10.8 The tobacco growing industry

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10.8.1 Global

Tobacco is grown in more than 120 countries on almost four million hectares of the world's agricultural land, consuming as much arable land as all the world's orange groves or banana plantations. In 2007, four countries—China, Brazil, India and the US—produced two-thirds (67%) of the world's tobacco leaf. China alone produced 40% of the world's tobacco leaf in 2007. Global tobacco production has almost doubled since the 1960s, increasing 300% in low- and middle-resource countries while dropping more than 50% in high-resource countries. In 2006, world tobacco production was approximately seven million metric tons.1 See Table 10.8.1 for the top 10 tobacco growing countries.

Table 10.8.1
Leading producers of tobacco leaf, 2007

Country

Metric tons of leaf

China

2,395 000

Brazil

919 393

India

555 000

USA

353 177

Indonesia

180 000

Argentina

170 000

Pakistan

126 000

Malawi

118 000

Italy

100 000

Turkey

98 000

Source: The Tobacco Atlas1

Tobacco agriculture creates many environmental and public health problems.2, 3 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,4 and lung damage from smoke and field dust.

The WHO Framework Convention on Tobacco Control (WHO FCTC) calls for financial and technical assistance for tobacco growers in countries heavily dependent on tobacco growing. Successful strategies will likely require a long-term approach aimed at building alliances with tobacco farmers and creating mechanisms for tobacco farmer investment in local infrastructure.5

10.8.2 Australia

10.8.2.1 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.6 Growing reached its peak in the early 1970s, when nearly 16 000 tonnes of leaf were sold annually,7 but by 2006 the crop yielded under 4000 tonnes.8 Prior to deregulation of the market, most Australian leaf was purchased by local manufacturers.9

Major influences contributing to the downturn in local tobacco growing include 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).9 This lead to an increase in diversion of Australian leaf into the illegal tobacco trade9 (see also Chapter 10, Section 10.9).

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).

10.8.2.2 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 the 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, lead 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%.10

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.10

10.8.2.3 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.11-13 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.14

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 the phasing in of major deregulation of the leaf market to bring it into line with other Australian manufacturing and agricultural industries and to permit tobacco manufacturers to purchase leaf from overseas without penalty. Later that year, the Australian manufacturing industry and tobacco growers submitted a proposal for restructuring which was agreed to by the Commonwealth Government in December 1994.15 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.15

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 around Ashford and Bonshaw in New South Wales.15 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.15 By the end of 1995, only 366 tobacco growers remained, 240 in Queensland and 126 in Victoria.15.

As foreshadowed, the Australian Tobacco Marketing Advisory Committee was wound up in 1995,16 and ultimately abolished in April 1997, with the repeal of the Tobacco Marketing Act 1965,17and the organisation's assets were transferred to the Tobacco Research and Development Corporation, a body intended to support the research needs of the industry.15 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.18-20 The Tobacco Research and Development Corporation was abolished in 2003.21

The last sales contracts in Northern Queensland were filled in early 2004,22 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 2009.23

Most leaf used in Australian-made cigarettes is now grown in the US, Brazil, Zimbabwe and India.24

References

1. American Cancer Society and World Lung Foundation. The Tobacco Atlas. Growing tobacco. Atlanta, Georgia: American Cancer Society, 2009, [viewed 1 June 2011] . Available from: http://www.tobaccoatlas.org/companies.html

2. Arcury TA, Quandt SA, Preisser JS, Bernert JT, Norton D and Wang J. 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

3. Campaign for Tobacco Free Kids. Golden leaf barren forest. The costs of tobacco farming. Washington: Campaign for Tobacco Free Kids, 2001, [viewed 1 August 2011] . Available from: http://www.ash.org.uk/files/documents/ASH_330.pdf

4. Ballard T, Ehlers J, Freund E, Auslander M, Brandt V and Halperin W. Green tobacco sickness: occupational nicotine poisoning in tobacco workers. Archives of Environmental Health 1995;50(5):384-9. Available from: http://www.ncbi.nlm.nih.gov/pubmed/7574894

5. Jones A, Austin W, Beach R and Altman D. Tobacco farmers and tobacco manufacturers: implications for tobacco control in tobacco-growing developing countries. Journal of Public Health Policy 2008;29(4):406–23. Available from: http://www.palgrave-journals.com/jphp/journal/v29/n4/full/jphp200837a.html

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

7. 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.

8. 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

9. 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

10. 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

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

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

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

14. Industry Commission. Annual Report 1989-1990. Canberra: Australian Government Publishing Service, 1991.

15. 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.

16. 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

17. 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, [viewed. Available from: http://www.austlii.edu.au/au/legis/cth/num_reg_es/tc1ocr1997n90447.html

18. Jackson M. Client stubs tobacco men. Weekly Times, (Melbourne) 2000:7 Jun. 32

19. Gray S. One last quota of hope. p. 11. Cairns Post, (Cairns) 29 November 2003:

20. Anon. Last tobacco contract filled in Qld. Sydney: inFARMation (Infochoice), 2004, [viewed 3 January 2008] . Available from: http://www.infarmation.com.au/news/04/02/article9848.asp

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

22. Last tobacco contract filled in Qld. Sydney: inFARMation (Infochoice), 2004, [viewed 3 January 2008] . Available from: http://www.infarmation.com.au/news/04/02/article9848.asp

23. Price L. Federal government offers tobacco growers exit package. ABC Rural Victoria, (Sydbet) 2006:26 Oct. Available from: http://www.abc.net.au/rural/vic/content/2006/s1774133.htm

24. British American Tobacco. British American Tobacco Australia Company website. About us. Sydney: British American Tobacco, 2008, [viewed 20 January 2008] . Available from: http://www.bata.com.au/OneWeb/sites/BAT_53RF5W.nsf/vwPagesWebLive/80256AED003D81CC80256ABE00352B4F?opendocument&SID=&DTC=

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