Tag: International Tobacco Growers Association

Growers Discuss Tobacco’s Prospects

Photo: ITGA

Tobacco growers’ representatives from Argentina, Brazil, Colombia, the Dominican Republic and the United States gathered in Salta, Argentina, to discuss the challenges and opportunities facing their sector during the International Tobacco Growers’ Association (ITGA) 2023 Americas Meeting.
In addition to dealing with the Covid-19 pandemic, tobacco growers have struggled with skyrocketing production cost, stagnating leaf prices and increasing regulatory pressures. To cope with the challenges, ITGA member associations have been urging their respective governments to support the sector. The ITGA urges international institutions to respect tobacco growers and include them in the debates where their future is being decided.
Key discussion points during the regional meeting included the World Health Organization’s Framework Convention on Tobacco Control (FCTC) and the Conference of the FCTC Parties (COP), which is scheduled to take place in Panama this year. ITGA representatives deplored the COP’s lack of transparency and resistance to include industry representatives in its deliberations. Since COP4 in 2010, meetings have not been held in public.
ITGA President Jose J. Aranda highlighted the steps Argentinian growers have taken to ensure the livelihoods of local farmers. Aranda underlined the multitude of threats facing tobacco, including cost of production and climate issues, and the stigmatization of the sector, which he stressed operates in a legal market and complies with all the regulations imposed on it.
ITGA CEO Mercedes Vazquez recognized the pioneering spirit of Argentinian tobacco growers and their substantial contribution to local economies. She commended Argentina’s Special Tobacco Fund, a unique provision that has enabled tobacco growers to make a dignified profit margin from their work.
Michiel Reerink, director of corporate affairs at Alliance One International, examined the global regulatory environment while Benjamin Dessart, vice president of external affairs at Universal Leaf, reviewed the latest legislative initiatives in the Americas region.
ITGA Manager of Tobacco Industry Analysis Ivan Genov evaluated the threats and opportunities for tobacco growers. These include the rising costs of production, political and economic uncertainty, along with a disequilibrium of supply and demand for tobacco leaf.
ITGA member associations shared the latest crop estimates and discussed the issues in their respective markets. Special attention was paid to the situation in the host country, Argentina, where out-of-control inflation is causing serious obstacles for growers. Argentinian associations also highlighted several sustainability initiatives to tackle social and environmental issues.
The participants in the meeting agreed that they will have to work closely together to tackle the increasing challenges facing the sector.

March 3, 2023
ITGA Convenes in Portugal

Photo: Atlântico

The International Tobacco Growers Association will host its 2022 annual general meeting Oct. 26–29 in Castelo Branco, Portugal.
The event will bring together member associations and partners from around the world.
Among other topics, participants will discuss the latest developments for the sector and industry. Representatives from Africa, the Americas, Asia and Europe will present their sustainability visions, which will be complemented by the visions of leading companies.
For more information, visit https://www.itgaevents.com/events/agm-2022.

October 18, 2022
Fighting for Farmers

Photo: BAT

ITGA’s past and present CEOs, Antonio Abrunhosa and Mercedes Vazquez, reflect on the prospects for tobacco farmers in a rapidly changing business environment.
By Stefanie Rossel
In November 2021, Mercedes Vazquez took over as CEO of the International Growers’ Association (ITGA). She succeeded Antonio Abrunhosa, who announced his retirement after serving in the position since 1998. In a three-way conversation with Tobacco Reporter, the tobacco industry veterans shared their views on the past, present and future of tobacco farming.

