in New Zealand concerning smoking and tobacco cultivation sometimes leave the impression that smoking is on the way out. There has been a downward trend for cigarette sales as higher taxes pushed up retail prices. About two decades ago Australia produced about 33 bn cigarettes annually. Much higher taxes and anti-smoking campaigns pushed consumption downward. For the 2005–07 average cigarette consumption was in the range of 19 bn annually. Per capita cigarette consumption among about 15 mn Australians 18-years of age and older in 2008 may be about half the level estimated for sales two decades ago.
Taxes On Cigarettes Show Upward Trend: Estimates for the share of cigarette prices going to taxes are in the range of 80%. Retail prices for major brands of cigarettes sold in Australia are about double the cost of about $32 per carton of ten packs (or $3.20 per pack of 20) for sales at convenience stores in Virginia or North Carolina, where state excises taxes are among the lowest. Some farmers and business people think that taxes on cigarettes in Australia are too high. They have indicated that the large tax revenues collected by the Federal and local governments are very high.
More smokers have shifted to roll-your-own mixtures. This has contributed to gains increased sales of the Drum brand of smoking tobacco. Australian manufacturers have been able to provide an array of quality tobacco products in face of competition from imports. US exports of cigarettes to Australia decreased from $5.1 mn in 2003 to a token $3,000 in 2007.
Imports Provide Smokers With Wide Array Of Brands: Australia is a growing market for cigarettes imported from some European suppliers, especially Germany. The value for imports of cigarettes into Australia in 2006 was above the $31.5 mn reported for 2005 imports, when 1.255 bn pieces were delivered at 50 cents per pack of 20. Cigarette imports come from the EU, Japan, China, Singapore, Indonesia, and several other countries. Brands containing predominately flue-cured tobacco are most important. This is reflected in the way about 80% of the US leaf tobacco exported to Australia is flue-cured.
Australia’s output of cigarettes remained stronger than might have been expected in 2007 because of a dramatic increase for exports to New Zealand. Duty-free trade among the two countries enhances Australian exports of manufactured goods. Australia has a population of 20.8 mn, compared with 4 mn in New Zealand. This gives Australia and advantage for economy of scale in output of some items. Both countries are large exporters of agricultural commodities to Europe, the Middle East, Asia, and North America.
Cigarette Exports Up In 2007: Cigarette exports from Australia increased steadily during 2005–07. Much of the increase from $23.2 mn in 2004 to over $50 mn in 2007, stemmed from dramatic gains for exports to New Zealand. Shipments of Australian cigarettes to New Zealand reached $31 mn in 2007, compared with $19 mn in 2006. Some cigarettes are exported from Australia to a number of markets in the South Pacific where no cigarette factories exist. Philip Morris and BAT have operated cigarette factories in Australia for decades. The downward drift for domestic sales has been partly offset by greater exports. The share of output exported rose to over 7% recently. Cigarette exports increased from 742 mn pieces in 2004 to 1.1 bn in 2005 and about 1.8 bn in 2006.
Downward Trend For Leaf Tobacco Production Contributes To Greater Leaf Tobacco Imports: Australia’s tobacco production showed a downward trend from about 15,000 tons annually during 1960–64, and 12,000 tons annually during 1989–91 to about 4,000 tons annually during 2003–07. Farmers in Queensland arranged to stop growing tobacco for delivery to Philip Morris after receiving buyout payments. For the buyout of tobacco farmers in Victoria Province, BAT, and Philip Morris will both participate.
Reduced domestic supplies contributed to an increase for imports of leaf tobacco. China, India, United States, and Indonesia were important suppliers of Australian leaf tobacco imports during 2004–07. Imports of tobacco and products into Australia increased from $120.8 mn in 2004 to $140 mn in 2005, as the value for cigarette imports rose from $31.5 mn to $41.8 mn. Competition among EU suppliers of cigarettes for Australia has been strong in recent years. UK cigarette shipments to Australia advanced at a slower pace during 2004–07 than German deliveries.
Greek exports of leaf tobacco to Australia fluctuated widely during 2002–05, and increased sharply from $206,000 in 2004 2005 to $2.577mn in 2006 for the delivery of 471 tons. A sharp decline for delivery of flue-cured tobacco from Zimbabwe in the recent decade was offset by greater imports of flue-cured tobacco from Brazil, China, India, and Indonesia.
Buyout For Myrtleford Tobacco Cooperative Growers Has Some Unusual Stipulations: In 2008, arrangements are underway to blink out commercial tobacco production altogether in the area where most of the crop is harvested. A buyout of the tobacco farmers in the Myrtleford area of Victoria Province will mean that the 4,000 tons of tobacco from that area will stop after 2009. Myrtleford is located about midway between Melbourne and Canberra. The excellent climate in this area indicates that many of the farmers who once grew tobacco may like to find some other profitable activity so they could remain at home in the Myrlteford area. The buyout payment of about $36 mn to farmers of Tobacco Cooperative of Victoria will help them to have a modest financial situation for a while. The average price of about $6.30 per kg (or $2.86 per pound) enabled some farmers in the Myrtleford area to have gross receipts in the range of $5,000 per acre from tobacco.
