1 of 3
El Niño is the latest natural calamity to strike tobacco cultivation. Photo credit: Makarand G. Mane, WordPress Photo Directory.
2 of 3
Nixon Lita, c.e.o. TAMA Farmers Trust, Malawi. Photo credit: TAMA
3 of 3
Domestic demand is driving up the prices for Indonesian leaf, to the point where it is “too high for export markets.” Photo credit: Arif Ramdhasuma, Pexels.
While Brazil and Zimbabwe crops are short, Indian exports are apparently booming.
It appears that tobacco supplies simply don’t get out of the hole. First, there was Covid-19 that decreased harvests to dismal volumes and severely disrupted distribution for a good two years. Then disastrous flooding all but destroyed Pakistan’s crop, only to be followed by La Niña wreaking havoc on many growing regions. But this year, and just when hopes were rising again, it was La Niña’s naughty brother, El Niño, that has caused droughts in South Africa, Botswana, Mozambique, Malawi, and Zambia, but particularly affecting Zimbabwe.
Zimbabwe harvest considerably lower than 2022/23
A recent Associated Press (AP) report said Zimbabwe’s 2023/24 harvest is estimated at just about 235 million kilograms, considerably down from an all-time record 296 million kilograms the previous season. The decline is attributed to drought brought on by the El Niño weather pattern in tandem with global warming, the report said. A BBC report likewise confirmed that the sharp drop in harvest volume and affirmed that the drought currently gripping southern Africa was indeed caused by El Niño, but claimed that global warming was not a co-factor. The Reuters news agency, meanwhile, reported a higher harvest figure for the 2023/24 season, quoting information obtained from Zimbabwe’s regulator, the Tobacco Industry Marketing Board (TIMB). According to TIMB, the 2023/24 crop “is expected to fall at least 10% to 265 million kg in 2024.”
Despite these press reports, Rodney Ambrose, c.e.o. of the Zimbabwe Tobacco Association (ZTA), cautioned during an interview with Tobacco Asia that the final FCV crop estimate for the current season was yet to be firmly established. Although he corroborated TIMB’s official estimate of 265 million kilograms, he said that “independent industry estimates are actually much lower, at 220 to 240 million kilograms.”
El Niño impact “felt throughout the season”
Also blaming the production slump on El Niño, Ambrose said “yields in some of [Zimbabwe’s] traditionally drier growing areas have been more negatively affected [than elsewhere], particularly Manicaland province, which produces about 18% of Zimbabwe’s total volume.” In addition, because of the sporadic rains, each of the four other major growing provinces had drier-than-usual districts within them.
El Niño’s impact, Ambrose explained, was felt throughout the season, though the main impact was in December 2023 post-planting, and again in February 2024, when plenty of water was needed for late-planted crops. Mitigation measures were “very difficult to implement, because only 18% of the national crop is grown under industrial irrigation,” according to Ambrose.
Malawi largely escapes El Niño brunt
The world’s largest burley producer, Malawi, is likewise affected by El Niño, though not nearly as devastatingly as its southern neighbor Zimbabwe, where the crop is focused on FCV. “El Niño has hit [our] southern region more, while its impact on the central region is moderate, with northern Malawi not affected at all because it falls under a different weather belt. The trend is that the further south, the more affected the area is by El Nino,” said Nixon Lita, c.e.o. of TAMA Farmers Trust. Early harvest estimates were slightly above 150 million kilograms. But in the third week of January 2024, this figure had to be adjusted down to 146 million kilograms before dropping to 141million kilograms in mid-March.
Potential 4-year-high despite down-adjustment
According to Lita, dry spells were recorded from the third week of January through to the third week of February, “a time period when we normally would expect the rains to be at their peak.” When the rains finally picked up in March, tobacco plants showed signs of recovery, raising hopes among farmers. “The March rains have rescued the situation,” said Lita. Still, even the down-adjusted volume of 141 million kilograms would mean a considerable increase in Malawi’s output. “If the expected tonnage [of 141m kgs] materializes, then it means a good improvement from the previous years, as Malawi has been under-producing for four consecutive seasons, with the lowest figure having been only 85 million kilograms in 2022, and the highest being 124 million kgs in 2021,” Lita said.
