THE INTERNATIONAL OUTLOOK FOR U.S. TOBACCO



Chart 6 - STAGES

Looking at export trends for the major traders, we can see that Brazil and Zimbabwe have
shown substantial upward growth, while exports by the United States are trending lower.
China has also come on and is now the world’s third leading flue-cured exporter. India and
Argentina have remained relatively steady although showing some decline over the last few
years.

Chart 7

Shifting to burley, we see that production is not as concentrated as with flue-cured although
the top four producers here account for nearly two-thirds of the world’s crop. China is again
the leading producer accounting for nearly 26 percent of the world’s burley crop. Other top
producers include the United States, Malawi, Brazil and Italy.

Chart 8

Looking at burley exports you can see that China drops out as a top exporter, but the other
top producers account for almost 70 percent of trade

Chart 9 - STAGES

The export trends for burley aren’t as pronounced as with flue-cured, but Malawi has shown
substantial export growth, while Brazil has come on over the last 7 years to become the
worlds’ second leading burley exporter. Italian trade has shown some growth as well. U.S.
trade has dropped considerably over the last 10 years and after accounting for nearly a third
of the world’s leaf trade 20 years ago, the United States is now the fourth leading exporter of
burley behind Italy. Argentine and Thai exports have shown some growth but generally have
remained fairly level.

What I would like to do now is focus a bit on the situation in some of these countries.

Outlook by Country

United States

Chart 10 - STAGES

We’ve seen considerable change in U.S. production and trade levels over the years.

But since 1997, U.S. leaf production has declined considerably. Production quotas for both
flue-cured and burley dropped 44 and 53 percent, respectively, during this period.

Production quotas for flue and burley, which combined account for nearly 95 percent of the
leaf tobacco grown in the United States, are determined by formula and take into account
stock levels, purchase intentions by domestic cigarette manufacturers, and leaf exports.

Although U.S. exports of leaf tobacco have shown a declining trend, and stock levels have
been higher than optimal, a key reason for the lower quotas in the U.S. is a declining U.S.
cigarette consumption and lower cigarette exports.



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