasingly important in recent years, as was tragically demonstrated in early May when Santa Cruz do Sul suffered the worst flash floods in living memory.

To ensure the required variation, the seed industrialization center houses a germplasm bank with thousands of “mothers” and “fathers” for burley, flue-cured and dark tobaccos, along with oriental styles. “We have access to more than 3,000 different tobacco varieties to cross and create new, unique strains,” says Moura. The resulting hybrids don’t produce seeds, which means they are impossible to replicate and thus guarantee return business for AOI. At least once every three years, seed samples in the germplasm bank are tested to make sure that they are germinating. That way, the company knows they will be available when it needs them.

With the help of DNA markers, AOI’s scientists identify the desirable qualities. Advancements in biotechnology have made the work quicker, easier and more accurate. “Thirty years ago, there were only a few tools for making selections; nowadays, instead of looking for the phenotypes in the fields, we can look inside the plant and see the genes,” marvels plant breeding supervisor Elaine Batista. What’s more, the cost of equipment has decreased significantly, allowing biologists to make selections quicker, more accurately and with less effort.

To ensure that the results of its research and development are rolled out correctly, AOI works closely with its contracted farmers. A new variety may deliver superior yields under controlled conditions, but if it’s improperly deployed in the field, the grower will not enjoy the full benefit. “So we spend much time training our growers on the correct way to work with the seeds,” says Moura.

Aware of the importance of capturing and retaining knowledge within their organization, the scientists meticulously document their work. “For every project, we create a business case and a project brief. If someone asks about it 10 years from now, we can save time and money,” says Moura, who at previous employers faced many situations in which colleagues inquired about a past project only to be told that the results were no longer available, forcing the company to reinvent the wheel. And while it may be tempting to document only the projects that worked, the seed industrialization unit insists on documenting both its successes and failures. “We don’t have the time or money to spend on things that don’t add value,” says Moura.

Even as demand for cigarettes stagnates and some nicotine users are switching to tobacco-free products, the work carried out at the seed industrialization unit is likely to remain relevant far into the future. As a respected flavorist pointed out during a recent Coresta meeting, consumers are able to tell the difference between nicotine created in a laboratory and nicotine derived from natural tobacco leaf. The depth of expertise and the sheer variety of genetic material housed in Passo do Sobrado will enable the unit to continue developing varieties that not only improve farmers’ operations but also meet and exceed consumers’ expectations for many years to come.

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.

July 1, 2024

Brazilian Flood Damage Assessed

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

Iro Schuenke, president, SindiTabaco

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.

June 24, 2024

Brazil Mulls Higher Minimum Price

Brazil’s plans to raise the minimum cigarette price, reports Reuters, citing a government source. The goal is reportedly to offset losses from tax benefits granted to companies in some sectors and small municipalities.

Brazilians now pay at least BRL5 ($1) for a pack of 20 cigarettes.

The finance ministry’s executive secretary, Dario Durigan, told reporters the government was not raising taxes on cigarettes. He did not comment on the reports of plans to raise the minimum price to sell them.

Finance Minister Fernando Haddad said on May 27 that measures to increase revenue are ready and that the government is considering whether to send them to Congress this week or next via an executive order.

May 28, 2024

Industry Supports Flood Victims in Brazil

The people of Santa Cruz do Sul are resilient and SindiTabaco is confident the region will recover from the recent natural disaster. (Video: Taco Tuinstra)

The tobacco industry is coming together to assist Brazilians in Rio Grande do Sul, which in early May suffered the biggest floods in the state’s history, particularly in the Rio Pardo Valley region.

As one of the world’s leading tobacco growing areas, Rio Grande do Sul plays a key role in global leaf supply (see “The Great Scramble,” Tobacco Reporter, May 2023). To help flood victims, the Interstate Tobacco Industry Union (SindiTabaco) and its member companies have been carrying out various initiatives.

Among other things, local tobacco companies have continued paying salaries to employees unable to come to work as a result of the floods.

The trade group and its members have also been donating basic food items, cleaning supplies, hygiene kits, and furniture, providing personal loans for reconstruction to associates, and offering mental support from psychologists.

In addition, tobacco companies and associations have also donated power generators and water tanks, as well as boats and vehicles for rescuing stranded people and animals.

According to SindiTabaco, most tobacco operations came to a standstill after the floods hit on April 30, and gradually resumed the following week. “This is a crisis of an unprecedented degree, in which basic services are in jeopardy, like the lack of drinkable water and scarce communication,” said SindiTabaco President Iro Schunke in a statement.

Many member companies in the affected regions, he added, had difficulties contacting their employees.

In addition to looking after their employees, the tobacco companies are now working on recovery plans for their contracted farmers. According to Schunke, Brazil’s widely acclaimed integrated production system is now giving contractors a good grasp of the needs of the impacted growers. The high per-kilo earnings from this year’s crop should help farmers in the recovery process.

“The upcoming tobacco crop is in its initial phase and we are going to do a survey to come to grips with the losses that occurred. Just like what happened during the Covid-19 pandemic, we are going to move forward with resilience, joining efforts toward what has to be done,” said Schunke.

