Contents - Previous - Next

Tobacco

Production increased again in 1993

Production grew 6 percent in 1993. similar to the growth in the previous year. The 9 percent rise in the developing countries more than offset a 3 percent drop in the developed countries. Production in Africa increased by 5 percent, almost wholly due to larger crops in Malawi and Zimbabwe. Good weather conditions in Zimbabwe not only sustained production volumes but also led to a significant improvement in crop quality. Conversely, crop quality in Malawi suffered from poor weather and the reduced price may lead to a fall in plantings in 1994. There was a record crop in Argentina, from a slightly increased area, and a sharp recovery to earlier production levels in Mexico, where the area planted has doubled since 1991. These increases more than offset a slight decline in Brazil. Brazilian growers reportedly intend to reduce output further in 1994 as a result of falling domestic and overseas demand.

Output in the Near East fell by 19 percent mainly because of a steep fall in Turkey. There the planted area was down considerably due to reduced support prices. and yields also decreased. By contrast. output in the Far East surged by 12 percent to approach 5 million tonnes or 58 percent of global production. Most of the increase was in China but future expansion of planting may slow down due to rising costs of production and increasingly attractive returns from alternative crops such as fruit and vegetables.

The largest decrease was in the European Community where output fell by 12 percent on an area reduced by 10 percent. Quota reductions, as part of the reform of the Common Agricultural Policy, were the main reason for the decrease. The area planted also fell in the United States as there was it substantial reduction in the quota for burley tobacco reflecting decreased domestic demand and stronger competition abroad. Minor increases elsewhere were insufficient to prevent output in the developed countries falling to 1.8 million tonnes, similar to the average for 1988-90.

The 1993 increase in overall output mainly reflected that of flue-cured and burley tobaccos. Expansion of these tobaccos in Brazil. China, Malawi and Mexico more than offset lower output in the developed countries. Production of oriental leaf increased 6 percent reflecting a recovery in the countries of the former USSR following the previous drought-induced losses. That increase offset a sharp reduction in Turkey, where prices were unfavourable, and in Greece, following EC agricultural reforms. By contrast, production of dark leaf tobacco declined slightly with pest damage in Brazil and reduced planting in China being only partly offset by an expansion of plantings in India and Indonesia.

Production had also increased considerably in 1992

Tobacco production exceeded 8 million tonnes in 1992. This was more than one million tonnes greater than the average of 1988-90 and reflected the continued expansion in the developing countries where one million tonnes was added to their output in the early 1990s. Expansion in China, which accounts for almost 40 percent of world production, was less rapid than in previous years, some 4 percent. In Africa the rise was 13 percent with production in both Malawi and Zimbabwe responding to the relatively favourable prices of the previous season. In Brazil the increase was 41 percent with a 16 percent expansion in the planted area and substantially increased yields. Increased output in Latin America and the Caribbean almost solely reflected the growth in Brazilian output though the harvest in Argentina rose above 100 000 tonnes. Production in the Near East advanced sharply following expanded planting in Turkey. In the Far East, the 1991 rise in world prices encouraged increases in production in the Philippines, the Republic of Korea and Thailand and, to record levels, in India. These countries accounted for nearly half the expansion in the region with China contributing the remainder.

Production in the developed countries increased slightly in 1992. A small increase in the crop in the United States reflected a slight increase in area. Production in Greece increased by 25 000 tonnes, following a temporary, large increase in area planted, but was insufficient to prevent a moderate contraction in the EC with decreased crops in France, Italy, Portugal and Spain. Output increased slightly in countries of the former USSR but this did not offset reductions in Eastern Europe, principally in Poland and Romania.

Trade growth almost ceased in 1993

The recent fast growth of trade in leaf tobacco slowed in 1992 and seems to have almost ceased in 1993. However, exports by the developing countries were likely to have risen by almost 10 percent to over 1 million tonnes, whereas exports by the developed countries were likely to have fallen 11 percent to just over 0.6 million tonnes, in 1993. These changes are a continuation of a recent trend and reflect agricultural reforms in the EC and increased use of cheaper tobacco by cigarette manufacturers. The unit value of their 1992 imports from developing countries was only 54 percent of the unit value of those from the developed countries.