Tobacco Reporter: Mr. Abrunhosa, in your 22 years at the helm of the ITGA, how has the leaf growing sector changed?
Antonio Abrunhosa: The main changes I witnessed in my tenure were the moves to decrease production in high-cost countries and move it to developing or underdeveloped countries, with much lower costs of production, especially salaries, which are the main [cost] component in many producing countries. Production went down by almost 1,200 million kg in the USA, Canada and the European Union in 30 years, and it increased by a similar amount in Brazil, Zimbabwe and Malawi, Tanzania and Zambia in the same period. Sales also switched from the auctions system, which prevailed in the U.S., Canada, Zimbabwe and Malawi, to contract growing—the Brazilian system. All this meant a substantial decrease in the [significance] of commercial, large-scale farmers—especially in Zimbabwe after land reform—and a radical loss of bargaining power of millions of growers all over the world [who were] facing seven main buyers with an oligopolistic power seldom seen in other sectors.
Then there was the invasion of tobacco regulation into all aspects of common life, in almost all countries, at different speeds and with different impacts, but [it] translated into the almost total absence of smoking in any public areas anywhere outside of China, and the disappearance of tobacco advertising from almost all media and sponsorship of public events. A visual example of this change can be seen by watching the difference between the Mad Men series and any recent movie of people in offices today.
That regulation got a totally different scale with the creation of the Framework Convention on Tobacco Control (the FCTC) by the United Nations, the first world treaty of the World Health Organization, which turned many dispersed local anti-tobacco initiatives into international law and created an enormous, rich and global anti-tobacco industry with thousands of NGOs [nongovernmental organizations] and companies, funded by public money, covering the whole world.
Furthermore, the technical revolution started by electronic cigarettes, vaporizers and heated-tobacco has deeply changed the consumers’ market and will continue to do so.
In the past years, the world has become much more aware of the dangers of reckless economic development based on the depletion of vital natural resources and the impact of such economic models on the planet’s capacity to sustain a population that has increased more in the past 30 years than it had in all the [previous] centuries. This awareness is impacting all kinds of businesses, especially in agriculture and, thus, in tobacco growing. That attention has pushed tobacco companies to request more and more stringent conditions of production from growers, especially in sensitive areas like labor conditions and child labor, deforestation, use of chemicals and water management.
These four changes have created a completely different tobacco sector compared to the one we had 20 years ago.

Antonio Aburnhosa (Photos: ITGA)

What has the ITGA done to help its members cope with these challenges?
Abrunhosa: Those changes impacted ITGA heavily, as some of its founder members lost thousands of growers and volume of production.
The widespread move to contract growing also meant a much more dependent relationship between growers and buyers, requiring a more intervenient role of ITGA in those relations and in the relations between growers and their governments.
ITGA’s role was also radically modified due to the inclusion into the FCTC of articles conditioning the ways in which growers could produce tobacco in the future or even aimed at ending tobacco production altogether. This required a much stronger presence of ITGA in international fora and a continuous participation in all kinds of members’ initiatives related with national or international issues affecting their businesses.

How much has actual tobacco farming changed during your tenure?
Abrunhosa: The pressure from the public and the published opinion about environmental and business sustainability, especially in a sector as controversial as ours, prompted the main buyers to [implement] radical measures in the management of their supply chains.
As it happens often in corporate praxis, research was done, plans were designed and screaming orders came down the corporate ladder, with little attention given to the opinions of the final and central recipients of those orders—the growers.
The typical case is GAP [good agricultural practices], about which I have said in many meetings that it threatens growers with the big stick of contract suppression in case they disrespect the unending list of mandatory rules for their production but seldom, if ever, shows the carrot of better prices to cover the increased costs that those rules imply.
Child labor is a typical case. Moving production to a country like Malawi requires acknowledging the fact that local infrastructures for childcare are limited or nonexistent. This means that parents have nowhere to leave their children while working—in environments with wild animals. And, in recent years, particularly now, significant increases in the costs of production have not been followed by correspondent increases in tobacco prices. That means additional difficulties for growers to hire workers.
Acknowledging these problems, ITGA, together with IUF, the main worldwide trade union for agriculture workers and almost all the important tobacco companies, except Indian and Chinese ones, created an international foundation, the ECLT, based in Geneva, which, for more than a decade now has been implementing projects in tobacco areas all over the world to address the problem.

