10.1 The tobacco growing industry

Last updated: November 2017
Suggested citation: Freeman, B. 10.1 The tobacco growing industry. In Scollo, MM and Winstanley, MH [editors]. Tobacco in Australia: Facts and issues. Melbourne: Cancer Council Victoria; 2016. Available from http://www.tobaccoinaustralia.org.au/chapter-10-tobacco-industry/10-1-the-tobacco-growing-industry

10.1.1 Global

Tobacco is grown in at least 124 countries on more than 4.3 million hectares of the world's agricultural land, consuming arable land equivalent to the entire country of Switzerland.1 In 2014, the five leading tobacco growing countries were China, Brazil, India, the US and Indonesia.2 China alone produced nearly half of the 7.5 million tonnes of tobacco grown globally in 2012.1 Since the 1960s, tobacco farming has shifted away from high income, to predominantly low and middle-income countries. This change is most pronounced in Africa, where more than 20 African countries now grow tobacco.1 See Table 10.1.1 for the top 10 tobacco growing countries in 2014.

Table 10.1.1
Top 10 tobacco growing countries, 2014

Source: Food and Agriculture Organization of the United Nations, 2014 2

Tobacco agriculture creates many environmental and public health problems.3,4 Pesticide and fertiliser runoff contaminate water resources, and the curing of tobacco leaf with wood fuel leads to massive deforestation. Agricultural workers suffer from pesticide poisoning, green tobacco sickness,5 and lung damage from smoke and field dust.

The use of child labour in tobacco growing is a global issue. In 2014, Human Rights Watch released a report that included interviews with 141 US child tobacco workers, ages 7 to 17.6 The report found that nearly three-quarters of the children reported the sudden onset of serious symptoms—including nausea, vomiting, loss of appetite, headaches, dizziness, skin rashes, difficulty breathing, and irritation to their eyes and mouths—while working on tobacco farms. The symptoms these children experienced are consistent with acute nicotine poisoning.  In the US agriculture sector, children as young as 12 can legally work for unlimited hours outside of school with parental permission, and employers may hire children younger than 12 to work on small farms with written parental consent.6 In response to this report, some US-based tobacco companies took action to ban children under 16 from working on tobacco farms, but older teens were excluded from these policies. A follow-up report in 2015 concluded that working in direct contact with tobacco is hazardous to children, including 16- and 17-year-olds, and recommended that no child under age 18 should be permitted to do such work because of the health risks.7   

Articles 17 and 18 of the World Health Organization’s Framework Convention on Tobacco Control (WHO FCTC) oblige signatory nations to implement economically sustainable alternatives to tobacco growing. Since these are two of the least implemented articles of the WHO FCTC, efforts are being made to identify best practices and share experiences in this area.  Ongoing activities include: raising awareness of the need for Article 17 and 18 provisions to be implemented; identifying experts and academic institutions to support research and implementation; establishing cooperation with specialized agencies and programs; preparing a database with relevant documents; and identifying, commissioning and sharing best practices.8    

10.1.2 Australia

10.1.2.1 Brief history 

Tobacco growing commenced during Australia's early years of settlement. Governor Macquarie experimented with plantings at Emu Plains in New South Wales in 1818, and by the 1820s tobacco was cultivated by farmers in the Hunter Valley. During the 1850s growing extended to Victoria and Queensland. It is likely that some proportion of the early crop was intended to supply the colony with the makings of pesticide for use in ridding sheep of parasites.9 Growing reached its peak in the early 1970s, when nearly 16 000 tonnes of leaf were sold annually,10 but by 2006 the crop yielded under 4000 tonnes.11 Prior to deregulation of the market, most Australian leaf was purchased by local manufacturers.12   

Major influences contributing to the downturn in local tobacco growing included declining tobacco consumption in the Australian population, and successive reductions in the protective tariff on Australian leaf during the 1990s, which permitted manufacturers to purchase leaf more cheaply on the international market (see below).12 This led to an increase in diversion of Australian leaf into the illegal tobacco trade12 (see also Chapter 13, Section 13.7).

Commercial tobacco farming no longer occurs in Australia. The industry began to wind down during the mid-1990s, with successive announcements at state and federal level for government-financed restructuring grants (exit grants) to tobacco farmers to assist them in leaving the industry (see below). 

10.1.2.2 Government regulation

Federal government support for the Australian tobacco growing industry commenced in 1936, with the introduction of the Local Leaf Content Scheme, which encouraged manufacturers to use at least a minimum percentage of locally grown leaf. Doing so entitled the manufacturers to a tariff concession on the balance of imported leaf they used.

