Tobacco supply chain representatives met with the Brazilian minister of agriculture, Carlos Favaro, on July 12, to ask his support ahead of the upcoming 10th Conference of the Parties (COP10) to the World Health Organization’s Framework Convention on Tobacco Control (FCTC).
“Brazil is the top exporter of tobacco worldwide and has occupied this position for 30 years now and is the second largest producer,” said Iro Schunke, president of the Interstate Tobacco Industry Union (SindiTabaco), in a statement.
“For this leadership role, Brazil should be a protagonist in defending a crop that contributes decisively to the socioeconomic progress of several cities, especially in the south region of the country. Historically, the Ministry of Agriculture has been an ally of the productive sector within this context because it has a good grasp of the impacts of the directives coming from the FCTC could have on the thousands of people who derive their livelihood from this crop, which is processed and exported. This is the stance we again expect from the ministry.”
Brazil should be a protagonist in defending a crop that contributes decisively to the socioeconomic progress.
The meeting was also attended by Benicio Albano Werner, the president of the Tobacco Growers’ Association of Brazil (Afubra); Giuseppe Lobo, executive director of the Brazilian Tobacco Industry Association (Abifumo); Guido Hoff, executive director of the Association of the Tobacco Growing Municipalities (AmproTabaco); Carlos Joel da Silva, president of FETAG-RS; Romeu Schneider, president of the Tobacco Sectoral Chamber; and Helena Hermany, mayor of Santa Cruz do Sul.
COP10 is scheduled to take place in November in Panama.
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.
Following last year’s record earnings, Brazil’s leaf tobacco sector expects a larger crop in 2023.
By Marissa Dean
As global markets ebb and flow with impacts of the Covid-19 pandemic, inflation and the Russia-Ukraine conflict, the tobacco sector has not been spared. Labor shortages, shipping issues and price inflation have all impacted tobacco growing and sales over the past few years. Through this, though, Brazil has come out in the positive in the last year and expects to see another good crop season in 2023.
Increased Earnings
Brazil’s 2022 tobacco leaf exports brought in the most earnings since 2014, when the country sold $2.3 billion worth of tobacco leaf internationally (see “The Way Forward,” Tobacco Reporter, February 2014). The $2.5 billion earned from leaf exports in 2022 reflected a 67.44 percent increase in value and a 25.93 percent increase in volume from 2021, with the negative impacts from the pandemic beginning to subside and logistical bottlenecks easing.
In 2021, Brazil exported 464,429 tons of tobacco leaf, amounting to $1.46 billion, according to the Interstate Tobacco Industry Union (SindiTabaco). In 2022, the country exported 584,861 tons of tobacco leaf, amounting to $2.45 billion.
The 2021/2022 crop fetched a price of brl17.02 ($3.28) per kilogram in southern Brazil versus brl10.54 per kilogram for the 2020/2021 crop, according to Afubra, the Tobacco Growers’ Association of Brazil.
The majority of exports last year were headed to Europe, with Belgium accounting for 26 percent of shipments. China bought 19 percent of Brazil’s tobacco while the United States purchased 6.3 percent.
While there were many factors that contributed to the substantial earnings last year, “The decisive factors that contributed to the higher-than-expected exports in 2022 were the 2021 unsold stocks, which were shipped abroad in early 2022, and the improvement to the shipping and container logistics in the second half of 2022,” said Iro Schunke, president of SindiTabaco.
What’s to Come in 2023?
Following the strong 2022 season, Brazil is expected to harvest a slightly larger crop this year. According to Afubra, the planted area in southern Brazil should yield an estimated 604,732 tons, 7.95 percent more than in 2022.
To reach these estimates, the growers’ organization uses the number of plants registered in the entity’s Mutual System, by type of tobacco, according to Benicio Albano Werner, Afubra’s president. “To these numbers, we add the number of plants on properties that are not registered in the system,” he said. “It is considered also the percentage that producers planted above or below the quantities registered. These three factors give us the planted area.”
“The Brazilian tobacco crop is expected to reach approximately 600,000 metric tons,” said Schunke. “The quality of the crop will be good enough to meet the requirements of the different clients.”
In the Rio Grande do Sul region, tobacco growers increased their planted area by 3.17 percent and production is estimated to be 3.8 percent higher. In Santa Catarina, planted area was increased by 10.22 percent and production is estimated to be 11.49 percent higher. In Parana, planted area was increased by 6.99 percent and production is estimated to be 10.93 percent higher.
When asked about how the expected increase in crop size would affect 2023 sales and earnings, Schunke said, “The Brazilian tobacco crop has remained around 600,000 metric tons over the past five years, and the average shipments abroad over the same period have remained little above 500,000 metric tons. Therefore, the current crop fits into this context.”