1992 trade growth slight

Leaf exports increased by 2 percent in 1992 with almost all the increase accounted for by the developing countries, their exports grew 3 percent to account for 59 percent of the world total. By contrast, exports from the developed countries hardly changed. Total exports from the developing countries increased by 29 percent between 1988-90 and 1992. However, regional growth differed widely. Over this period Africa's exports grew rapidly, overwhelmingly from Malawi, up 43 percent. and from Zimbabwe, up 41 percent. Exports of Latin America and the Caribbean increased by 21 percent. Most were from Brazil where shipments surged to over 240 000 tonnes with a bumper crop. In 1992, Argentina's exports also rose to 33 percent above the average of 1988-90 following substantially increased crops in 1991 and 1992. Exports by the Far East increased again reaching a level 56 percent above the average for 1988-90. The expansion in 1992 came mainly from India. but the latter increase was offset by reduced exports from China, Thailand and Indonesia. By contrast, exports from the Near East fell by 19 per cent from the 198890 average reflecting contraction in exports from Turkey where a small crop in 1991 led to a 44 percent drop in exports in the following year.

Among the developed countries the United States again increased unmanufactured leaf imports more than exports and was a net importer for a second year. The EC was an even larger net importer of leaf. By contrast, the net exports of cigarettes of both markets have doubled since 1988. The share of exports in cigarette output of the United States rose from 17 percent in 1988 to 29 percent in 1992. In the EC the increase was from 26 percent to 38 percent. With the consumption of tobacco declining in the developed countries the industry there has added value through the manufacture and export of cigarettes. However. leaf imports by the United States may stagnate or decline Lis a result of recent legislation limiting the amount of foreign tobacco that can be used in domestically manufactured cigarettes.

Stocks sharply up again

Stocks, which rose to over 6.7 million tonnes at the end of 1992 were expected to rise by a further 0.5 million tonnes in 1993. By the end of 1993 stocks would then be 85 percent of current production, a proportion slightly below the average for 1988-90 but above that for the intervening years. The expansion of production in the developing countries has resulted in a wider dispersion of stocks and relatively high levels in some countries. Stocks in China at the end of 1993 were estimated to be 2.7 million tonnes, twice as large as in the United States and over one million tonnes larger than at the end of 1988. Stocks in Brazil and in India doubled during the same period and Brazilian stocks now exceed 70 percent of annual production. Inventories in the United States continued to decline both in absolute terms and as a proportion of world stocks.

Prices decline sharply in 1993

With strong competition for export sales in 1993, auction prices for flue cured and burley tobacco fell substantially in local currency in Malawi and Zimbabwe. One third of the 1992 unit value was lost in Malawi while Zimbabwe suffered losses of over one-quarter. Early season reports from the United States indicated that auction prices were similar to those fetched in 1992.

The global value of exports of unmanufactured leaf increased slightly in 1992 to $5 856 million. The increase was in the receipts of the developed countries, though volumes exported were virtually unchanged. Earnings of the developing countries fell despite a 15 percent increase in volume. Export earnings of the developing countries were likely to decline further in 1993 as their increased volume were more than offset by reduced unit values. An increase in price was unlikely for most tobaccos as production exceeded consumption in 1992 and in 1993. Some countries are making efforts to decrease production; even so the enlarged stocks and quantitative restrictions on imports would continue to depress the market.

Production¹

¹ Farm sales weight basis.
² Based on production figures published by the United States Department of Agriculture.

Value of exports

Closing stocks

¹ At 31 December.
² At 30 June for domestic flue-cured only.

Exports¹

¹ Dry weight basis.

Imports¹

¹ Dry weight basis.

Prices at auction

¹ Export unit value.

Contents - Previous - Next