The farmers are required to not use the approximately 2,000 acres where tobacco was grown for other crops. That appears be related to the unusually low flow of water in the Murray River and other sources of irrigation water. Lingering effects of the severe 2006 drought are a problem for farmers in some areas where crops are irrigated and for pastureland in some provinces. Because of the high prices recently listed for wheat, corn, and other cereals, it would appear that the farmers could be allowed to grow something on their land. If future rainfall provided a greater flow of irrigation water, at least they might help Australia’s agricultural economy by growing hay for livestock. A research project where there was an indication that the farmers would not obtain good profits from growing lavender does not sound like a convincing reason to ban use of the land for any crops in the next five years.
The farmers had a cooperative for marketing tobacco and a building for storage of their crop before it was delivered to the Australian cigarette factories. The imagination that domestic tobacco will not be needed because of the drum beat to reduce smoking may not prove to be statistically the real situation. Australia already was importing most of the leaf tobacco used in the manufacture of cigarettes. Exports of cigarettes by Australia tended to rise in recent years, with substantial shipments to Southeast Asia and islands of the South Pacific. Even with further declines for cigarette sales to smokers in Australia, the two major manufacturers may seek expanding export markets to keep sales from declining to a great extent.
Leaf Tobacco Imports Likely To Rise: Imports of leaf tobacco into Australia are likely to rise as domestic output is phased out. The anti-smoking campaign appears to have contributed to the buyout of tobacco farmers. Some tobacco will still be grown by small farmers and gardeners for the chop chop trade, although they will not have a license for its cultivation. Australia has a deficit in total merchandise trade, although domestic supplies help the country to escape the soaring world prices for petroleum. The value for leaf tobacco imports may increase to a range of $100 mn in 2008.
Leaf tobacco imports averaged about 33,000 tons annually during 2005–07. Brazil was a major supplier: Exports of leaf tobacco from Brazil, China, and some countries in Africa remained substantial in recent years, although imports from some suppliers of oriental tobacco declined. Imports of flue-cured tobacco from Zimbabwe declined between 2002 and 2007. China appears to have picked up the gap left by dwindling arrivals of tobacco from Zimbabwe.
US exports of flue-cured tobacco to Australia doubled in 2006, reaching 1,937 tons, and then decreased 35.5% in 2007 to 1,251 tons. The value for all US leaf tobacco exports to Australia had been up to $16.8 mn in 2003. After dropping to a low of $6.2 mn in 2005, the value for shipments in 2006 reached $13.6 mn, before dropping back to $10.8 mn in 2007. In 2003, US exports of flue-cured tobacco had been 2,113 tons in 2002 before competition from Asian suppliers increased. Efforts to provide flue-cured tobacco with a minimum of harmful chemicals by US growers should be a factor under consideration by tobacco importers in Australia for purchases in the future. US exports of burley tobacco to Australia reached 354 tons in 2007, compared with 92 tons in 2006.
Cigarette Exports Rising: Australia’s cigarette exports increased sharply in 2007, with much of the increase stemming for booming shipments to New Zealand. Australia exports some cigarettes to over 25 destinations in the South Pacific.
Exports of premium brands from Australia to Singapore and Philippines increased in recent years: Unusual exports of leaf tobacco from Australia to South Korea were reported during 2003–05. Apparently some stocks of leaf tobacco stored in Australia were exported at attractive prices. After sales of some stocks were made, Australian leaf tobacco exports dwindled in 2007. The rising need for imports as domestic production was phased out tended to curb plans for future leaf tobacco exports. The decline in stocks held by manufacturers may contribute to strong demand for leaf tobacco imports in 2008, despite declining sales to Australian smokers.
Anti-Smoking Campaign Covers Various Aspects Of Daily Life: The setting has changed in recent years on where Australians can smoke. Efforts to discourage smoking include some photos on packages to illustrate the danger certain smokers have run into in the past.
The anti-smoking campaign has a focus on good health for the average Australian. Per capita cigarette consumption is declining. The ban on smoking in restaurants and bars has apparently contributed to reduced sales to Australians.
Australia has banned the sale of wallet packs of cigarettes. The concern appears to be related to the way smokers can separate the two portions of the pack to have a remaining segment missing the images and health warnings.
Anti-smoking campaign includes the use of photos of cancer victims on cigarette packages. Efforts are now underway to plug loopholes used for making sales by cigarette companies. Online purchases of cigarettes will be affected by a new law requiring buyers of cigarettes online to prove their age.
Grocery Stores And Petrol Stations Account For Most Of The Cigarette Sales: A shift away from special tobacco shops to grocery stores and convenience shops where petrol stations are found has been underway in the recent decade. Over 90% of the cigarettes sold in grocery stores consist of the top ten brands. Longbeach from Philip Morris usually accounts for over a fifth of cigarette sales. Marlboro has remained among the leading brands for a decade. The brand Peter Jackson has about a sixth of the cigarette market. Alpine is the leading menthol brand.