AI4—UKMUf Fwwhn, s.tod.y, «upist 30,1980 But Third World use is up
Tough times for tobacco seen as U.S, use drops i
™ through the 1980’s, wit^
declines in developed
country markets and some
possible expansion con
centrated in the developing
nations where incomes and
the demand for tobacco
products are increasing.
LANCASTER - With
growth in tobacco con
sumption stunted at home by
a number of factors in
cluding the antismoking
campaign, U.S. tobacco
growers are looking toward
foreign markets to rekindle
the industry.
On the bright side, from a
tobacco grower’s per
spective, is evidence that
excellent new markets may
be springing up in Third
World countries.
However, on the home
front, tobacco is facing lean
times. A steady decline in
U.S. per capita use during
the last decade has clouded
tobacco’s future here. Signs
of a stagnating domestic
tobacco market abound,
leaving industry leaders
worried:
last year, the average
American smoked, chewed,
or sniffed less tobacco per
person than in any year
since 1898.
from a high of 1.43 billion
pounds in 1965. U.S tobacco
consumption dropped to an
estimated 1.25 billion pounds
in 1979.
UJS. cigarette sales rose
slightly in 1979, as they have
for the last 10 years. But
USDA expert describe this
sales trend as flat, because
cigarette smoking is not
increasing as fast as
population growth.
A closer look at per capita
cigarette smoking is even
more revealing. In 1963,
better than half of U.S. adult
males and nearly one-third
of all U.S. women smoked
cigarettes. Adult smoking
averaged a record 4345
cigarettes each.
By the end of 1978, only 38
percent of men and 30
percent of women smoked
Per capita used dropped to
3967.
It’s one thing for fewer
cigarettes to be smoked. But
demand for U.S. tobacco is
affected even more than the
above figures indicate
because:
Greater efficiency by
cigarette manufacturers’ is
resulting in less tobacco
waste. Also, the drive for
low-tar, low-nicotine brands
has led to less tobacco being
used in cigarettes, even
since the introduction of
extra-longs.
More foreign tobacco is
being used in domestic
cigarettes as “filler”
because it is cheaper than
domestic leaf. The per
centage of imported tobacco
in domestic cigarettes rose
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from 11 percent in 1965 to 22
percent in 1978.
Looking ahead, an
tismoking sentiment is
certain to continue to
dampen U.S. sales. Per
capita use should continue
its decline by one to two
percent per year. By 1990,
per capita U.S. cigarette use
could decline as much as 25
percent.
So, tobacco growers must
look overseas for a note of
optimism. And, with
sprouting competition from
Brazil, Korea, Thailand,
Malawi, and now Zimbabwe
(formerly Rhodesia), that
optimistic note is soft, even
though the U.S. is the world’s
largest exporter of tobacco.
Of great concern is a
resurgence of competition
from Zimbabwe. Before
U.N. trade sanctions were
unposed on Rhodesia 15
years ago, its tobacco
ranked second m quality,
only to America’s. With
sanctions lifted tobacco
experts say Zimbabwe could
place 200 to 400 million
pounds of leaf tobacco on
world markets by the mid
1960’5.
For years, the U.S. has
offered a premium quality,
high priced tobacco.
However, in recent years,
these other countries have
entered the market with
tobacco almost as good but
cheaper. As a result the U.S.
share of the world market is
declining.
During 1960-64, U.S. leaf
exports accounted for 30
percent of world total, by
1979 the share had fallen to
18 percent.
In 1979 alone, U.S. ship
ments of leaf and other
unmanufactured tobacco fell
19 percent to 567 million
pounds, lowest since 1975.
Mainly responsible was
the drastic reduction in sales
to European markets. In
T 578, West Europe took
nearly 60 percent of U.S.
tobacco exports. But last
year the share dropped to 29
percent. Sales were smaller
because Europe had
stockpiled high quality
supplies from the 1978 U.S.
tobacco crop. In addition,
several European countries
experienced a drop in
domestic tobacco sales
similar to the U.S.
A look at last year’s
tobacco sales to Japan is
another indication of the
poor showing by the U.S. on
world iftarkets. Although
sales to Japan fell 6 percent
in 1979 to 96 million pounds
that country surpassed the
United Kingdom as the
leading destination for U.S.
tobacco. In 1979, sales to the
United Kingdom were off 54
percent.
Some other important
markets which showed
declines of 20 percent or
more in U.S. tobacco pur
chases from 1978 levels were
Spam, Egypt, Denmark,
Switzerland, and Sweden.
Nonetheless, most experts
say the world market
where tobacco consumption
increases about two percent
per year is the only place
where significant growth
can occur.
That assessment is rooted
in the persistent mcrease in
demand for cigarettes from
the developing nations of the
Third World.
In the Middle East and
other Asian Countries', U.S.
cigarette sales rose sub
stantially last year, despite a
early cutoff m exports to
Iran. Exports of cigarette;:
to South America and Africa
also increased.
This growing overseas
market carries some hope
for the tobacco farmer
caught in the squeeze of
smaller crop returns and
inflation. Prospects for
growth in cigarette exports
are expected to support as
much as a 14 percent m-
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crease in total U.S. cigarette
output by 1990.
However, growing Third
World demand for tobacco
won’t necessarily translate
into long-term economic
salvation for the American
tobacco farmer.
Price is a key obstacle.
Foreign buyers complain
that, despite the high
quality, U.S. tobacoo, is
simply too expensive.
On world markets, U.S.
fiue-cured tobacco sold for
$1.40 a pound in 1579, more
than twice the selling price
for Zimbabwe and Brazilian
leaf.
Ironically, Federal price
supports designed to help the
industry may be pricing
U.S. tobacco out of the world
market.
An indication of the impact
of price supports is the 1978
farm value of $2,826 per acre
for tobacco Return over
production costs is also
substantially higher for
tobacco than for most other
crops.
Over the longer term the
tobacco industry must also
face the possibility of an
tismoking campaigns in
foreign countries. As
cigarette sales grow, foreign
governments can benefit
from increasing cigarette
taxes.
On the other hand, many
observers point out that
these governments must
also consider the potential
increase in health care costs
and question the use of
meager buying power for
tobacco instead of food,
especially with already
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inadequate diets using
precious buying power for
tobacco instead of food,
especially where diets are
inadequate.
Even with these obstacles,
USDA economists expect
shifts in U.S. tobacco exports
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