ORIENTAL LEAF
Oriental Leaf Markets: Declining but in Equilibrium Privatization in Turkey in 2008 put the market in a tailspin. By Dr. Iqbal Lambat, CEO Star Agritech International he four traditional producer countries of the Oriental heartland—Turkey, Macedonia, Greece and Bulgaria—have seen a further decline in their 2018 crop with a combined production of 116 million kgs, declining 25 percent over the past 5 years. Part of the reason for the decline has been rising prices paid by processing companies to farmers. Another has been the expensive leaf offered to cigarette manufacturers, causing a change in the overall game. But that is not all: Politics, demographics and economics have played a big role in this decline. To put the Oriental Tobacco world into perspective the table below provides a global overview of both Heartland Orientals and Semi Orientals.
T
All Oriental of one origin It would be fair to say that all Oriental Tobaccos are of Turkish origin. The Ottoman Empire was an imperial power centered on the borders of the Mediterranean Sea. It existed from either 1281 or 1299 to 1923—more than six centuries. At the height of power, it included Anatolia, the Middle East, parts of North Africa and much of
southeastern Europe and the Balkans. The Empire was established by a tribe of Oghuz Turks in western Anatolia and ruled by the Osmanli dynasty, the descendants of those Turks. The Turks took with them to their new worlds their language, their culture and tobacco cultivation with Turkish tobacco seeds, among many other things. Turkey has always been the largest cultivator in the world of Oriental tobacco, with historic crop outputs exceeding 400,000 tons per year. There are a vast range of varieties—eight in total now: Izmir, Basma, Bitlis, Yayladag, Samsun, Sark, Adiyaman and Trabzon. So, the crops produced in Greece, Macedonia and Bulgaria all started during the Ottoman Empire. Where can Oriental be grown? Oriental tobacco requires a sandy, infertile soil to allow the plant to develop small palm-sized leaves with low nicotines and high sugars. When grown in fertile soils, the leaves produced are larger and with higher chemistries. That results in their classification as semi-Oriental Tobaccos. Oriental tobacco is sought after for its high aromatic characteristics and sweet taste.
WORLD ORIENTAL AND SEMI-ORIENTAL PRODUCTION 2018 COUNTRY
TONS / PA
VARIETIES
Turkey Macedonia Greece Bulgaria Lebanon Albania Tajikistan Moldova Total World
60,000 28,000 16,000 12,000 12,000 5,500 4,500 2,000 140,000
Izmir, Samsun, Basma Prilep, Yaka Basma, Keterini Krumovgrad, Bulgaria North Latakia Yenice, Albasan Dubek Chisinau
PRICE INDEX % 100 75 90 60 30 30 40 30
(Price Index=Izmir AB Top Grade Tobacco at US$ 10.00 = 100 percent)
16 TOBACCO INTERNATIONAL APRIL/MAY 2019
The world of Oriental tobacco was transformed significantly when the State Tobacco Monopoly for Tobacco and Alcohol (TEKEL) was privatized in 2008 by the Turkish Government. Some 650,000 Tobacco farmers in Turkey were faced with the new reality that TEKEL was no longer there to guarantee offtake at subsidized prices. And the new owners of TEKEL— BAT—were certainly in no mood to take on any responsibility for leaf other than that required to make the Oriental brands it had acquired. The Turkish crop fell dramatically over the next three years from a high of 275 million kgs to less than 50 million kgs, which was less than a fifth of recent historic production. The Turkish declining position proved to be the catalyst for development in neighboring Macedonia to accelerate the output of its Oriental crop. Greece suffered from the elimination of government subsidies which had a double effect—raising prices to levels where its leaf was not competitive as well as drying up crop financing as banks could no longer collateralize the subsidies farmers would receive. In Bulgaria, the status quo prevailed as it struggled to meet stricter rules from its new family—The European Union. Production report 2018 Among the four heartland producers, 2018 statistics were as follows: Turkey saw an output at 60 million kilograms. The Izmir variety achieved 53 million kilograms, of which 52 million were exported. The other two main varieties produced are Samsun and Basma. Before, there were many more varieties, but most have completely disappeared. Macedonia saw Prilep and Yaka production decline to an estimated 28 million kilograms versus 33 million in the year prior. Stll, Macedonia is now ranked as the number two Oriental to-
