Tobacco^[22]

Introduction

The volumes of tobacco produced and consumed globally depend on demand, which is determined largely by incomes and by population sizes, as well as being heavily influenced by the various policies adopted in individual countries to control and reduce smoking. These projections assume a continuation of existing policies. Levels of production and consumption may, however, prove to be much lower than these estimates should aggressive anti-smoking policies be widely adopted, particularly in some of the major consuming countries in the developing world.

Production

Global production of tobacco leaf increased from 4.2 million tonnes in 1971 to 6.9 million tonnes in 1998-2000 in dry weight. Its growth took place almost entirely in developing countries. Global production is projected to reach over 7.1 million tonnes in 2010, representing annual growth of 0.35 percent. However, this production level remains lower than the record world production level of 1992-1993.

Production of tobacco leaf in developed countries declined steadily during the 1990s and is expected to continue its decline during the current decade with overall production expected to be less than 1.2 million tonnes in 2010.

In developing countries, however, tobacco leaf production is expected to continue to increase, thus expanding the developing countries’ share in world production from about 79 percent in 1998-2000 to 87 percent in 2010. China is projected to remain the world’s largest producer with a projected output of about 3 million tonnes in 2010, well above India and Brazil. Malawi and Zimbabwe, although major exporters, have much lower production levels.

Consumption

World consumption of tobacco leaf increased from 4.2 million tonnes in 1970 to 7.1 million tonnes of equivalent dry weight in 1998-2000, with over 65 percent of the world total consumed in the developing countries. Global demand is expected to continue to increase very slightly to 7.15 million tonnes dry weight in 2010.

In developed countries overall demand is expected to decline by more than 1 percent annually up to 2010, to about 2.05 million tonnes. However, consumption in these countries is expected to represent only 29 percent of the world total.

The global picture of tobacco demand in the future is determined mainly by the developing countries, where consumption is expected to increase by 0.5 percent annually to 5.09 million tonnes dry weight. About 80 percent of the projected increase in demand is expected to be in the Far East, particularly in China. The share of China in total world tobacco demand is likely to increase to 37 percent in 2010, up from 34 percent in 1998-2000.

The projection results show that consumption per adult in 2010 will continue to decline to below 1.5 kg/year with existing policies in place. Consumption per adult is declining not only in developed countries, but also in developing countries, albeit modestly. This significant development, however, is concealed by the fact that overall world tobacco use is expected to continue to expand with population growth.

Production and consumption would not meet these projected levels, however, should demand for tobacco contract as a result of the introduction of more restrictive policies on smoking in the major consuming countries. The imposition of measures such as taxes to increase prices, bans on smoking in public places, curbs on advertising, action against smuggling, and campaigns to increase awareness of the impact of smoking on health may all contribute to reduced demand. Any reduction in support to tobacco production would also result in a contraction of production and consumption.

Trade

The volume of tobacco exports is projected to continue to increase but at a much slower annual rate of less than 1 percent during the period from 1998-2000 to 2010. The global volume of exports is expected to reach 2.2 million tonnes by 2010, up from 2.0 million tonnes in 1998-2000 and 1.4 million tonnes a decade earlier. Import requirements are expected to increase considerably in the developed countries while their export availability declines. Conversely, in the developing countries, export availabilities are projected to expand more than import requirements, as production is continuing to shift from developed to developing countries.

Exports from developing countries such as Brazil, Malawi and Zimbabwe are very price-competitive and their economies, in particular the latter two, depend heavily on tobacco. These countries are likely to continue to compete successfully with other exporting countries. For example, the export unit value of tobacco leaf from the United States is more than twice the world average, reflecting higher quality but also higher production cost. Wage rates in developed countries are much higher than in developing countries. With cigarette manufacturers able to develop new processing technologies that allow them to use lower quality leaf, countries such as Brazil, Malawi and Zimbabwe are becoming able to compete more effectively, increasing their shares of the world market. Any reduction in support for tobacco production in the developed producing countries would promote further change in the location of world tobacco production in favour of these three and other developing countries, and possibly India, Turkey and China.

Issues and uncertainties

Growing demand for tobacco, particularly in developing countries, is expected to continue to drive the tobacco economy of the world during the period from 1998-2000 to 2010. Production of tobacco leaf increases in countries where demand is increasing, where production costs are low, where there are no production restrictions and where there are good transportation systems and access to the international market. Hence, tobacco leaf production is expected to continue to shift towards developing countries.

Given the above general conclusions, public policy that aims to reduce tobacco use might most effectively focus on demand. Suppressing demand markedly in the developing countries in the medium term, following the pattern of recent years in developed countries, would be a serious challenge given projected growth in population and incomes.

Table 2.87. Tobacco leaf, actual and projected production

Table 2.88. Tobacco leaf consumption