Imbalances between supply and demand in the industry, as well as ongoing problems with grading and pricing of local leaf, led to the passage of the Commonwealth Tobacco Marketing Act 1965. This legislation established the Australian Tobacco Board as a statutory authority of the Australian Government. The Australian Tobacco Board, which became known in 1990 as the Australian Tobacco Marketing Advisory Committee, advised federal and state ministers on interstate and overseas marketing of Australian tobacco leaf, as well as the various state tobacco leaf marketing boards (established under legislation in those states which grew tobacco) on the same matters. The Australian Tobacco Board (and later the Australian Tobacco Marketing Advisory Committee) was also responsible for the administration of the main instrument of regulation, the Tobacco Industry Stabilisation Plans. In brief, Tobacco Industry Stabilisation Plans and their key component, the Local Leaf Content Scheme, served to control supply and guarantee the sale of Australian leaf to local manufacturers at a pre-arranged price. The Tobacco Industry Stabilisation Plan introduced in 1965 raised the minimum local leaf content to 50% of Australian leaf in the manufacture of their products and in 1977 this requirement was increased to 57%.13

At a state level, each growing area had its own Tobacco Leaf Marketing Board, which was responsible for allocating supply quotas of tobacco to individual growers.13    

10.1.2.3 The decline of tobacco farming in Australia

During the 1980s and early 1990s, a series of reviews evaluated the structure of the tobacco growing industry in Australia.14-16 In 1990, it was the view of the Industry Commission that, taking into consideration statutory marketing arrangements, tariff concessions and all other measures of government support, tobacco was by far the most subsidised agricultural activity in Australia, receiving assistance at around six and a half times the rate of other horticultural activities, and over 12 times the average rate for all agricultural activities.17   

In 1994 the Industry Commission published a review of the tobacco growing industry in Australia, finding that the succession of Tobacco Industry Stabilisation Plans and Local Leaf Content Schemes had created an inefficient, non-competitive industry that was now on the brink of collapse. The commission recommended that major deregulation of the leaf market be phased in to bring it into line with other Australian manufacturing and agricultural industries, and to permit tobacco manufacturers to purchase leaf from overseas without penalty. The Australian manufacturing industry and tobacco growers submitted a proposal for restructuring which was agreed to by the Commonwealth Government in December 1994.18 The package allowed for the winding down of the Australian Tobacco Marketing Advisory Committee and the abolition of the Local Leaf Content Scheme and Tobacco Industry Stabilisation Plans. Tariffs were to be removed from imported tobacco leaf and tobacco products. Manufacturers were to purchase local leaf under arrangements which conformed to the requirements of the Trade Practices Act 1974. In addition, the tobacco manufacturers agreed to provide $10.8 million to aid restructuring, payment to be matched by contributions from the Queensland, Victorian and New South Wales state governments. 

In 1994, the year in which the final Tobacco Industry Stabilisation Plan ran its course, there were about 600 tobacco growers remaining in Australia. Most of the crop (58%) was produced in northern Queensland, about 38% was grown in Victoria around Myrtleford, and 4% was grown in New South Wales around Ashford and Bonshaw.18 During 1994 and 1995 the Victorian, New South Wales and Queensland state governments announced financial incentives and other support for growers wishing to exit the market.18 By the end of 1995, only 366 tobacco growers remained—240 in Queensland and 126 in Victoria.18   

As foreshadowed, the Australian Tobacco Marketing Advisory Committee was wound up in 1995,19 and ultimately abolished in April 1997 with the repeal of the Tobacco Marketing Act 1965.20 The organisation's assets were transferred to the Tobacco Research and Development Corporation, a body intended to support the research needs of the industry.18 Over the following years the manufacturers increased volumes of cheaper imported tobacco leaf and the Australian growing industry continued to fold, not without acrimony on the part of some of the remaining growers.21-23 The Tobacco Research and Development Corporation was abolished in 2003.24   

The last sales contracts in Northern Queensland were filled in early 2004,23 and in Victoria and southern Queensland a majority of growers voted in support of a federal government and industry-funded buyout of the leaf growing industry announced in October 2006. All outstanding sales transactions were expected to be completed in 2009, and as of 2017 there were no valid licences issued for personal or commercial tobacco growing in Australia.25  
As of 2008, cigarette companies reported that most tobacco leaf used in Australian-made cigarettes was grown in the US, Brazil, Zimbabwe and India.26 No more recent information could be located about the source of tobacco used in cigarettes sold in Australia. 


References

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2. Food and Agriculture Organization of the United Nations. Crops. Countries. Production Quantity. Tobacco, unmanufactured. Rome, Italy: United Nations, 2014. Last update: 2016; Viewed 10 December 2016. Available from: http://www.fao.org/faostat/en/#data/QC.

3. Arcury TA, Quandt SA, Preisser JS, Bernert JT, Norton D, et al. High levels of transdermal nicotine exposure produce green tobacco sickness in Latino farmworkers. Nicotine & Tobacco Research, 2003; 5(3):315−21. Available from: http://ntr.oxfordjournals.org/content/5/3/315.abstract

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7. Wurth M. Teens of the Tobacco Fields. Child labor in the United States tobacco farming. New York: Human Rights Watch, 2015. Available from: https://www.hrw.org/report/2015/12/09/teens-tobacco-fields/child-labor-united-states-tobacco-farming.

