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Special Report
World Unmanufactured Tobacco Production, Supply and Distribution
Production
China, the United States, India, Brazil, Turkey, Zimbabwe, Indonesia and Greece, when combined, account for nearly three-quarters of the world's unmanufactured tobacco production. China is by far the leading producer with leaf output of almost 3.5 times the level of the United States or over 37-percent of world output. In 1998, China is expected to grow over 2.5 million metric tons farm-sales-weight (FSW) of leaf tobacco, down one fourth from last year's crop. Flue-cured accounts for nearly 95-percent of the tobacco grown in China. The Chinese tobacco industry continues its efforts to cut back on the production of lower quality tobaccos and bring stock levels down. The industry's current emphasis on cigarette quality is likely to keep leaf output more in line with use.
Total unmanufactured tobacco production in the United States in 1998 is expected to decline slightly to 735,781 tons FSW due to sharply lower flue-cured production quotas. Flue-cured output is expected to decline 14-percent to 385,000 tons this year, while burley should reach 310,000 tons, an increase of 5-percent. Flue-cured and burley are the leading tobacco types grown in the United States, accounting for about 95-percent of total U.S. leaf output.
India's 1998 tobacco production is estimated at 635,000 tons, up 2-percent from last year based on a 6-percent increase in planted area. A 9-percent drop in flue-cured production is responsible for the lower output. Adverse growing conditions in the main flue-cured producing state of Andhra Pradesh was largely responsible for the smaller flue-cured crop. Brazil's output in 1998 is expected to decline about 23-percent to 442,000 tons. This drop can be attributed to lower yields that resulted from abnormal weather conditions. The southern production area was too wet and cloudy and the northeast suffered a drought. Zimbabwe's leaf production in 1998 is expected to increase about 10-percent to 212,050 tons. The expectation of another year of favorable flue-cured prices pushed plantings up in 1998 by 4-percent. This coupled with higher yields induced by favorable weather resulted in the larger crop. Turkey’s leaf output is expected to decrease about 10-percent to around 266,500 tons. The Turkish Government hopes to reduce production by lowering prices. The 1998 price for "A" grade tobacco was set 10-percent lower in real terms. The Turkish Government does not want to let stocks build to excessive levels. Greece’s total leaf production in 1998 is expected to remain virtually unchanged from 1997, totaling 132,000 tons. Over 60-percent of Greek output is oriental leaf.
Consumption
The world's top unmanufactured tobacco consuming nations are China, the United States, India, Turkey, Japan, Germany, Indonesia, and Brazil. China's leaf consumption is expected to be over 2.1 million tons in 1998, down slightly from 1997. The United States is expected to consume about 665,000 tons of unmanufactured tobacco this year. This is also down slightly from last year due to an expected further decline in cigarette exports. In Brazil and Japan, lower domestic cigarette production is expected to push leaf consumption down. Total leaf consumption in Germany and India is expected to remain near last year's level. Turkey’s leaf consumption rose 2-percent based on high domestic cigarette use and strong cigarette exports.
Exports
The world's leading unmanufactured tobacco exporting nations are Brazil, the United States, Zimbabwe, Malawi, Turkey, and Greece. Brazil, the world’s largest leaf tobacco exporter, is expected to export 279,500 tons of leaf in 1998, down 12-percent from last year. The decline is the result of lower supplies of leaf available for export. In the United States, leaf exports in 1998 are expected to reach about 225,000 tons, a slight increase from last year. The United States' top leaf export markets are in the European Union (particularly Germany) and in East Asia (particularly Japan). Zimbabwe's exports in 1998 are expected to increase 11-percent from last year’s level to a projected 177,600 tons. Adequate supplies and the complete elimination of the export tax are expected to keep Malawi’s exports near the 1997 level of 110,000 tons. Tobacco exports account for over 70-percent of Malawi’s foreign exchange earnings. Turkey and Greece are expected to show a decline in leaf exports again this year to about 151,000 tons and 105,000 tons, respectively.
Imports
The United States, Germany, the Russian Federation, Japan, the United Kingdom, and the Netherlands are the world's leading unmanufactured tobacco importing nations. When combined, these countries account for more than half of the world's leaf imports. In 1998 the United States' general leaf imports are expected to total about 315,000 tons, up 3-percent from 1997, but 4-percent lower than in 1996. U.S. leaf imports have grown slowly over the last three years following a substantial decline in 1994 and 1995. The current levels are still significantly below the levels imported during the 1990 through 1993 period. Imports during the 1990-1993 period rose due to greater use of imported tobaccos in cigarettes manufactured in the United States. However, in 1994 the United States implemented the domestic content legislation which was replaced by a tariff-rate-quota proclaimed in 1995. The domestic content legislation in particular had a significant impact on the level of U.S. leaf tobacco imports.
In Germany, leaf imports are expected to reach 230,000 tons in 1998, up about 4-percent from 1997. The Russian Federation is expected to import about 178,000 tons of leaf tobacco in 1998, a 4-percent decline from 1997. Although the lack of foreign exchange has limited Russia’s imports in the past, the demand for leaf tobacco and tobacco products is strong in this region. Japanese leaf imports are expected to be up slightly this year, totaling 91,000 tons with the United States accounting for nearly half of this trade. The United Kingdom is expected to import 132,000 tons of leaf tobacco, down nearly 16-percent from last year. Much of this decline is due to lower tobacco consumption and attempts by the tobacco industry to keep stock levels down. Leaf imports by the Netherlands are also expected to fall from last year’s level. Imports may be off 7-percent to 91,000 tons.
Stocks
World unmanufactured tobacco stock levels are projected to rise again during 1998. This is the third straight year stocks have risen as production exceeds use. However, the projected 82,000 ton increase during 1998 would be the smallest increase in 3 years and may indicate that supply and use are coming in balance. China and the United States together account for over half of the world's leaf tobacco stocks. Stocks in both countries are expected to rise only modestly during 1998. Leaf stocks in several producing countries are expected to fall during the year.
Prepared By: Daniel J. Stevens, Senior Tobacco Economist, Foreign Agricultural Service, USDA. (202) 720-9493.
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