Readers wishing to support relief efforts in southern Brazil, can donate to the Rotary Club of Venancio Aires, which is headed by Inacio Leisman of Tabacos Marasca (see chart for bank details).

According to the Ministry of Development, Industry and Foreign Trade, Brazil exported 512 million kg of tobacco with a value of $2.73 billion in 2023.

May 14, 2024

The Great Scramble

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.

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.

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.

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.

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.

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.

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.”

Iro Schunke, president, SindiTabaco

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.

Helena Hermany, mayor of Santa Cruz do Sul, Rio Grande do Sul, Brazil

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.

May 1, 2024

Brazil Agency Upholds Vaping Sales Ban

The board of directors for the Brazilian Health Surveillance Agency (Anvisa) voted unanimously on April 19 to maintain a ban on the sale of e-cigarettes and other vaping products, reports Brazil Reports.

Manufacturing, selling, importing and advertising vapes has been banned in the country since 2009, but e-cigarettes remain widely available in small shops and online stores across Brazil.

According the Brazilian Institute of Geography and Statistics, 16.8 percent of students aged 13 to 17 said they had tried vaping at least once in their lives. An estimate 4 million Brazilians vape, according to Covitel, which carries out health-related surveys.

Anvisa’s vote follows a public consultation on the measure. Anvisa justified its position based on the rise in underage vaping in countries that permit e-cigarettes, the addictive properties of nicotine and the lack of long-term studies on the effects of vaping on health, along with the potential impact of allowing vaping on Brazil’s overall tobacco control policies, which have been praised internationally.

In July 2019, Brazil became the second country to fully implement all measures set out by the World Health Organization with the aim of reducing tobacco consumption and protecting people from chronic non-communicable diseases.

In voting to uphold the ban, Anvisa President Antônio Barra Torres cited a December 2023 World Health Organization publication recommending government prohibited electronic cigarettes based on current evidence.

The Brazilian Tobacco Industry Association, ABIFUMO, said that banning vapes is “ignoring the learnings of more than 80 countries that have already authorized their sale with clear rules for control, restriction of points of sale and taxation of manufacturers.”

Philip Morris Brasil said that “maintaining the ban on vapes is out of step with the uncontrolled growth of the illicit market, proven to be accessible to around 4 million Brazilians who use a product daily without any control of quality.”

Meanwhile, the Senate is debating a bill that would authorize the production, import, export and consumption of e-cigarettes in Brazil. The proposal is still in its early stages and does not have a date for voting.

April 23, 2024

‘Quit Like Sweden’ Global Effort Takes Off

International health experts rallied behind a major new global effort to replicate Sweden’s success at eradicating smoking by embracing a comprehensive approach that could prevent millions of premature deaths globally.

Quit Like Sweden (QLS), launched at a conference in Brazil featuring medical professionals, politicians and policymakers, aims to motivate and support countries worldwide to emulate the example of Sweden, which is set to become the first nation to attain official “smoke-free” status later this year.

“Sweden has achieved this remarkable feat by ensuring that safer alternatives to smoking are accessible, acceptable and affordable,” said QLS founder Suely Castro, a Brazil-born harm reduction advocate in a statement.

“A country where 49 percent of men used to smoke regularly has virtually wiped out this scourge by allowing its smokers to switch to products that pose just a fraction of the risks, such as snus [traditional smokeless tobacco] and other smoke-free alternatives like vapes and nicotine pouches.

“Swedes are reaping the health dividend with significantly lower cancer cases and mortality rates compared to their European counterparts. Now, Quit Like Sweden will amplify this message globally, leveraging expertise and fostering collaboration across stakeholders to help countries replicate the Swedish experience.”

Sweden is winning the war against smoking with a comprehensive approach to tobacco control that supplements traditional cessation and preventive measures with an all-important added element: giving smokers the opportunity to switch to safer alternatives.

Anders Milton, former chair of the World Medical Association and former secretary general of the Swedish Medical Association.

Castro was joined at the launch of her platform by leading harm reduction experts who unveiled new research showing that Brazil could save 1.36 million lives by 2060 by adopting the Swedish approach.

Earlier research has shown that 3 million more Europeans would be alive today if other countries had implemented Sweden’s comprehensive approach to helping smokers quit.

Meanwhile, a study of low-income and middle-income countries (LMICs) shows that, through the adoption of Swedish-style policies, Kazakhstan could prevent 165,000 premature deaths in the next four decades while South Africa, Bangladesh and Pakistan could save 320,000; 920,000 and 1,200,000 lives, respectively.

“Sweden is winning the war against smoking with a comprehensive approach to tobacco control that supplements traditional cessation and preventive measures with an all-important added element: giving smokers the opportunity to switch to safer alternatives,” said research co-author Anders Milton, a former chair of the World Medical Association and former secretary general of the Swedish Medical Association.

“It has set out a policy roadmap that should be treated as a gift to global public health and, potentially, one of the greatest ever breakthroughs in tackling noncommunicable diseases (NCDs).

“That’s why QLS is so important. By spreading the message of the Swedish experience to all corners, many millions of premature deaths—including almost 1.4 million here in Brazil—could be prevented in the next four decades.”

April 12, 2024

Tag: Brazil