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October, 2008

Renegade-Auction

Fortunately, Gustav arrives in off-season

Hurricane Gustav hit Pinar del Río, the leading tobacco-producing province in Cuba, with considerable fury on August 31.

Although no tobacco was in the field at the time of the hurricane, some damage was nonetheless experienced.

Olga Tapia, a Communist Party official in the state, said on September 2 that 3,414 tobacco-curing houses had been damaged. Winds reportedly exceeded 240 kilometers per hour in places.

Also, the heavy rains soaked 906 tons of tobacco leaves. Tapia said these were not necessarily a complete loss, since the leaves can probably be dried. But there might be loss of volume, and there probably would be some loss of quality.

Tapia did not give an estimate for the value of the damage. It no doubt would have been higher but Cubans, warned of the storm’s approach, moved some tobacco to safer places.

The province, which occupies the western end of Cuba, produces about 70% of the country’s leaf.

There was no report of hurricane damage to the Dominican Republic’s up-and-coming cigar tobacco crop. Before the storm, size of the three types grown was estimated at 4.5 mn kg for Piloto Cubano, 2.25 mn kg for Criollo, and 2.3 mn kg for Olor.

The reputation of Dominican leaf has been on the rise in recent years. For instance, in its recent market report on tobacco in the Dominican Republic earlier this year, Euromonitor International said, “[Cuban] Habanos have lost quality due to adverse economic conditions in Cuba, whilst the Dominican Republic has made significant investments in plantations and fertilizers that allow them to keep offering higher-quality products.” - (Bickers)


Argentina
A bigger burley crop on the way
Leandro N. Alem - Transplanting of the 2009 burley began the first week of August in the northeastern province of Misiones and in mid-August in the northwestern province of Tucuman.

Substantially all Argentina’s burley is grown in these two provinces.

Universal Leaf has projected the size of this year’s Argentine burley crop at 53 mn kg, up 26% from 2008.

In neighboring Brazil, transplanting of the 2009 burley crop was reportedly about one quarter complete. Universal projected a crop size of 105 mn kg, about the same as in 2008. - (Bickers)


Canada
Will Ontario help its farmers exit tobacco?
Tillsonburg - Tobacco farmers in Canada’s leading leaf province of Ontario were scrambling in early fall to try to persuade the provincial government to participate with the federal government in an exit plan from the crop.

On August 1, the federal government had said it would partially finance an exit from tobacco by any farmer who would promise not to grow the crop again. The assistance would take the form of a payment of $1.05 (Canadian) per pound of quota.

But this proposal would also require the government of the province to contribute $.69 per pound, and provincial leaders were adamant that no such contribution would ensue.

“I have made it very clear that Ontario’s position is that it is tobacco users, and not the taxpayers of Ontario, who should be funding an exit strategy,” said Leona Dombrowsky, Ontario’s Minister of Agriculture.

Whatever the source of funding, it is not expected that all growers would elect to exit. The program is voluntary, and some growers seem likely to continue tobacco production if the buyers provide any incentive for production in a post-regulation market.

About 15% of the crop had been harvested by mid-August, according to dealers doing business there. The original target was 20 mn pounds, but it appeared that farmers had produced perhaps 20% more than that. - (Bickers)


India
Government pays to stray from tobacco
New Delhi - The Indian government plans to cut tobacco production in half by 2015.

The government has recently set up an Rs 5000-crore fund to encourage tobacco farmers to diversify their crops. Each farm will receive Rs 5 lakh to gradually phase tobacco out of their cultivation, and move towards other crops such as oil seeds and soyabean.

Tobacco farmers will also be given financial support for their rehabilitation. Kovur (Andhra Pradesh) and Shimoga (Karnataka) are the two villages identified by the government to kick start the program.

India’s tobacco industry employs 10 mn people, and the country ranks among the top five in both production and consumption of tobacco. But the government now believes that farmers can make equal or greater profits from alternative crops over a period of time.


Tobacco shortage boosts India’s exports
Tobacco shortage boosts India’s exports

New Delhi - A decrease in the global tobacco supply increased India’s exports by 33.66%, coming out to 80,571 tonnes during the the recent months, according to the Tobacco Board. By this time last year, India had shipped 60,278 tonnes within the same period of time.

A Senior Official at the Tobacco Board told a local news source that the increased demand was coming from China, Zimbabwe, and Brazil.

Tobacco Board data has shown that the sale of tobacco leaf surged almost 35% to 70,118 tonnes from April to July, compared to the 52,046 tonnes during the same period of 2007.

The Board’s data also showed that exports rose 65.31% to Rs 982.87-crore during this period.


Malawi
Good market helps currency
Blantyre - Thanks in large part to the stronger performance of the nation’s tobacco crop, the relationship of the Malawian kwacha and the US dollar remained stable this year through June, according to the Malawi Savings Bank (MSB).

Almost 106 mn kg had been auctioned for US$251.4 mn, as of June 27, at an average price of US237.2 cents (about 331 Malawian kwachas) per kg, said MSB in the report.

“This is a tremendous improvement when compared to US$190.6 mn realized during whole of the 2007 marketing season, where a total of 107.8 mn kg were sold and the average price was 176.73 cents (about 246 kwachas) per kg,” the report said. - (Bickers)


Philippines
High quality, high prices
Candon City - Good quality, reduced production, and some weakness on the part of competitors, powered the Philippine flue-cured crop to an excellent market season.

Estrella De Peralta, an official of the National Tobacco Administration based in Candon City, told the Philippine Information Agency, “With the positive development of the tobacco industry this season, we are expecting that more farmers will engage in tobacco growing in the next season.”

Tobacco farmer Marcelo Abalos of the state of Ilocos Sur told the PIA, “The increase would really help us to recover from the high prices of inputs in tobacco production.”

Harvest of flue-cured was done by the beginning of June, according to Universal Leaf Tobacco, and buying was 95% complete, with completion expected by the end of the month. The estimate of crop size was increased as marketing ended, because of good growing conditions, to 22 mn kg, the lowest since 2006.

Burley harvest was also complete by early June, but purchasing was only 75% complete, said ULTC. The quality of the filler crop was reportedly above average. The Isabela crop, meanwhile, was ripe, with good shine and oil. The crop size estimate has been lowered by one mn kg to 10 mn kg, which would still be the largest production of this type in five years.

The Philippine dark air-cured crop was nearly as big, according to the estimate, at 9.6 mn kg, down 12% from the year before. A lower-than-expected production in the state of Isabela was part of the reason for the shortfall. - (Bickers)


United States
Oriental makes a 9% comeback
Richmond - Oriental leaf production rebounded a bit in 2008, according to Universal Leaf’s recent Crop Report. In 2007, volume had sagged to 237 mn kg from 268 mn kg the year before. But the 2008 crop will come in at about 259 mn kg, up 9%, primarily due to increases in Turkey, Macedonia, and Bulgaria. - (Bickers)

Tobacco International - October, 2008
U.S. Tobacco Cooperative


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