Farmer's Voice

Leaf overview

A task ITGA monitors regularly, there are innumerable constraints that have had an impact in this season. If in Argentina the impact of the cost of production factors (especially gas, electricity and wages) is already well known from previous campaigns, countries like Mozambique also report a generalized increase in the 2016/2017 campaign, with an emphasis on the 150 % fertilizer costs increase.

With regard to leaf quantities produced globally, Universal expects a reduction to 5.42 million tonnes (5.78 in 2015-2016), although an increase in production of FC Virginia is expected, amid fears that countries such as Brazil could provoke a new excess of supply, since, like China, this country still had inventories of previous seasons in 2016. Indeed, as reported by Afubra, the scenario points to productions in the range of 625.951 tonnes (with an estimated average price of $ 2.9 per kilo) and 79,361 tons of Burley (at $ 2.7 per kilo) in Brazil in 2017.

This fears are slightly minor in India where there is an entity (Indian Tobacco Board) limiting annual production, thereby minimizing the risk of overproduction, as such would lead to a reduction in average producer prices: this year's authorized production reduction was approximately 20% over the previous year. However, India faces another issue: the lack of alternative crops and the fear that, by failing to produce tobacco in certain regions, the value of its reduction will be quickly absorbed by the other major producers of Virginia. Then Indian producers would suffer the most, since world tobacco production might remain unchanged under these conditions.

Zambia, in the voice of its Minister of Agriculture, reports an estimated decline in the value of tobacco exports of $ 100 million (predicting that the quantities exported will reduce from 45 thousand tonnes in 2016 to less than half (22 thousand tonnes) in 2017). This fall will certainly impact on a country where roughly 450,000 people are directly or indirectly related to tobacco production and whose average price as of June 6 was close to US $ 2.9 (Virginia) or 1.69 (Burley) per kilo .

Malawi prices are expected to be more generous ($ 1.91 per kilogram) than last year's ($ 1.42 per kilogram), as the country's tobacco regulator estimates demand at 151,000 tonnes, higher than supply (which is approximately 124 thousand tonnes). This is due, as Taco Tuistra points out in his article published in the Tobacco Journal International, to the reduction of the number of producers this season, whose abandonment is due to the low prices reached in 2016. Nevertheless, many of the constraints that have accompanied the prices volatility in Malawi will continue, in particular the low net producer's income. In Tanzania by the second week of June, average prices were around $ 1.97 per pound.

In Indonesia, the Government intends to restrict the import of tobacco products, which will be taxed at a rate of 200%. A similar phenomenon occurred in Thailand, which led the Philippines to file a complaint with the World Trade Organization.

Production in Zimbabwe (176.5 thousand tonnes, valued at $ 521.6 million by mid-July, slightly below the $ 548.3 billion for the same period of the 2015-2016 marketing year) can not be tackled without reference to the main problem that tobacco producers are facing in the country at the moment: the monetary crisis, marked by a lack of liquidity and which jeopardizes the payment of grower's production. However, this does not seem to deter the increase in the area to be produced for the next marketing year, as by July 10th Zimbabwe's producers have already acquired sufficient seed to produce 100,298 hectares (well over 62,255 hectares in the same period of the previous year).

As for the United States of America, our member reports a 4% reduction in Virginia's production area in 2017, in no way offset by the 1% increase in Burley's production area.