What achievements are you most proud of?
Abrunhosa: I am most proud of having established ITGA as the world brand for tobacco growers in spite of the increasingly difficult regulatory, structural and financial conditions of the sector; of our members and of ITGA’s office, which always had between two and four officers. This was particularly relevant when the anti-tobacco lobby, much reinforced by the FCTC, aimed at legally banning tobacco production.
I am also proud of having been able to pass this heritage to the highly capable hands of my successor, Mercedes Vazquez.
Ms. Vazquez, what, in your view, are the most pressing issues for farmers now and in the midterm?
Mercedes Vazquez: Pricing and sustainability, which are intrinsically linked. Sustainability includes all social and environmental challenges but also—and most importantly from farmers’ point[s] of view—the economic survival of their businesses. Without it, other sustainability issues become irrelevant. For years, we have been trying to make this message get through, especially during the prolonged period of stagnation in prices combined with rises in costs of production everywhere.
Now, considering the unprecedented times we are living in, after two years of the pandemic and still comprehending the realities of the war in Ukraine, “long-term” in tobacco production is 12 months. Consequently, in some countries, growers are moving to more profitable crops. If we consider the generational problem in agriculture where youngsters do not feel attracted to follow their family businesses plus this demoralizing scenario, in countries not too dependent on tobacco, companies will face a gap to fulfill their demand for clean, good-quality crop.
For highly dependent countries, there is not a cent that has not been squeezed to the limit. Unless substantial changes are made—mainly in poverty alleviation to grant margins that will allow growers to be in compliance with good agriculture practices—sustainability of the sector will be ever more at stake. Changes will only happen with all main players involved, and ITGA will do its part on behalf of our growers’ associations and tobacco growers in general.

Mercedes Vasquez

What are your plans to help ITGA members to cope with these challenges?
Vazquez: ITGA is at the core of the tobacco conversation. We have been around for almost 40 years. Our experience and global network capacity make us a pivotal player in all discussions related to tobacco around the world. More than ever, we need to work as the vehicle to spread growers’ messages and to promote dialogue among key players in the sector. Outside the sector, ITGA is liaising with agriculture agencies and entities to make sure tobacco growers are taken into account in the global sustainability agenda. With this, we also mean to normalize our sector in the global context, getting rid of the negative connotation we have carried all these years.
Our main concerns are related to those developing countries that are very reliant on tobacco production. There is no transition plan for the near future. To a certain extent, this is due to the lack of collective work done in this regard. After two years of pandemic with limited access or none to our growers’ gatherings, ITGA is committing its time and resources this year to meet them, to bring them together and make their voices be heard. We feel that there is momentum to raise this united collective voice, and growers are responding to this call.
This shouldn’t require a special mention in the 21st century anymore, but you are the first female CEO in the ITGA’s history and one of only a few women at the top of a tobacco-related organization. What is it like?
Vazquez: It seems pretty normal to me because during my more than 10 years of work in ITGA, I have never had reason to think that this could not be possible at some point if I made my work meaningful to our members. I never worked thinking about becoming the CEO, though, and this was important, too, because it did not get me distracted and allowed me to focus on my duties and in making my work worthwhile. The process was very natural, but I think the turning point was my personal investment, going to visit all members’ associations and getting to know their boards and staff. Now I can say—and I think my members would agree—we have built a personal relationship, and I am very close to most of them.
Are we going to see a stronger ITGA focus on gender equality and the issues facing women in the tobacco cultivating sector?
Vazquez: I will do everything in my powers to advance this agenda. Before becoming the CEO, I have always done my best to shed light on women working in the tobacco sector and more specifically those involved in tobacco production. I introduced this item into ITGA’s key priorities with no objection [from others]. The current edition of our flagship publication, The Tobacco Courier, pays tribute to women in tobacco, and we managed to interview many of them from various parts of the globe. I highly recommend the reading of these interviews to learn about their realities. What got my attention was to see that regardless of their specificities, they all agree about the need of education and capacity building. They all want to improve and become more relevant in business decision-making. I have met many of them, and they are all a source of inspiration.

