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Johannesburg - The influx of illicit cigarettes and tobacco into the country threatens to make the fortunes of hundreds of farmers and thousands of workers go up in smoke.
Scores of emerging farmers in Limpopo and Mpumalanga, who produce most of the country’s tobacco crop, have had to scale down operations and lay off workers.
This is because companies such as British American Tobacco (BAT) have seen a notable decrease in the sale of cigarettes, which has led to declining demand for tobacco from farmers.
The Tobacco Institute of Southern Africa (Tisa) estimates that the livelihoods of between 20 000 and 25 000 people who are part of households relying on wages from tobacco farms as their main source of income will suffer because of the decrease in demand.
BAT says that, over the past five years, the volume of legal cigarettes it has sold decreased from 22 billion sticks to 15 billion, resulting in the loss of 600 jobs.
Zacharia Motsumi is the executive director of Limpopo Tobacco Processors (LTP), the biggest single supplier of tobacco leaves to domestic buyers in the country.
He says it has “been subjected to a reduction of 1 500 tons [15%] in the domestic order for 2017/18”.
LTP has experienced a drop in tobacco supply from farmers, notably in the Sekhukhune and Waterberg areas of Limpopo.
The area produces more than 75% of the country’s sun-dried tobacco.
Motsumi agrees with the view that many farmers may have to shut down operations because of the falling demand caused by the smuggling of illicit cigarettes.
Motsumi says Limpopo produces 9 500 tons of tobacco a year, and Mpumalanga produces 415 tons a year.
Tisa chair Francois van der Merwe says that, over the past financial year, the industry’s excise and VAT payments to government totalled more than R17 billion.
Van der Merwe says that LTP purchases more than 11 300 tons of tobacco from local farmers in three provinces – North West, Limpopo and Mpumalanga.
“Since 2012, tobacco manufacturers have bought 2 000 tons less of tobacco leaf, which can directly be attributed to the increase in illicit tobacco trade in South Africa,” he says.
Mpumalanga farmer Shadrack Sibisi says the illicit cigarette trade and stringent government regulations on tobacco advertising are putting farmers out of business.
Sibisi is a spokesperson for three farmers’ organisations representing 88 members in the province’s Nkomazi region.
He says some farmers have already stopped growing tobacco and have laid off workers.
The farmers produce sun-cured Virginia tobacco, which is reputed to contain less nicotine than the oven-baked varieties.
Sibisi started his operation in 2010, farming on half a hectare of land.
By the 2014/15 farming season, he was planting tobacco on eight hectares and making money.
This was also the case with other farmers in the area.
“We started qualifying for loans, which we were able to repay in the same year. Life was 100 times better than when we started out because we were finally making a profit,” Sibisi says.
Between 2015 and last year, at least 17 of the 20 farmers in his sub-region were reduced to farming only one hectare of the crop.
They had to supplement their income by diversifying into other crops, but this required more capital because different tools needed to be bought.
Their hopes of expanding their tobacco production have not materialised.
He says every hectare farmed requires two permanent workers and an additional three during harvest time. The decline in demand for tobacco means job losses.
“We are in a rural area where poverty is quite high. If we send people home, it means they have to go back to surviving on a government social grant,” he says.
Agricultural industry association AgriSA’s Pietman Roos says illicit tobacco is a serious threat to the agricultural sector and the tobacco value chain.
“It is very important for government to take urgent notice of the problem. It must work with the relevant stakeholders to address it, as it is a matter of national importance,” Roos says.
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