This morning, I received an unsigned e-mail from a person who says he has studied Paraguayan cigarette production.
The writer estimates 2008 cigarette consumption at 2.43 billion cigarettes. There are 50 licensed factories, and based on export activity, the e-mailer suspects that 32 factories are producing on a regular basis.
Paraguay’s total production is around 35 billion cigarettes, according to the author—but the 2007 legal exports registered in the customs system were only 2.7 billion!
He estimates the total volume of Paraguay-made cigarettes smuggled into Brazil at 18 billion cigarettes in 2007.
The incentive is clear: The average price of a master case of cigarettes (50 cartons) at the Brazilian border is $55—11 times cheaper than that of legal products in Brazil.