What are the ITGA’s goals for the future?
Vazquez: The future has never been as uncertain as it is now. ITGA must keep advancing the growers’ legitimate and independent agenda. Tobacco production has dramatically changed over the years, diminishing growers’ control over their product. Twenty years ago, the scenario was very different with auctions operating at a higher rate than contracts. ITGA is here to assess the impact of these changes, to help growers make informed decisions through market analysis and [to improve] our tools to provide accurate information. We aim to bring the sector together and expand our network to run efficient advocacy. At this moment, we need to put pressure in the pricing improvement as a paramount issue, and growers are telling us that this is the time to act and to speak out, so we will be up to these expectations.
Provided the challenges for the tobacco growing sector, such as the continuous global decline of cigarette consumption, will persist, where do you see the ITGA and its members 22 years from now?
Vazquez: In 22 years from now, I honestly believe that unfortunately some, not to say many, tobacco farmers and ITGA members will be out of this business. This can happen overnight, as we witnessed with the case of Colombia. Only the ones with the ability to absorb the increasing demands and with a diversified portfolio will remain. Some will be forced to disappear; some others will simply move out.
Tobacco growers’ associations are rare these days. Those remaining are ITGA members. Unless their governments reinforce their role and make sure they are included in every conversation taking place about tobacco, its contribution, its future, its sustainability … at some point, they will be made redundant by companies, taking over their part with the direct contract system.
As for ITGA, we will stick to our commitment even after that. If there is no tobacco production the way we see it now, there will have to be a transition for those vulnerable growers forced to quit. Consumption is declining at a fair pace to permit the changes needed for this sector to adapt. The problem is that farmers are getting ambiguous messages that stimulate productions in some regions while depreciating it in others, and that situation continuously changes. Our partners should be more consistent in that regard because this uncertainty is certainly harming this industry.

Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

June 1, 2022
New Hurdles Ahead

Photo: Attasit

Growers discuss the challenges and opportunities facing their sector during ITGA’s annual Issues Day.
By Stefanie Rossel
Increasing regulatory pressure, sustainability, climate change and child labor emerged as the main challenges during the International Tobacco Growers’ Association’s (ITGA) Issues Day on Nov. 18. Due to the ongoing Covid-19 pandemic, the conference for took place virtually for the second year in a row.
The ITGA’s president, Abiel M. Kalima Banda, described 2021 as another year of limitations. Interestingly, though, the Covid-19 crisis wasn’t as bad for the tobacco industry as it was for other businesses, as ITGA’s CEO Antonio Abrunhosa pointed out. Especially in the main leaf countries, production went back up again, with markets returning to normal.
However, new regulations are presenting new challenges to farmers. For example, just one day before the ITGA meeting, the European Union executive outlined a draft law requiring companies to prove that agricultural commodities destined for the bloc’s 450 million consumers were not linked to deforestation. “The future of regulation will be tougher than it is now,” said Abrunhosa. “Growers will suffer the greatest part of sustainability issues. Buyers must be aware that farmers need a decent income to be sustainable and support their families.”
While burley witnessed another year of decline, flue-cured Virginia (FCV) volumes in Brazil, Zimbabwe, the U.S. and China experienced a boost, according to ITGA tobacco expert Ivan Genov, referring to data provided by Universal Leaf. An even higher growth rate is expected for 2022, but it is likely to remain below the range that was the norm before the pandemic. Growers are faced with steadily increasing production costs, Genov said. “The situation remains volatile; the pressure on the sector remains strong. Sustainability issues will increase and intensify further.”

Slight Recovery
Ivan Genov
World tobacco leaf production stood at an estimated 4.74 billion kg in 2021, with FCV production amounting to 3.47 billion kg, slightly up from 3.37 billion kg in 2020. By 2022, production is anticipated to reach 3.5 billion kg. Dark air-cured production remained stable at 111 million kg in 2021, whereas oriental declined from 155 million kg in 2020 to 128 million kg in 2021. Burley production declined to 411 million kg in 2021 from 446 million kg a year earlier. The latter crop is expected to recover next season, with production going back up to 468 million kg in 2022, which would still be below pre-Covid-19 levels.
Seven of the world’s top 10 tobacco exporters by volume saw declines in 2020. Brazil’s exports dropped from 530 million kg in 2019 to 485 million kg in 2020; China’s exports declined from 194 million kg in 2019 to 186 million kg in 2020; and India’s exports decreased from 186 million kg in 2019 to 177 million kg in 2020. Only Argentina and Turkey registered a minor increase in production for export, according to U.N. Comtrade figures.
In terms of value, Brazil finished first with $1.51 billion worth of tobacco exports in 2020, followed by Zimbabwe ($741 million) and the United States ($695 million). According to Universal Leaf, China will provide around 50 percent of global FCV production in 2021, followed by North, Central and South America with a combined 24 percent share. Africa and the Middle East, currently standing at 10 percent, are expected to increase production volumes in 2022.
Growers in the U.S. and Zimbabwe suffered challenging working conditions in 2020. The U.S. fought a trade war with China, whereas Zimbabwe was hit hard by Covid-19, which delayed auctions. On Nov. 8, the country’s ministry of lands and agriculture announced plans to generate more value from its tobacco sector. It aims to create a $5 billion tobacco industry by 2025.