8. Conference of the Parties to the WHO Framework Convention on Tobacco Control. Economically sustainable alternatives to tobacco growing (in relation to Articles 17and 18 of the WHO FCTC). Report by the Convention Secretariat. Geneva: WHO, 2016. Available from: http://www.who.int/fctc/cop/cop7/FCTC_COP_7_12_EN.pdf?ua=1.

9. Department of Customs and Excise, Tobacco−Survey of progress of the Australian tobacco growing industry under the 'percentage system' of tariff protection. Canberra, Australia: Department of Customs and Excise; 1963.

10. Australian Tobacco Marketing Advisory Committee, Australian Tobacco Marketing Advisory Committee Annual Report 1992.  Year ended 31 December 1992 regarding the operation of the Tobacco Marketing Act 1965. Canberra: Canberra Times Print; 1993.

11. Australian Bureau of Statistics. 7121.0 Agricultural commodities Australia 2005−06. Canberra: ABS, 2008. Available from: http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/393F8CDF359889C1CA257401000D5E7C/$File/71210_2005-06.pdf.

12. Australian National Audit Office. Administration of Tobacco Excise. Audit Report No. 55, 2001−2002, Performance Audit.Canberra: Commonwealth of Australia, 2002. Available from: http://www.anao.gov.au/uploads/documents/2001-02_Audit_Report_55.pdf.

13. Industry Commission. The Tobacco Growing and Manufacturing Industries.   Industry Commission Inquiry Report No. 39. Canberra: Australian Government Publishing Service, 1994. Available from: http://www.pc.gov.au/ic/inquiry/39tobacc.

14. Industries Assistance Commission, Manufactured tobacco.  Industries Assistance Commission Report No 256, 23 January 1981. Canberra: Australian Government Publishing Service; 1981.

15. Industries Assistance Commission. The tobacco growing and manufacturing industries. Industries Assistance Commission Report no 405, 24 September Canberra: Australian Government Publishing Service, 1987.

16. Queensland Department of Primary Industries in association with ACIL Australia, Economic study of the Australian tobacco growing industry. Canberra: Australian Tobacco Marketing Advisory Committee; 1990.

17. Industry Commission, Annual Report 1989−1990. Canberra: Australian Government Publishing Service; 1991.

18. Australian Tobacco Marketing Advisory Committee, Australian Tobacco Marketing Advisory Committee Final Report.  Year ended 31 December 1995 regarding the operation of the Tobacco Marketing Act 1965. Canberra: Canberra Times Fine Print; 1996.

19. House of Representatives. Official Hansard.  Commonwealth of Australia Parliamentary Debates.  Thursday 12 December 1996.  Thirty-eighth Parliament.  First session - second period. Canberra: Commonwealth of Australia, 1996. Available from: http://www.aph.gov.au/Hansard/reps/dailys/dr121296.pdf.

20. Assistant Treasurer and Commonwealth of Australia. Tobacco charge (No. 1) (Rate of charge) Regulations (Amendment) 1997 No. 90.  Explanatory Statement. Canberra: Commonwealth of Australia, 1997. Last update: Viewed 26 March 2008. Available from: http://www.austlii.edu.au/au/legis/cth/num_reg_es/tc1ocr1997n90447.html.

21. Jackson M. Client stubs tobacco men. Weekly Times, 2000; 7 Jun:32. 

22. Gray S. One last quota of hope. Cairns Post, 2003; 29 Nov:11. 

23. Anon. Last tobacco contract filled in Qld. Sydney: inFARMation (Infochoice), 2004. Last update: Viewed Available from: http://www.infarmation.com.au/news/04/02/article9848.asp.

24. Attorney-General's Department. Tobacco Research and Development Corporation Repeal Regs 2003.  FRLI No. 2004B00222, 2003, Australian Government: Canberra. Available from: http://frli.law.gov.au/s97.vts?action=View&VdkVgwKey=2004B00222&Collection=FRLI&ViewTemplate=frliview.hts

25. Australian Tax Office. Growing tobacco for personal or commercial use. Canberra: Australian Tax Office, 2016. Last update: 05 January 2016; Viewed 10 December 2016. Available from: https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/In-detail/Tobacco/Growing-tobacco-for-personal-or-commercial-use/.

26. British American Tobacco. British American Tobacco Australia Company website.  About us. Sydney: British American Tobacco, 2008. Last update: Viewed Available from: http://www.bata.com.au/OneWeb/sites/BAT_53RF5W.nsf/vwPagesWebLive/80256AED003D81CC80256ABE00352B4F?opendocument&SID=&DTC=.

 

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