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The projections of demand show a changing consumption pattern of tobacco. Although these patterns had already started in the early 1990s, the structure of consumption would be quite different in 2010, as compared to previous decades, as shown in Figure 3.22. Although total tobacco leaf consumption is increasing at the world level, it is declining in developed countries and increasing in developing countries (excluding China). China alone is the largest consumer in the world with about 320 million smokers out of 1.1 billion smokers world-wide and over 40 percent of world consumption. China showed a rapid growth in tobacco consumption in the early 1990s and an abrupt decline in 1997-1999, but it is most likely to increase again in the period to 2010.

Figure 3.22 Tobacco leaf consumption patterns - actual and projected (baseline scenario)

The increase in aggregate world tobacco consumption, however, conceals the fact that tobacco consumption per adult is declining and is expected to continue to decline (as shown in Figure 3.23) in both the baseline scenario and the policy scenario.

Figure 3.23 Tobacco consumption per adult, world, (kg/year) (Scenarios - baseline and policy) (dry weight)

It is expected that in the baseline scenario consumption per adult will decline below 1.5 kg/year and in the policy scenario it will decline even more to about 1.3 kg/year, a decline of almost 10 percent in the baseline scenario and almost 20 percent in the policy scenario. Consumption per adult is declining not only in developed countries, but also in developing countries including China, albeit modestly. This significant development, however, is concealed by the fact that global tobacco use is rising.

Tobacco support programmes are under continuous pressure in developed countries, mainly in the United States and the EU and support will, most probably, decline or perhaps disappear in 2000-2010 decade. A widely held belief is that government support to tobacco growing increases the supply and reduces the price of tobacco products, and as a result, an end to production support is considered an integral part of a comprehensive anti-smoking campaign. However, this belief is only partly true (see Warner, 2000, p.84). With the increasing liberalization of international trade and lower production costs in developing countries, the net effect of a cut in support would be to shift tobacco production further to developing countries, mainly Brazil, Zimbabwe, Malawi, India, Turkey and perhaps China.

In fact, exports of Brazil, Malawi and Zimbabwe are very price-competitive and this might provide the potential for them to compete successfully with other exporting countries in the event of reduced support for tobacco. For example, the export unit value of tobacco leaf from the United States is more than twice the world average, reflecting the higher quality but also higher production cost of United States tobacco. The minimum wage rate in developed countries is at least five times more than wages in many developing countries and ten times more than wages in Malawi and Zimbabwe. If cigarette manufacturers can continue to develop new processing technologies that allow them to use lower quality leaf, countries such as Malawi, Brazil and Zimbabwe would be able to compete more effectively with the United States and other developed countries in export markets and capture increasing shares of world market in the period to 2010.

The international community has provided various forms of financial assistance to Malawi and Zimbabwe over recent decades. In the event of a significant contraction in demand for tobacco, it is likely that their economies would suffer markedly, and would require assistance from international donors focussed clearly at facilitating adjustment both within agriculture and between agriculture and other sectors of the economy.

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