Cigarette Value Under Pressure
Shane Macguill
Shane MacGuill, Euromonitor global lead for nicotine and cannabis, looked at the current key drivers in the global tobacco market. The Covid-19 disruption, he observed, has created both threats and opportunities. The pandemic will potentially have implications in the medium term regarding consumer choice and disposable income. Significant prevalence and visibility declines, caused by tobacco control, he noted, will probably be the long-term key driver. MacGuill expects this to ease a little in the future, though. Heated-tobacco products (HTPs) and nicotine pouches have broadened the nicotine universe and caused a fragmentation. “As a consequence, cigarette value will diminish over time,” he said. Regulatory innovation has been key in the tobacco space historically and is expected to continue, potentially even further. MacGuill singled out the “beyond nicotine” sector as another key driver.
In 2020, global cigarette volumes just held up, whereas value came under pressure, according to MacGuill. Excluding China, consumption stood at 2.79 trillion cigarettes. Illicit product accounted for 12 percent of cigarette sales.
The value of cigarette sales declined by 0.2 percent in 2019–2020, while stick equivalent value rose 1.4 percent. The overall value of the global cigarette market was $484 billion, and the global average pack price was $2.77, or $3.47 excluding China. Cigarettes represented an 84 percent share of total value sales (81 percent excluding China).
Between 2015 and 2020, total cigarette demand grew most in Ethiopia, Jordan, Egypt, Hong Kong, Cambodia, Brazil, Vietnam, Algeria, Lebanon and El Salvador—primarily developing countries that saw migration from other tobacco categories into the cigarette category and perhaps lower regulation and excise. Demand fell most in Japan, Sri Lanka, South Africa, Ukraine, Peru, the Philippines, Australia, Saudi Arabia, Lithuania and Greece. Here, the decline was pushed by a combination of strong regulatory measures, increased taxation and the rise of cigarette alternatives. HTPs were driving substantial cigarette volume loss, most notably in Japan.
Of the top 15 stick markets, Egypt, Vietnam, Bangladesh and India are expected to grow in stick/stick equivalent volume.

HTPs Heating Up
Global illicit cigarette trade dropped during 2020 as border closures and lockdowns interfered with illicit supply chains. However, MacGuill expects a return in growth, with illicit trade standing at around 15 percent eventually. Eastern Europe and Asia-Pacific will be among the most affected regions over the next five years as a result of affordability.
“HTPs will cement their place at the head of the vapor growth narrative,” MacGuill predicted. “With the leading growth markets between 2020 and 2025 including Russia, Germany, Poland, the U.S., Japan, Italy, Ukraine and South Korea. To consumers, availability, ease of use, the possible impact on health but also price are among the most important product features. In a consumer survey, lack of information on the products was named as the essential barrier for not using HTPs.”
Nicotine pouches reached a value of $1.2 billion in 2020. With benefits from lower barriers to consumers’ communication and—for the time being—less regulatory pressure, the segment is expected to grow by 40 percent to 2025.
During 2020, overall monthly nicotine use grew in 17 markets, possibly due to pandemic-related factors, such as boredom and stress, according to Euromonitor. While cigarette use mostly declined or stayed flat and e-cigarette use plateaued in some key markets, HTPs saw a significant uptake. Across formats, price remained the key product feature.
Many tobacco manufacturers see their future in “beyond nicotine” products, especially in the field of cannabis. According to MacGuill, investors are now assigning greater value to nicotine companies that are more diversified away from combustible products. Companies are also likely to focus more on cannabis as a potential substitute for their tobacco and nicotine products. Sales are set to reach $92 billion by 2026. Key trends in the cannabis space include a wider range of ingredients and formulations, targeting new populations, such as gamers, and new occasions, such as cannabis products in tins for dogwalkers.

