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  2. European tobacco growing appeared in the creation of the support system as one of the rather sensitive issues of the common agricultural policy, as an eco-social focus. Debates continue under the pressure of • the price competition in the world market • the ecological and social drawback of tobacco growing regions • the growing pressure of the anti-smoking social atmosphere, and • the WTO negotiations aiming at the decoupling of direct payments. • Our aim: to find those integration points which allow the sustainable tobacco production in Europe, for the benefit of rural inhabitants, by developing the social relations.

  3. Dependence on the globalisation of the tobacco world Contrast of production and consumption Employment can be replaced only by social elements World market prices are independent of European production Status of European tobacco production Without tobacco growing the population migrate, the devices and natural environment decline The key of survival is subsidy Serious social argument Reduction of health risk There is no alternative of tobacco production Tobacco production provides living in underdeveloped areas Summarizing the situation of European tobacco production

  4. This study would like to contribute to the more and more extensive strategy of UNITAB. In this study we examined (until 2006) • global relations (biological, ecological, quantity, price, turnover and other factors), • development of growing and consumption, employment, • the difficulties of production diversification, • regional connections, • the effect of the ten new member states joining the EU in 2004 – taking Hungary as a model, and the possible directions of strategic activity.

  5. The topics of this presentation • The tobacco growing of the European Union in a global comparison • The status of tobacco production in the European Union • Situation in Hungary (in the view of ten new member states joining the EU in 2004) • Difficulties of diversification and alternative crops to tobacco • Joining forces for stability – UNITAB’s efforts and strategy • Suggestions

  6. The tobacco growing of the European Union in a global comparison • Tobacco is grown in more than 120 countries in the world • Tobacco has a special biological ability to adapt, but most of the developing countries have more favourable climate conditions for tobacco growing, than Europe • Concerning potential yield and tobacco quality (Brazil, Malawi), production is not competitive with the big tropical and subtropical tobacco growing countries (excepting Oriental tobaccos) • Production is being transferred from developed areas to developing countries • Multinational companies control increasingly the whole tobacco sector • In EU, Tobacco production is done in poor quality soils, where economical production of other plants is not possible and is regionally concentrated to a great extent

  7. The extent of European tobacco growing internationally

  8. Changes in the quantity of the world’s tobacco production

  9. Changes in the quantity of the world’s FCV tobacco production

  10. Changes in the quantity of the world’s light air cured tobacco growing

  11. Changes in the production of Oriental tobacco

  12. Farmer prices of raw tobacco • Farmer pricesvary considerably by the demand on different types of raw tobacco (special character) and are influenced by several factors: quality (habitat, variety), price policy of big companies, etc. • In case of oriental tobaccos, market pays for their unique character, special role in blends and limited quantity • Filler tobacco prices in EU are influenced by supply and demand in the world market, and not by tobacco quantity produced in the EU, or according to payment system • In the case of FCV and Burley tobaccos, there is no determining connection between the quantity of tobacco produced in the EU and the average farmer prices of raw tobacco • The change in the raw tobacco prices of EU did not follow the dramatic fall in quantity, resulting from decoupling of the payment

  13. Changes in quantity of FCV tobacco and its farmer price

  14. Changes in quantity of Light air cured tobacco and its farmer price

  15. Changes in quantity of Oriental and Semi-oriental tobacco and its farmer price

  16. The tobacco production and consumption • Demand for tobacco products constantly rises • Until 2025 the number of smokers grow from 1.1 billion to 1.7 billion • The developing countries represent 70% of the world’s consumption (China 44%) • Consumption have fallen in developed countries • The quantity of cigarettes marketed in the EU-25 dropped by 10% between 2002 and 2004. • 106.63 million smokers in EU, 2,5% (2005) • There is no connection between the quantity of raw tobacco produced in the European Union and the tobacco consumption of the EU

  17. The European tobacco production and consumption While the production of the EU dropped by 32 % from 2005 to 2006, the drop in consumption is only 2-3 % (In Greece, for instance cigarette consumption dropped only by 3 %, in spite of the 80 % drastic drop in production.)

  18. Situationof greatest tobacco producer countries compared to the EU

  19. Main conclusions of the comparison • Main advantages of developing countries in competition on world market are lower cost (more favorable climate, cheaper workforce) and support of the WTO. • In spite of increasingly control of multinational companies, in most developing countries traceability and consumers’ health protection lag behind European tobacco, which is produced under traditionally strictly controlled conditions - European Charter for Tobacco Growing. • Outside Europe, in most countries the market operates still on a speculative basis. The safety of product quantity, the predominance of quality respects and working conditions are fall behind the European criteria. • In European Union tobacco is grown within quantity frames regulated by agricultural policy, in the framework of unified production contracts, under predictable market conditions and profitability. • In the EU, the profitability of tobacco growing can only be maintained by significant direct support, mainly because of the high production costs.

  20. The status of tobacco production in the European Union • Tobacco has been grown in the following 12 countries out of the 27 member states of the EU in 2007:

  21. According to the regional policy of the EU, inthese countries tobacco growing regions belong to Target Group 1. (underdeveloped areas) We present typical European tobacco growing areas through some particular regions. We have chosen the following regions: • France: Aquitaine, Poitou-Charentes • Italy: Umbria • Spain: Extremadura • Portugal: Alentejo • Germany: Baden-Württemberg • Hungary: Northern Great Plain

  22. We examined the • Geographical location, • Weather conditions, • Soil. There are significant differences among these areas, which prove the tobacco’s outstanding biological ability to adapt.

  23. Macroeconomic features 1. GDP in 2006

  24. Macroeconomic features 2. The rate of unemployment in 2005

  25. Data of tobacco growing farms in the European Union

  26. Number of people employed in tobacco growing in 2006

  27. Effects of the tobacco payment system introduced in EU-15

  28. Changes of tobacco production of EU member states

  29. Changes of the area and crop of tobacco in EU member states

  30. Changes of the area and crop of tobacco in EU member states

  31. The economic indexes of tobacco growing in the EU

  32. Tobacco production’s cost structure(2006 in Hungary)EUR/hectare

  33. Unite production costs in some European countries(EUR/kgs) * depending on the rate of mechanization and type of energy source ** mechanized, or greatly mechanized whole plant harvesting In France the costs neither include family labor, nor equipments depreciation.

  34. Reducing the health risks of tobacco consumption • Attack of WHO • Answer: Variety development, quality traceability, product development Reducing the health risks of tobacco consumption in Hungary 20 years- Tar 74% , Nicotine 73% 

  35. Situation in Hungary (in the view of ten new member states joining the EU in 2004)

  36. The changes in the tobacco production(1997-2006)

  37. The profitability of Virginia production

  38. The profitability of Burley production

  39. Difficulties of diversification and alternative crops to tobacco • Some important studies carried out in the issue and institutes dealt with the topic: • EUROSTAT study (2001) • COGEA study (2003) • FAO study (2003) • Tobacco Institute of South Africa (2007) • Keyser study (2007) • ANITTA case study (2006-2008) • University of Hohenheim (DIVTOB Projek, 2008) • Agricultural Economics Research Institute, Hungary (2008) • European Parlament (2008-)