Tobacco Asia

Volume 19, Number 4

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66 tobaccoasia / Issue 4, 2015 (September/October) History of Tobacco in Brazil When the first Portuguese colonizers arrived to Brazilian lands they found tobacco plantations cared for by several indigenous tribes, who considered it a sacred plant with mys- tical origins. For this reason, it was believed to be special, meant to be used only for restricted occasions, and its con- sumption was managed by the tribe chief or by the local sha- man. The main uses were religious (a call to the gods and in predictions) and medicinal (curing wounds, migraines, stomach aches). At that time, indigenous Brazilian tribes had the habit of eating, chewing, drinking, inhaling, and smoking tobacco. Smoking, however, prevailed with time and this form of consumption spread all over the world. It became really popular in Europe when the French ambassador in Portugal, Jean Nicot, discovered in 1560 that the plant cured migraines. So, he sent it to his queen, Catherine de Medici, who suffered from constant headaches. The gift worked and she started a habit of smoking tobacco on a daily basis for medical rea- sons, and, as consequence, it was imitated by noble men and women from her court. Since the dawn of the 16th century, Brazil has been selling tobacco to Europe. Sales made quick progress in colonial times and tobacco became so important that during the next century, a special legislation on the crop was approved and taxes were lighter. In the 17th century, it was the biggest export item during Brazil's Imperial time. What Brazilian people rarely know is that tobacco is so important to the Brazilian history and economic development that its leaves are drawn alongside coffee leaves in the Coat of Arms of Brazil, a very important national symbol. "Our challenge is finding a way to make our international prices even more competitive. The African countries are our main competitors in this way, be- cause they produce tobacco similar to the Brazilian tobacco, but with production costs lower than ours," explains Schünke. "Exchange rate fluctuations also impact our competitiveness and it is an obstacle that Brazilian industry needs to face". One strategy to recover the business is to introduce positive assets that Bra- zilian tobacco already has to the buyers. Traceability, sustainability, agricultural good practices, environmental conserva- tion, and low rates of child labor in the farms are some of the areas where Brazil is ahead of other countries. According to the Bureau of Foreign Trade, Ministry of Development, Indus- try, and Foreign Trade (SECEX/MDIC), the market already reacted positively in the first three months of 2015. March marked a sales increase of 87%. In the same period in 2014, sales dropped 39% and the following months would not be good either. Tobacco Producing Areas With the huge historical and economic importance of tobacco in Brazil's devel- opment, it is peculiar that most Brazilian citizens ignore and do not acknowledge how important this business is. Very few people know that Brazil is the top ex- porter in the market and the second big- gest tobacco producer in world. But who would ever imagine that all these crop records have been broken by only three states in Brazil – Rio Grande do Sul, Santa Catarina, and Paraná – located in the south of the country, where tobacco plants find good conditions to grow and 651 tobacco producing municipalities are located. Of their total production, 85% is destined for the international market. According to the Brazil's association of tobacco growers (AFUBRA), 347,000 hectares are planted by 162,000 big and small growers. Approximately 650,000 people are involved in this production cycle, reaching a gross income of R$5.3 billion (US$1.5 billion). Good for the countryside, great for the government: only in 2014, the col- lected taxes averaged US$3.07 billion. Dealing with Brazil's high tax rates of up to 74% has become one of the tobacco industry's biggest challenges in Brazil. Markets for Brazilian tobacco in 2014 EXPORT 2015 (thousand US$) January: 132.879 (+28%) February: 147.277 (+19%) March: 162.245 (+87%) EXPORT 2014 (thousand US$) January: 104.090 (-16%) February: 123.990 (-13%) March: 86.951 (-39%) Industrial processing of Brazil tobacco

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