ITGA Situation Update for Tobacco Growers

International Tobacco Growers’ Association

This past July. the International Tobacco Growers’ Association (ITGA)  attended a number of meetings in Africa to back tobacco-growing countries in that continent in their efforts to work towards sustainability. Among the main challenges identified during these meetings were a drop in consumption, new generation products with lesser need of tobacco, the US-China trade war, and the unrealistic approach given to the subject of alternative crops.

ITGA also attended the ILO Technical Meeting held in Uganda from 3-5 July 2019 to promote an exchange of views on the further development and implementation of the integrated strategy to address decent work deficits in the tobacco sector. ITGA congratulated the ILO for the inclusive multi-sector meeting where, for the first time, tobacco growers were represented and given a voice through ITGA. This meeting was very timely and necessary for growers, taking into account efforts made within the sector to tackle the issue of child labor in tobacco. A meeting where tobacco growers are not represented shows a non-realistic approach to any of the issues related to tobacco and that is why ITGA commends the ILO for having this approach of inclusiveness that shows an honest willingness to find solutions. 

The ITGA reinforced the need to coordinate the agencies of the United Nations, the WHO (through its Article 17), and the World Bank in close collaboration with civil society, growers, companies, and foundations and other NGOs in order for a change and to achieve sustainability in this sector.

Following the ILO multi-sector meeting, ITGA was invited to a workshop organized by its member in Malawi, the TAMA Farmers’ Trust on 9 July. The Ministry of Agriculture of the Malawian government emphasized the importance of tobacco growing for the economy of Malawi, but also the need to look into other crops to sustain tobacco growers’ farms. The support that the government is willing to give to any initiative that aims at creating an improved marketing system was also highlighted during the workshop. The Malawian government realizes that tobacco still has a good future but encourages famers to look into supplementary value chains.

In his opening speech, Abiel Maseche Kalima Banda, president of TAMA Farmers’ Trust, provided the assembly with a historical insight about tobacco in Malawi, emphasizing the important role the World Bank and USAID played in the development of a structured tobacco market in Malawi back in the 1990s, during the reform of burley tobacco production and marketing, which led to an increase in production by smallholder farmers who at the same time had a considerable impact in the Malawian economy. The World Bank stated at the time, “smallholder profits from burley sales have provided the largest ever cash injection of the income in rural Malawi.”

TAMA Farmers’ Trust highlighted the importance of being in line with the UN Sustainable Development Goals (UN SDGs) and embracing the need of women empowerment in the tobacco sector. To learn more about initiatives in place regarding this issue, UN Women was invited to give an overview of the role of women in agriculture. 

Main African tobacco producing countries were invited to the workshop to show a real picture of the sector in their countries and the difficulties tobacco growers are facing these days in order to achieve sustainability while being in compliance with good agricultural practices that respects the environment.

ITGA gave a global perspective with updated figures of the world market for leaf and next generations products. Among other important facts influencing the tobacco global market, it was pointed out that the US-China trade issue has led to a drop of US North Carolina exports from US$162 million in 2017 to US$4 million in 2018 (98% decline) with resulting decrease in contracts by leaf dealers. This fact has led to a switch in production to other crops such as hemp.

The fast movements of goods is influenced by geopolitical tensions, trade agreements, wars, and diplomacy. As China is the biggest player where tobacco is concerned, anything that influences the country has a significant impact over the entire industry’s value chain and, obviously, the growers. Chinese investment in Africa has, in the 21st century, taken a role of increasing relevance in the continent. The Asian nation has been investing in Africa due to political reasons and to reap the benefits of the economic growth that Africa will likely enjoy inthe future. China has been helping to develop infrastructures that are the basis for a modern economy, with Chinese firms focusing on the utilities sector, as well as telecommunications. There have also been several investments in the agriculture sector.

Recently, the Namibian Parliament approved a tobacco and maize plantation of 10,000 hectares in the Zambezi region, with the investment being the responsibility of Chinese investors, who would get lease rights for 99 years. According to the China Global Investment Tracker by the American Enterprise Institute and the Heritage Foundation, Chinese investment in Sub-Saharan Africa has surpassed US$87billion between 2006-2019.

Data from the China Africa Research Initiative suggests that the total Foreign Direct Investment Stock in Africa in 2017 represented US$43 billion. Both figures highlight the level of Chinese investment in the continent, which may improve trading conditions, including for tobacco.

Tobacco growers eagerly await news of the trade war between the world’s biggest economies, as every decision has the potential to deeply impact the livelihood of millions of people around the globe. American growers are immediately affected due to a decrease in contracts to produce tobacco. African and South American growers will also be affected. The demand by the Chinese tobacco market will be satisfied, the only doubt is the nationality of the tobacco consumed.