The increase in production area was expected, according to Werner. “The past crop was, for a large part of tobacco growers, very profitable, with high lucrativeness,” he said. “This encouraged some producers to increase their planted area.”
Hurdles
Globally, the past few years have been hard; beginning with the Covid-19 pandemic in 2020 and followed by supply chain issues, global labor shortages, global inflation and the conflict in Ukraine, many sectors have been impacted in some way. Tobacco farming is not exempt.
Brazil’s tobacco industry is dominated by small-scale farming, with a total of 142,190 producers, the majority of whom are in southern Brazil (128,448) followed by the northeast (13,390) and a marginal amount located elsewhere in the country (352). The overall number of producers has decreased from the 2020/2021 season, which counted 151,388 producers.
The Covid-19 pandemic exacerbated the problem of child labor around the world due to increases in poverty, school closures and labor shortages. The International Labor Organization and the United Nations Children’s Fund released a report showing that 160 million children and adolescents ages 5 to 17 were subjected to child labor in early 2020.
The tobacco industry in Brazil has made considerable headway in addressing the problem. The Growing Up Right Institute, which focuses on eliminating child labor, is an initiative of SindiTabaco and its associated companies, supported by Afubra, helping to keep teenagers and children of tobacco farmers out of the tobacco fields. Companies associated with the institute hire young apprentices and pay them a salary equal to 20 hours a week to attend a rural management and entrepreneurship course after regular school hours.
In July 2022, the Growing Up Right Institute held a seminar in Santa Cruz do Sul with associates and partners, discussing progress made in combatting child labor and the work that needs to be done going forward. “The institute was founded with the mission to fight child labor and generate opportunities for adolescents from the rural setting, especially in tobacco growing regions,” said Schunke, who is also president of the Growing Up Right Institute. “It is a complex task, but with good partnerships, we have achieved great results. We have already become known nationally and internationally for the innovative method of offering opportunities to adolescents from the countryside through the learning law.”
Additionally, “The increase in [cost of] farm inputs, along with higher international freight costs, were responsible for pushing up the production costs of all agricultural crops, including tobacco,” said Schunke. While, based on last year’s earnings and expectations for this year, Brazil’s tobacco income seems well positioned, the industry will still have to fight against global inflation and the remaining supply chain issues.
“It is worth emphasizing that Brazil has been the largest tobacco exporter for 30 years due to the quality and integrity of the crop whilst complying with ESG [environmental, social and governance] questions,” said Schunke. “It is important for the tobacco growers to continue in line with these principles, always acting in compliance with good agricultural practices.”
A Rural Tradition
Image courtesy of Palheiros Paulistinha
Brazil is a prominent player in the global tobacco industry, known not only for its leaf tobacco but also for its cigarette manufacturers, including market leader BAT Brasil, which is perhaps better known as Souza Cruz. Within the larger commercial industry, however, lies a smaller, more rural niche of straw cigarette makers.
Palheiros Paulistinha is located in Bebedouro, Sao Paulo, Brazil, and specializes in the production of straw cigarettes, an artisanal product of Brazilian tobacco filler with a corn husk wrapper. The company was started in December 2004 with the aim of preserving the tradition of Brazilian straw cigarettes as well as adding value to the corn production process, making straw a high-scale raw material.
Palheiros Paulistinha produces about 168 million cigarettes per year, with the possibility of expanding local production to 300 million cigarettes annually. The company offers seven product lines, including flavored and nonflavored products.
Straw cigarettes are popular in the rural communities and among young adults, according to the company, partly because they lack chemical additives, with the exception of flavorings such as menthol. “We are experiencing a change of habits when it comes to tobacco customers in Brazil,” said Eduardo Pierini, export director of Palheiros Paulistinha. “While in the rest of the world, they are migrating to e-cigarettes and vapes, in Brazil, despite those products, they are more attracted to straw cigarettes because they are more natural and ‘stronger.’” This change has led to an increased market share for the company.
Each cigarette is handmade by trained individuals who prep the tobacco and corn leaves, cut the leaves, sterilize them and roll the cigarettes. Because of the handmade aspect, these products are more expensive than traditional cigarettes; however, the lack of chemical additives and “lack of smell,” according to the company, make them very popular as a “natural” cigarette alternative.
The company works with many small farms to procure corn husks “because the biggest suppliers sell the corn leaves to industries to produce animal feed,” according to Renata Grasseschi Dunck, export consultant for the company. They have eight suppliers, who buy corn leaves from different farms and from different states. The tobacco used in the cigarettes comes from Bahia in the northeast region of Brazil. Dunck went on to explain that Palheiros Paulistinha helps tobacco farmers buy “corn leaves for a higher value than the market. We also offer training, growth prospects, etc. [for the farmers].”
