Tobacco Asia

Volume 19, Number 2

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64 tobaccoasia / Issue 2, 2015 (May/June) By Allen Liao The tobacco-growing regions in China are trying to exercise control over both the tobacco acre- age and sales volume in response to the general plan set out by the State Tobacco Monopoly Ad- ministration (STMA). In early 2014, STMA – the regulator of China's tobacco industry – unveiled its general plan to reduce production and supply of leaf tobacco over the next three years to a more manageable level. In the context of this plan, the year 2015 be- comes a crucial. Whether the tobacco industry will succeed in actively and effectively reducing both the tobacco acreage and the leaf tobacco sales volume during this period will ultimately decide whether leaf tobacco production in China will re- main stable in 2016 and beyond. In 2015, the scale of leaf tobacco production in China continues to decline from last year, with acreage and sales volumes to be limited to 16.18 million mu (1.08 million hectares) and 46.02 mil- lion dan (2.301 million tons) respectively, down 3 million mu (200,000 hectares) and 2 million dan (100,000 tons) from 2014. This actually means that this year will be a severe challenge to the tobacco- growing regions nationwide. Objectively speaking, control over both the tobacco acreage and leaf tobacco sales volume is intended to solve the major problem in China's tobacco trade of a significant imbalance between supply and demand. Since the outbreak of the "raw materials cri- sis" in the late 1990s, STMA has been highly pru- dent when it comes to leaf tobacco production. Yet, along with vigorous development of cigarette brands over recent years, tobacco manufacturers, in an effort to gain enough advantage in the mar- ket over their competition, produced too much. China Wants Control Over Acreage Volumes Flue-cured tobacco of Yunnan Province

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