OPINION | Where there are illegal smokes, there's a fire
The latest important study into the ban on cigarettes has confirmed that the tobacco trade is being handed to the criminal underworld.
It also exposes the devastation threatening thousands of families in some of the most disadvantaged regions of the country who rely on the legal tobacco trade to put a meal on the table.
Despite the ban on legal sales for the last 54 days, more than 90% of smokers have been able to buy cigarettes during lockdown, according to economists at the University of Cape Town (UCT).
Criminals are selling illegal cigarettes at hugely inflated prices and "feeding an illicit market that will be increasingly difficult to eradicate, even when the lockdown and the Covid-19 crisis is over", they added.
An illicit market is bad for customers, who are exploited by high prices, and for government, who are denied taxes desperately needed to deal with this unprecedented crisis.
But for members of the Black Tobacco Farmers Association (BTFA) this growth in illegal trade threatens our very means of existence and the livelihoods that support our families.
The UCT report shows that a growing chunk of the SA cigarette market has been taken over by manufacturers who use no South African tobacco at all - many times larger than it was before the lockdown. With legal sales in legal outlets halted, and if smokers keep buying these brands, it spells ruin for our hard-working farmers and their dependents.
BTFA is part of an extensive and interlinked tobacco value chain under the umbrella of the South Africa Tobacco Transformation Alliance (SATTA). Within this value chain, there are 8 000 tobacco farmers, with 30 000 dependents, and 164 new era (black) farmers.
Our farmers only supply legal manufacturers of tobacco products. Our businesses produce in South Africa, are taxed properly and, therefore, deliver hundreds of thousands of rand in revenue to the government. We also manage our businesses, employ rural people and support some 4 300 households.
These livelihoods are all in jeopardy if the criminalisation of the SA tobacco trade continues.
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According to the survey of 16 000 smokers by UCT’s research unit on the economics of excisable products, during the lockdown more than half have switched the cigarette brands they buy.
The biggest beneficiary is Gold Leaf Tobacco Company (GLTC), a Zimbabwe-based operation whose brands, including Sharp, RG and Savanah, account for one third of the illegal sales.
Excise declarations put GLTC’s market share pre-lockdown at substantially less than 8%. This means the cigarette ban has helped them increase their stake in the trade four-fold.
The market share of Carnilinx, makers of JFK, is five times bigger than before at 10%, and that of Best Tobacco Company, makers of Caesar, has more than quadrupled from 2% to 9%.
None of these companies uses South African tobacco.
British American Tobacco South Africa’s (BATSA) share of the market has dropped from 60% to 24%.
The report’s authors conclude that the current ban’s implications for the SA cigarette market are "dramatic".
For BTFA members, this an understatement.
During the lockdown, our economic potential has reduced to zero. Even though we have been able to resume our farming operations, the rest of the value chain is not able to operate.
Because BATSA buys all our tobacco leaf, we have no market to sell to and all our farmers, their workers, families and dependent households are suffering.
If the ban continues and the brands of GLTC and they’re like become more deeply entrenched, our prospects become even bleaker.
The complete collapse of our businesses and livelihoods is imminent.
This is a tragedy because tobacco growing has proved its potential to transform entire rural communities that have very few other resources.
Our members have worked to diversify their farms by using the income they get from tobacco. It has allowed them to provide food security for thousands and a belief in a better tomorrow for many more.
Because of our crop, we do not qualify for government relief funds. If our industry closes down we will again be forced into a life of dependency on State grants.
The government can longer claim that this ban is stopping people from smoking. It is stopping smokers from buying legal cigarettes. It is sustaining criminals in the illegal trade. And it is impoverishing decent, hard-working South Africans.
BTFA is urging government to lift this unfair ban which threatens to inflict untold misery on those who deserve better.
Shadrack Sibisi is president of the Black Tobacco Farmers Association. Views expressed are his own.