TOBACCO PRODUCTION ON THE INCREASE
Harvested area being reduced constantly from '66-'67
By Syed M. Aslam
Sep 07 - 13, 1996cotton, rice, sugarcane, gram, rapeseed and mustard.
Tobacco is one of the major crops of Pakistan alongwith wheat,
While production of rice, cotton, sugarcane, gram, rapeseed and mustard in '95-96 increased by 9.7, 7.9, 0.41, 14.1, and 5.7 per cent respectively over '94-95 over the biggest increase was registered in the production of tobacco which increased a sharp 27.2 per cent from 81,000 to 103,000 tonnes during the comparative periods.
Though tobacco production in '95-96 has increased over the '94-95 level it is still much lower compared to the record production of 140,000 tonnes in '66-67. Similar is the case with the total area under tobacco cultivation which has decreased from 72,000 hectates in '66-67 to just 47,000 hectates in '95-96.
Tobacco production increased significantly last year but Pakistan exported only Rs 79 million of raw and manufactured tobacco during the first nine months of '95-96 compared to Rs 143 million during the same period last year. The biggest export was registered in '87-88 when the country exported Rs 318 million worth of the product.
Similarly, during the first nine months of the last fiscal 31,599 million numbers of cigarettes were produced in the country which represented over eleven per cent increase from 23,071 numbers produced during the same period last year.
Being a cash crop, tobacco subjected to high taxation is a substantial revenue earner for the government; the government earned Rs 5828 million from indirect taxes alone in '90-91.
It may be mentioned that according to official statistics the agriculture sector in Pakistan registered a growh of 6.7 per cent in '95-96 compared to 5.9 per cent in '94-95 mainly due to a 9 per cent expansion in major crops, the maximum 27.2 per cent in tobacco, and 4.9 per cent in minor crops, 5.6 per cent in livestock, and 8.3 per cent in fishery.
Thus tobacco cultivation is playing a significant role in the economy of the country as it remains the leading cash crop of the country.
Production of tobacco (000 tonnes)
Year'93-94 100'94-95 81'95-96 103
Area under tobacco cultivation (000 hectres)
Year'90-91 44'91-92 54'92-93 58'93-94 57'94-95 47'95-96 47
Tobacco production (000 tonnes)
Year'90-91 75'91-92 97'92-93 102'93-94 100'94-95 81'95-96 103 (provisional)
CMI Value of production and Value Added (Rs million)
Value of production'84-85 85-86 86-87 87-88 88-897498 7117 11465 9074 8767
Value added5920 5612 9776 7488 7050
CMI Employment cost and average daily employment
Employment cost (Rs million)'84-85 85-86 86-87 87-88 90-91197 185 198 232 225
Average daily employment (000)10 10 9 9 6
CMI indirect tax contribution and value of fixed assets (Rs million)'84-85 85-86 86-87 87-88 90-915325 4457 4862 4790 5828
Value of fixed assets328 397 391 291 515
Exports by value
Year Value (Rs million)'90-91 116'91-92 217'92-93 171'93-94 134'94-95 185'95-96 (July-March) 79
According to Commodity Review and Outlook 1994-95, a publication of Food and Agriculture Organization of the United Nations, the world tobacco production again exceeded 8.3 million tonnes in '93 after reaching the record high of 8.328 million tonnes in '92.
The publication attributed the increase to the continued expansion in harvested area in the developing countries which led to their output approaching 6.6 million tonnes or 79 per cent of the world total.
By contrast tobacco production in the developed countries continued to fall by 5 per cent in '93, to 1.7 million tonnes, which was almost 30 per cent less than the record level reached in 1976. This reflected a reduction in the harvested area which in '94 was some 60 per cent of the 1976 level.
On the contrary, area under tobacco cultivation in developing countries increased greatly from 2.2 million hectres to four million hectres in '94.
The lower output in the developed countries in '93 mainly reflected decreased production in the US, following a substantial reduction in the quota for burley tobacco resulting from weaker domestic demand and stronger competition overseas.