There’s a big focus on community within the company—“We also work in the rehab of prisoners, offering to them the opportunity to have a job,” said Dunck. “The prisoners have a lot of benefits working,” added Pierini. Prisoners are paid, and the work they do shaves down their sentences; “So if you are condemned for nine years in prison, you would serve six years of [the] sentence,” said Pierini. “So it’s good for all the society.” The company has manufacturing set up in prison workshops and works with signed contracts, following all rules and requirements of regulating organizations. More than 3,000 inmates work for the company.
While the company is looking to expand internationally, having recently registered with the U.S. Food and Drug Administration, Palheiros Paulistinha puts a lot of stock in sourcing locally and keeping the tradition in Brazilian straw cigarettes. –M.D.
Marissa Dean joined Tobacco Reporter in the summer of 2018 as a copy editor.Since that time, she has taken on additional responsibilities, including feature writing.Her skills span the publishing industry from layout and design to copy editing to content creation.
Farmers in southern Brazil have planted enough tobacco to harvest 604.73 million kg in 2023—7.95 percent more than in 2022, reports Kohltrade, citing the country’s tobacco growers’ association, Afubra.
In Rio Grande do Sul, the production estimate points to 256.73 million kg of tobacco, cultivated in an area of 117,675 hectares with a productivity of 2,182 kg per ha. Compared with the past crop, tobacco growers in the Rio Grande do Sul increased their area by 3.17 percent and production should be 3.8 percent higher, Afubra estimates. Average productivity during the 2021–2022 harvest was 2,168 kg per ha.
In Santa Catarina, the projection is 191.55 million kg, produced in an area of 77,489 hectares with a productivity of 2,472 kg per ha. The planted area increased 10.22 percent from last year, and production is estimated to be 11.49 percent higher. Santa Catarina’s farmers average productivity was 2,444 kg per ha in the past season.
In Parana, production should reach 156.46 million kg in an area of 66,576 hectares with an estimated productivity of 2,350 kg per ha. The producers of Parana increased their area under tobacco by 6.99 percent. Afubra estimated increased production will be up by 10.93 percent. Productivity in the past season was 2,267 kg per ha.
Afubra President Benicio Albano Werner said the increase in the production area was expected. “The past crop was for a large part of tobacco growers very profitable,” he said. “This encouraged some producers to increase their planted area.”
Tobacco growers in southern Brazil produced 560.18 million kg in 2021–2022, 10.9 percent less than in the previous growing season, reports Kohltrade, citing figures released by the Brazilian Tobacco Growers Association, Afubra, on Sept. 5.
Production included 512.59 million kg of flue-cured Virginia, 41.79 million kg of burley and 5.79 million kg of Galpao Comum, a native tobacco variety.
The area planted with tobacco in southern Brazil decreased by 8.8 percent year-on-year to 246,590 ha in 2021–2022.
While the leaf volume was down, the average price paid to tobacco growers in southern Brazil grew by 61.5 percent to BRL17.02 ($3.25) per kg this year.
The average price was BRL17.26 per kg in Rio Grande do Sul, BRL17.19 per kg in Santa Catarina and BRL16.41 per kg in Parana.
Industry representatives expect the southern Brazil region to cultivate a slightly larger tobacco area for the 2022–2023 crop.
The production estimate will be completed by the end of October.
Brazil’s Ministry of Justice in Brazilia (Photo: Jose Duardo)
Brazil’s Ministry of Justice instructed 33 businesses to stop selling e-cigarettes or risk a penalty of BRL5,000 ($966.65) per day, according to the The Brazilian Report.
E-cigarettes have been banned in Brazil since 2009, but they remain readily available online, at tobacconists and in supermarkets.
One of the companies targeted by the ministry is France-based Carrefour, one of the world’s largest retailers, which owns more than 1,000 stores in Brazil and accounts for 25 percent of the domestic retail market.
In July this year, Brazil’s national health surveillance agency, Anvisa, voted to uphold the ban on e-cigarettes, citing studies showing that the use of electronic smoking devices increases the risk of smoking in young people, the potential for dependence and the likelihood of lung, cardiovascular and neurological health problems.
Around 20 percent of Brazilians aged 18-24 vape, while smokers make up approximately 12 percent of the population, according to April 2022 polling data.
The Brazilian media conglomerate Grupo RBS has recognized Iro Schunke, president of the Interstate Tobacco Industry Union (SindiTabaco), for his contributions to the development of Rio Grande do Sul, one of Brazil’s leading tobacco producing states.
During an Aug. 30 ceremony in the municipality of Esteio, Schunke accepted the Guri trophy, which honors the accomplishment of citizens in areas such as agribusiness, music and technology.
