Issue link: https://read.dmtmag.com/i/699960
58 tobaccoasia / Issue 3, 2016 July / August population as well as urbanization or even immigra- tion to other European countries which is taking away labor from agriculture in general." These sentiments are shared by Jonathan Wert- heimer, president & c.e.o. of Socotab. "Yes, it is true that the 2014 crop was somewhat larger than the 2015 crop. There were two main reasons for this. The first, was that the 2014 crop was to some extent larger than the demand; the 2015 crop plan therefore reflected the need to adjust. And the second reason was that the 2014 crop was less successful than normal, which gen- erated a below-average revenue for most of the farm- ers, which discouraged some from planting again in 2015. However, the 2015 crop was successful and the farmers' revenues were more in line with expectations, thus leading to a stabilization of the volumes." In 2015 Socotab's production for classical oriental leaf was 60,050 tons in Turkey, 21,260 tons in Greece, 18,835 tons in Macedonia, and 9,050 tons in Bulgaria – a total of 109,195 tons. Socotab's initial estimate for the 2016 crop is a total 108,690 tons broken down into 57,990 tons in Turkey, 20,200 tons in Greece, 22,500 in Macedonia, and 8,000 tons in Bulgaria. Nicos Gleoudis has a similar yet slightly differ- ent take on 2016 expectations, though. "Although the 2015 crop produced much higher quality tobac- cos compared to 2014 crop and growers seemed to be satisfied with the money they received, we do not foresee any change in the total oriental tobaccos pro- duction in the area," said Costas Gleoudis. "Greece will be steady, Turkey and Bulgaria will face 5-10% decreases whilst for F.Y.R.O Macedonia we estimate a 15% increase." Based on supply and demand theory, the question that now arises is: is there enough oriental leaf supply in the market now? The answer is a cautious yes. "Today, the markets are balanced, in part because there is still some inventory available," said Wert- heimer. "Of course, there may be small imbalances in specific grades of specific varieties, but by and large, we view the markets as being in equilibrium. We main- tain this outlook throughout crop 2016 also. Having said that, with the absorption of the stocks, certain va- rieties will need to slightly increase their supply start- ing with crop 2017 in order to ensure that enough vol- ume is left in the market to be able to reconstitute the typical buffer inventory." There are measures that can be taken to prevent even more drops in production, as explained by Gle- oudis. "Total production of oriental tobaccos in the area in 2014 crop was about 128,500 tons, in 2015 crop about 108,000 tons whilst our estimation for 2016 crop (under normal climatic conditions) is about the same (about 108,000 tons). Usage and demand is somehow higher than the above figures and any fur- ther decrease in production will let us face an unbal- anced situation with negative effects. There are two ways to avoid this: Either by paying higher prices to the growers (in which case we could lose competi- tiveness in the international market) or continue and enforce the experiments for further mechanization of the crop." Given the decreased production in previous years and expected drops for 2016, is the future then bleak for oriental tobacco? Both Socotab and Nicos Gle- oudis do not think so. In fact, they both see an op- portunity for oriental leaf presented by new "no ad- ditives" regulations. "Oriental tobaccos had always an important place in the blended cigarettes. Due to its natural aroma and unique character it might play an even more important role under the new "no addi- tives" regulations," said Costas Gleoudis. "Classical oriental leaf is purchased for aroma. This is an attribute that is unique to the varieties grown in the oriental regions, and is the reason for which oriental is included in the cigarette blends," ex- plained Wertheimer. "Experience has shown us that it is extremely difficult to replicate the aroma/price ratio on a commercial scale outside of the classical areas. Another important point is that oriental is a natural ingredient with many uses; it adds aroma, can be used to differentiate a product, and can be integrated into a wide range of cigarette blends. In a world more and more focused on concepts such as "additive free" and saddled with restrictions regarding what can and can- not be used in a cigarette, oriental remains one of the few tools left that can naturally enhance or distinguish a blend through simply using tobacco. Given this, we see an extremely bright future for oriental. "Oriental tobacco growing remains a key activity for more than 100,000 farming families in Turkey, Greece, Macedonia, and Bulgaria and oriental leaf remains an essential ingredient for the world's top cigarette brands. Given the common goal of both the growers and the end-users to ensure a sustainable supply of quality tobacco, we feel confident that the classical oriental regions will continue to produce for many years to come. Our role is to make sure that an equilibrium between the availability and the demand exists in the classical markets." "Growing oriental tobacco is a difficult business. The growers work hard to produce the quality that the market requires. At Socotab, we do everything we can to ensure that our growing partners receive a revenue which is competitive in each of their regions, while ensuring that the product can be sold effectively. This often means helping the growers with things such as micro-credits to fund labor-saving machinery, more efficient agricultural practices, or simply adjusting the payment cycles to best match their requirements. Our goal is to make the growers as sustainable as possi- ble, and stay interested in growing quality oriental for us. So far, we are encouraged by our results, and are pleased that the grower base has stabilized." It would seem that oriental leaf is not going away anytime soon, and the future remains hopeful with new opportunities.