The increased production in the developing countries was principally due to a 10 per cent rise in output in Latin America where Brazil's production surged to a record 663,000 tonnes from a slightly increased area. Though Argentina did not maintain the record crop of the previous year, the harvest in Mexico, where the cultivated area has doubled since '91, rose by 41 per cent but remained well below the levels of earlier years.
In Africa, output also rose by four per cent mainly due to a record harvest in Malawi. However, crop quality suffered from poor weather and prices fell consequently.
Good weather conditions in Zimbabwe sustained production, though it was 3 per cent below the record crop of the previous year, and improved quality.
Trade in '93
Tobacco exports worldwide decreased by 1.2 per cent to 1.66 million tonnes; in developed countries it fell by almost ten per cent to less than 38 per cent of total exports from 52 per cent in 1960s to an average 41 per cent between '90-93.
In comparison exports by developing countries increased exceeding one million tonnes for the first time.
Exports by developing countries in Africa exceeded 0.3 million tonnes which was 44 per cent higher than the average in '89-91. Much of this was due to Zimbabwe where exports were over 62 per cent higher than the average of '89-91.
Exports by Latin America, though slightly less than in '92 remained 18 per cent higher than the '89-91 average.
Brazil, which became the world's biggest tobacco exporter with an increase of 28 per cent since '89-91, accounted for 68 per cent of regional shipments in '93.
OUTPUT DOWN IN '94
Production in '94, at 7.8 million tonnes, was 6.6 per cent less than the previous year due to substantial reductions in output by some large producers. Decreased output in the developed countries, 5 per cent less than in '93, largely reflected an 8 per cent decline in output of the US, the major developed country producer. The US grows mainly flue-cured and burley tobacco varieties which were subject to lower production quotas, following high stocks, and reduced domestic and export demand.
In EC, despite the Common Agricultural Policy reforms, output in '94 was only slightly less than what it was in '93. The only major producer with a reduced crop was Italy, where production has fallen sharply during the '90s. Elsewhere in Europe production was slightly boosted following a recovery in output by Hungary and Romania.
In developing countries production in '94 dropped by 7 per cent; nearly 13 per cent in Brazil which had a record crop in '93.
In Asia, China's production fell by 74000 tonnes over previous year and 116000 tonnes from the record production in '92. The country, nevertheless remained the world's largest producer accounting for 43 per cent of the world output in '94.
TRADE SLACKENED IN '94
Exports of tobacco leaf declined slightly for the second successive year in '94. While shipments by developing countries were likely to remain above one million tonnes in '94, exports from developed countries would likely fall to under 600,000 tonnes.
Slower consumption growth in addition to high stocks in the major importing markets was responsible for the decline.
This was accentuated for some traditional exporting countries as cigarette manufacturers continued to switch to alternative cheaper leaf.
In the US, imports in '94 were likely to be dampened by legislation effectively limiting the amount of foreign tobacco in domestically produced cigarettes. Similarly, reforms in the EC and quota reductions in the US reinforced the market decline in developing countries.
(000 tonnes)89-91 average 92 93 94World total 7182 8328 8318 7789DEVELOPING COUNTRIES 5360 6501 6576 6115Latin America 723 856 945 868Africa 345 442 457 400Near East 318 398 387 274Far East 3974 4804 4788 4573China 2849 3515 3474 3401DEVELOPED COUNTRIES 1821 1827 1742 1655North America 779 853 816 743Europe 678 630 580 583EC 437 421 396 389Oceania 13 12 12 9Area of former USSR 245 217 236 228Other developed countries 107 115 98 92
Value of exports
(Million $) (Million $)89-91 average 92 93World Total 5013 5820 5029Developing countries 2458 2851 2636Developed countries 2555 2969 2393
('000 tonnes)89-91 average 92 93World total 1534 1684 1664Developing countries 847 991 1039Developed countries 687 693 626
('000 tonnes)89-91 average 92 93World total 1501 1709 1656DEVELOPING COUNTRIES 315 367 330Latin America 30 49 48Africa 53 51 53Near East 81 89 78Far East 148 176 149DEVELOPED COUNTRIES 1187 1342 1326North America 221 333 370Europe 804 814 702EC 645 677 553Oceania 13 13 13Area of former USSR 36 35 105Other developed countries 112 147 137Japan 89 117 119