Brazil selling out fast
Across the Atlantic, Brazil’s 2023/24 crop was expected to have sold out completely by end-April, although the marketing season normally extends until the end of June. According to an AFUBRA report, 58% of all Brazilian tobacco production had already been sold by March 15. Then, by early April, that rate had climbed to almost 70%. The rush for Brazilian leaf reportedly caused the farm-paid price to increase by an average of 19.15% compared to the previous year.
According to information obtained by Rio Grande do Sul-based merchant, KohlTrade, tobacco prices were expected to reach a price exceeding BRL20.00 (US$3.85) per kilo of dry leaf and – in some regions - up to BRL390.00 (US$75) per arroba (14.69kgs) for BO1-graded tobacco. However, according to Kohl Trade, producers have expressed concerns about the leaves’ lower weight caused by the extraordinarily rainy weather that had prevailed during the growing season.
Indonesia: No capacity to meet increased demand
With Brazilian FCV probably gone completely by the time this issue of Tobacco Asia went to press and Zimbabwe’s FCV output being seriously low this year, many tobacco product manufacturers scrambling to replenish their stocks may be turning a hopeful eye at Indonesia. But things in Southeast Asia’s largest tobacco producing country aren’t exactly rosy either. “It’s crucial to acknowledge that our situation is not significantly different [from Brazil and Zimbabwe],” Christian A. Njoto Njoo, the president of major merchant firm Mangli Djaya Raya (MDR), told Tobacco Asia. “Although the past two harvests were better compared to the years before, which had been affected by La Niña, the very antithesis of the current El Niño, we still don’t have the capacity to meet increased demand, because Indonesian manufacturers now also are turning to domestic tobaccos [due to the unavailability of imports].”
Cigar-grade leaf particularly sought after
Although Njoto Njoo claimed that MDR’s sales had actually increased, the company struggled to supply its regular customers overseas in addition to the domestic ones, “let alone expanding into new export markets.” Almost all varieties were experiencing heightened interest, Njoto Njoo said, “but cigar wrappers and binders such as Besuki NO or Javano, as well as FCB Lombok and DFC are particularly sought after, with their popularity far surpassing our available stocks.”
SC prices “too high for export”
In addition, due to domestic demand, sun-cured tobaccos is now fetching prices that are “too high for export markets,” Njoto Njoo said. “At the moment, we are selling most of the sun-cured tobaccos locally.” In fact, the domestic supply situation has become so dire that MDR is importing tobaccos from wherever it can. Of course, that will take Indonesian produce off most importers’ radar, at least for the time being. “As long as domestic manufacturers so aggressively purchase local tobaccos, it will be challenging [for MDR] to export,” Njoto Njoo admitted. “The only tobacco type that I see as potential export candidates at this point are probably cigar-grade tobacco, as we do not have to compete for prices with domestic manufacturers for those.”
India to the fore!
Alright… Brazil is sold out; Zimbabwe is shaky; Indonesia’s export capacity is challenging. So now what? Well, there still is India. “The shortfall of Brazilian but also Zimbabwean tobacco has created massive demand for Indian tobacco,” claimed Chandrasekhar Vanguru, a contracted sales and marketing agent for India’s second-largest tobacco exporter, Godfrey Philips India Limited. As a result of skyrocketing demand, prices for all tobacco varieties have gone up by 30%, as Indian exporters are loaded with heavy orders particularly for FCV and burley. “If anyone has benefitted from the Brazilian and Zimbabwean shortages, it surely is India,” Vanguru said. But he added that “even our stocks are not going to last indefinitely.” Now, if that’s not a subtle hint, what is?