Greek Leaf: Out of the Doldrums Yet?

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Features

The Balkan region has a long tradition of tobacco growing reaching as far back as Ottoman times. Greece is no exception and is indeed one of the world’s foremost suppliers of oriental leaf. Nevertheless, the country’s growers and traders have experienced a veritable rollercoaster ride over the past few years.

By Thomas Schmid

Among travelers, sun-kissed Greece may be renowned for her ancient architectural wonders like Athens’ Acropolis, her fabled beaches, romantic islands, passionate rembetika music, as well as hearty culinary delights such as gyros, moussaka, and souvlaki. But to tobacco companies worldwide the country is foremost known as a crucially important supplier of oriental tobaccos, as well as flue-cured Virginia and a small amount of burley, all of them used primarily in cigarette manufacturing. While Basma and Katerini are the most widely cultivated oriental tobaccos, the small country also produces some less common types such as Elessona, Tsebella, and Mavra, just to name a few. The latter, however, are hardly worth mentioning, as their amounts are comparatively miniscule.

The Deep Plunge into the Economic Abyss

In 2005, Greece rather suddenly descended into a severe debt crisis. Due to the associated credit crunch, that crisis affected pretty much each and every business sector in the country of only 11 million people, including the agricultural sector - and by extension the tobacco growers, of course. Greece has since continuously slipped ever deeper into recession, her GDP dwindling year after year.

Then, in 2006 another (but not entirely unexpected) blow came in the form of the Greek government’s “de-coupling” of European Union agricultural subsidies from tobacco production. In non-bureaucratic terms that meant that relevant subsidy payments were no longer tied specifically to growing tobacco, but were allocated according to the actually cultivated acreage irrespective of crop grown. Hence, farmers across the country could now receive the subsidy that was originally earmarked only for tobacco growing even if they decided to switch to other crops.

Scores of farmers gripped the opportunity by its horns and switched. And as if that wasn’t enough, the remaining tobacco growers were subsequently hit by declining prices for oriental tobaccos brought on by an over-supply on the background of slowing cigarette sales particularly in the US and western Europe. The result was that even more farmers simply called it quits.

The figures tracing this deterioration of a once thriving industry are nothing but spectacular. Before the crisis, Greece was the EU’s largest producer of tobacco, hovering around 120,000 metric tons in 2002 across all tobacco varieties, of which about 85,000 tons were exported. Two years later, these figures had slowly decreased to around 110,000 tons total production and roughly 76,000 tons exports. But from then on it was all downhill as the production decline accelerated at a frightening pace. By 2014, total tobacco production had bottomed out at only about 25,500 tons.

Signs of Hesitant Recovery

Luckily, signs for a reversal of this seemingly unstoppable downward trend have recently emerged, albeit slowly and hesitantly. Yes, several of the less common oriental varieties have since disappeared from cultivation altogether, but the national output of Basma, Katerini, FCV, and burley picked up, yielding a combined 28,355 tons in 2015. Nevertheless, oriental volumes remained unstable, as the crop year 2016 once again saw declines in Basma and Katerini, although FCV gained slightly. But the presently underway crop season may finally mark a much-needed turnaround for good. Traders in the country are widely expecting tonnages across all three main tobacco types to increase this year (see table).

Ironically, Greece’s continuing recession seems to have triggered a somewhat unexpected positive side effect of tobacco farming, according to some observers. As work in the cities is scarce and badly paid thanks to frozen wages and salaries, an urban exodus has been happening on a certain scale. Scores of erstwhile city dwellers have reportedly decided to return to the countryside to take up farming again, with some of them growing oriental tobaccos as world prices are reported to have rebounded.

Despite all the economic doom and gloom, thus not all may be lost for Greece, particularly since the country’s neighbors have themselves been struggling with sharply declining oriental production. Statistically speaking, even under the prevailing circumstances Greece still is in the enviable position of being the world’s second largest producer of oriental tobacco behind Turkey. In 2015, Turkey supplied approximately 33-35% of the global demand, while Greece managed some 15%. Closely behind in third place was FYROM (Former Yugoslav Republic of Macedonia) with an estimated 14% of world production, followed by Bulgaria with approximately 6%, ranking it at fourth place.