A graduate from the Federal University of Santa Maria, Schunke has worked as an agronomist, manager, director and production superintendent. In addition to leading SindiTabaco, he is the director of the Federation of Industries of Rio Grande do Sul. In 2015, he also became director-president of the Instituto Crescer Legal, an entity that promotes professional education for rural young people.
“I thank Grupo RBS for this honor,” said Schunke in an article published on SindiTabaco’s website. “Rest assured that I will continue to work on behalf of the state, the tobacco sector and the Crescer Legal Institute.”
Brazil’s Growing Up Right Institute organized a seminar on child labor prevention at the Santa Cruz Country Club in Santa Cruz do Sul on July 7.
Under the theme, “Child labor: care, welcome and protection,” participants discussed the progress made in combatting child labor, along with the work that still needs to be done.
“The Institute was founded with the mission to fight child labor and generate opportunities for adolescents from the rural setting, especially in tobacco growing regions,” said Iro Schunke, president of the Growing Up Right Institute, in a statement. “It is a complex task, but with good partnerships we have achieved great results. We have already become known nationally and internationally for the innovative method of offering opportunities to adolescents from the countryside through the learning law.”
Since 2016, the rural professional learning program has benefited 596 young people in Rio Grande do Sul. As part of the program, tobacco companies associated with the Growing up Right Institute hire young apprentices and pay them a salary proportional to 20 hours a week.
Instead of working, however, the apprentices attend a rural management and entrepreneurship course in the shift opposite to their regular school hours. The classes typically take place in the apprentices’ normal schools or in venues provided by the municipal administrations, which also provide for food and transport logistics thus making it viable for the adolescents to attend the course.
According to a report by the International Labor Organization and by the United Nations Children’s Fund, 160 million children and adolescents, aged 5 to 17, were subjected to child labor in early 2020. The Covid-19 pandemic has exacerbated the problem of child labor around the world, with a sharp increase in poverty, closure of schools and consequent school evasion.
In Brazil, the National Household Sample Survey, demonstrated that 1.77 million children and adolescents works, 53.7 percent of whom are in the 16-17 year age group.
Brazil’s national health surveillance agency, Anvisa, decided on July 6 to maintain its ban on the import, advertising and sale of electronic cigarettes in Brazil, according to News Bulletin 24/7. The restriction began in 2009, but marketing continues illegally in the country, so Anvisa also called for increased inspections and educational campaigns to curb the illicit trade in e-cigarettes.
The decision was taken unanimously during a meeting of the body’s collegiate board. According to Anvisa Director Cristiane Rose Jourdan, scientific studies show that the use of electronic smoking devices increases the risk of smoking in young people, the potential for dependence and the likelihood of lung, cardiovascular and neurological health problems.
The Brazilian Medical Association (AMB) applauded Anvisa’s position. ”This is a wise decision, as there is increasing scientific evidence that the use of electronic smoking devices, the DEFs, is not harmless, does not support smoking cessation or is a form of harm reduction, but a product that causes dependence and can cause several diseases, especially cardiovascular, respiratory and cancer,” said Ricardo Meirelles, coordinator of the Commission to Combat Tobacco at AMB.
A survey carried out in the first quarter of 2022 by the Vital Strategies organization and the Federal University of Pelotas, revealed that 19.7 percent of Brazilians aged between 18 and 24 have tried electronic cigarettes.
BAT Brasil (formerly Souza Cruz) said it will assess the regulatory impact analysis of Anvisa’s decision when it is published.
“Dozens of countries have already understood the importance of risk reduction as part of their tobacco control policies and, given this reality, have advanced in the regulation of these devices,” the company said in a statement, citing the examples of United States, the European Union and the United Kingdom, among others.
Japan Tobacco International regretted Anvisa’s decision. “The use of electronic devices in the country is current and supplied exclusively by illicit trade. Legalized companies do not sell the product and the growth in consumption that affects the population comes from the illegal acquisition of devices,” the company said.
Tobacco buyers have been paying 43 percent more for flue-cured Virginia leaf and 35 percent more for burley leaf in Brazil, reports Kohltrade, citing a partial marketing survey carried out by Afubra, a tobacco growers association.
During a May 4 meeting of the Rio Grande do Sul Tobacco Sector Chamber, Afubra President Benício Albano Werner said famers have been receiving an average of BRL15.09 ($3.16) per kg for their flue-cured tobacco and an average of BRL13.48 for their burley this year, compared with BRL10.54 and BRL13.48, respectively around the same time in 2021.
Industry sources note strong competition to purchase the remaining stocks of green tobacco from farmers. By the end of April, the cigarette tobacco-producing states of Rio Grande do Sul, Santa Catarina and Parana has sold 73 percent of their Virginia tobacco, 93 percent of their Burley leaf and 92 percent of their Comum tobacco to leaf merchants.
The price increases are attributed to the rising cost of energy, fertilizers and labor, among other factors.
