Farmers concerned

| November 2, 2017

The ITGA worries about slumping demand for leaf tobacco and a lack of alternative crops

Tobacco Growers from Africa, Asia, Europe, North and South America gathered at the International Tobacco Growers’ Association (ITGA) annual meeting in Litohora, Greece, on Oct. 16-17, asking governments and institutions to open a formal dialogue to address the sector’s challenges resulting from a decrease in demand for its products and the absence of viable alternative crops.

Continued declines in the demand for tobacco will lead to a drastic drop in employment and family income in many countries, according to the ITGA. Without a concerted effort to find alternatives for tobacco growers, the organization fears the situation will get even worse.

The gathering took place against a backdrop of considerable political turmoil, including the deepening of the Middle East crisis and the growing potential for conflicts around the South China Sea, the Korean peninsula and eastern Europe. The rise of populist parties in many developed-world democracies is also calling into question the continuity of long-established trends.

This has made the business environment less predictable, especially in the leaf tobacco sector.

There are, nevertheless, some unshaken realities, according to the ITGA: The present population of more than 900 million smokers will likely remain stable for at least a decade. The population of the world will go from the present 7.5 billion to 9 billion in 2050, which will mean that food production will have to increase steeply in the coming decades, even years.

Meanwhile, regulation of the tobacco sector and other factors have caused the legal tobacco market to shrink. Only three countries expect an increase in smokers’ prevalence at this time. Because regulation depends on the political environment it has become less predictable in recent years.

But the anticipated decline in tobacco use is driven not only by external factors. Philip Morris International (PMI) recently announced its intention to phase out combustible cigarettes. As part of that ambition it has promised substantial donations to the recently created Foundation for a Smoke Free World. The company has invested heavily in heat-not-burn (HnB) technology.

British American Tobacco (BAT) and Japan Tobacco International (JTI) are also developing heat-not-burn products and they are speeding up their distribution as they do not want to fall behind.

The future of those products is important for tobacco growers as they are the only alternatives to traditional cigarettes that require leaf tobacco.

Beyond the customers’ preferences, the future will depend on taxation and regulation. Several governments want to tax new “tobacco” products just like cigarettes; other governments want to tax them at lower levels to encourage smokers to switch from traditional cigarettes.

Regulation will be decisive. If HnB products are treated like traditional cigarettes, with all the associated  bans and limitations, it will be almost impossible for the companies to advertise them and communicate their advantages.

Another point of concern for growers is the recent announcement of the U.S. Food and Drug Administration (FDA) regarding the implementation of a policy to reduce nicotine in cigarettes. This measure will influence policymakers in other countries and will eventually impact the most vulnerable part of the tobacco value chain, the growers. For them, it will be almost commercially impossible to produce leaf with such low levels of nicotine. Besides, the reduction of nicotine will make the sale of traditional cigarettes almost impossible too, pushing consumers to illicit products that do not respect such limits; and therefore, the demand for legal tobacco will drop sharply without any alternative plan for tobacco growers around the world, according to the ITGA.

The growers already face a similar from the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC). Many of the subjects discussed in the FCTC meetings concern tobacco growers. Articles 17 and 18 relate directly to tobacco production as they refer to alternatives to tobacco production and the environmental impact of tobacco growing.

Growers have been offering their help and their expertise to define measures that will directly affect their future. The legitimate growers’ representatives could have helped the government delegations attending FCTC meetings to have a much more realistic view of the present situation of tobacco growing around the world. Growers insist that the WHO FCTC must return to its original mandate under Article 17, as was reiterated at the previous Conference of the Parties (COP6) in Moscow.

COP6 reaffirmed the importance of carrying out studies and research to identify alternative crops that could provide a level of income and assured export markets equal to those provided by tobacco.  For this reason, it was agreed upon that pilot projects in tobacco-growing regions would be necessary to demonstrate the long-term feasibility of such alternative crops.

However, the FCTC keeps excluding growers and their representatives from the discussions about matters having a direct impact on tobacco production and therefore, on growers’ livelihoods.

With COP8 on the horizon, the growers will have to be prepared for a new wave of dangerous proposals. The ITGA is expecting direct attacks on tobacco production this time, given the aggressive FCTC report on the impact of tobacco growing, released last spring. This report referred almost exclusively to tobacco’s negative impacts. According to the ITGA, it contained biased and in many cases totally unscientific views—particularly on possible alternatives to tobacco—and highly exaggerated positions on problems such as child labor, deforestation, soil erosion and water management.

The ITGA says that tobacco growers are committed to working in a compliant manner, following good agricultural practices to produce a crop supplying a legal market of more than 900 million consumers. Their crop provides a livelihood to millions of farmers, rural workers and their families around the world.

They also agree about the efforts to be made in order to improve tobacco production and sustainability to address challenges, such as child labor and deforestation, and accept the need of regulating consumption of tobacco products.

However, they insist that regulatory measures should be balanced and based on science, not opinions, so as to prevent such measures from having a devastating impact on the livelihoods of millions of tobacco farmers and laborers, without achieving the desired aims of tobacco control.

Even so, the ITGA expects some aggressive proposals against the growers in the coming COP besides the usual ones on plain packaging, high taxation of tobacco products, ingredients and possibly, nicotine reduction in cigarettes.

Any of the foreseeable scenarios carries an almost certain future reduction in the demand for tobacco products and ITGA members and tobacco growers in general need to begin adapting to this reality.

Prices have been stable or are falling due to the fact that many countries have not reduced their production and some are still increasing it. A price crash has not happened yet because the weather has reduced production in some of the biggest producers, but the forecast for the next crop is not a pleasant one, according to the ITGA.

If the weather is “favorable,” the sector may have more than 200,000  tons of oversupply, particularly in flue cured.  The ITGA has been insisting on the need to foster diversification and some of its members have already gone a long way in that path—but a lot more has to be done. As the FCTC is doing little to support research on diversification, the ITGA and its associations will have to find ways of doing it.

Tobacco growers attending the ITGA annual meeting signed a declaration requesting governments and international bodies:

  • To respect their right to be consulted on the development of policies which have a direct impact on them must be guaranteed,
  • To recognize the significant economic contribution of the tobacco crop to the economies of tobacco-growing countries to be recognized, and
  • To undertake a comprehensive economic study on the market and take into account its results when proposing measures.

 

 

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