More Regulation Looming
Michiel Reerink
Michiel Reerink, corporate affairs director and managing director at Alliance One International, listed the outcomes of the ninth session of the Conference of the Parties (COP9) to the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC), which took place Nov. 8–13, 2021. Among other things, COP9 delegates agreed on the creation of an investment fund to support control activities and noted and deferred to WHO reports on technical matters including HTPs as well as on research and evidence on novel and emerging products without discussion or decision until COP10 in 2023.
In the EU, the Supply Chain Due Diligence Act will increase the industry’s regulatory burden. In March 2021, the European Parliament adopted a resolution on corporate accountability, which stipulates a due diligence requirement for human rights and environmental standards that is likely to be aligned with OECD and United Nations Guiding Principles. By now, 15 EU member states have adopted human rights at the supply chain level. “Suppliers should prepare for this legislation,” Reerink said. “Due diligence should already be part of their company code of conduct.”

Finding Alternative Livelihoods
Heliodoro Campos, manager of the National Tobacco Fund in Colombia (Fedetabaco), described the plight of small-scale tobacco farmers in his home country. The sudden exits of Philip Morris International and British American Tobacco in 2019 and 2020, respectively, left thousands of tobacco famer families struggling for alternative sources of income (see “Blueprint for Exit,” Tobacco Reporter, March 2021). A conversion plan that envisaged the cultivation of permanent crops, such as Tahiti lemon, for the 30 percent of families that are landowners and transitory crops, such as maize or yuca, for the remaining 70 percent of families who lease their land did not materialize, as Colombia didn’t provide the required financing.
Campos’ presentation was a cry for help. Stakeholders are now hoping that a new conversion plan that foresees the production of non-THC cannabis will yield better results. A pilot project is expected to provide insights into the cost of production and potential profitability next year. Campos said he was trying to find resources for this plan, also internationally.

Stepping up the Fight
Innocent Mugwagwa, senior manager of the Eliminating Child Labor in Tobacco Growing Foundation (ECLT), outlined the development of his organization, which has moved from focusing on implementing small projects in Africa in the first decade of the millennium to signing pledges of commitment with companies and addressing minimum requirements for businesses and human rights in the 2010s.
In 2021, the foundation started concentrating on technical assistance, supporting governments so that they can protect children’s rights and supporting businesses to prevent and remedy child labor. It will also cooperate more closely with the ITGA to strengthen famers’ voices in defining fair standards and educate farmers in languages they understand. “We already worked together with the ITGA in the education of farmers on Covid[-19],” Mugwagwa explained. Furthermore, the ECLT will leverage governments and businesses to support ITGA members’ and farmers’ efforts in combatting child labor.
The ITGA’s vice president, Jose Aranda, closed the conference by emphasizing that a unified voice and strengthened efforts were needed to fight the challenges. “We must understand that the new challenges to our sector are threatening, with increasing regulations and the growing popularity of products without tobacco. Some markets are already gone.”

Antonio Abrunhosa
Vázquez succeeds Abrunhosa as ITGA CEO
The International Tobacco Growers Association appointed Mercedes Vázquez as its new CEO during the organization’s 36th annual general meeting, which took place virtually Nov. 18-19. Vázquez succeeds António Abrunhosa, who announced his retirement after serving in the position since 1998.
Members expressed their gratitude and highlighted Abrunhosa’s role in positioning ITGA as a key player in the global tobacco sector.
“In my new role I will do my best to continue this learning process from all of you so I can ensure and reinforce the long-lasting relations with our partners so we can together overcome the common challenges we are facing in our sector,” said Vázquez.

Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 1, 2022