This is the main conclusion of a report by a House of Lords' Committee, published today. Tobacco producers receive an average 80 per cent of their revenue for tobacco by way of subsidy. Some varieties depend for their production on a subsidy that is 99 times the purchase price.
Tobacco is grown mostly in Italy, Greece and Spain, often in poor, underdeveloped regions.
Over the years tobacco subsidies have been seen as a way of propping up small farms which would not otherwise be economically viable. But the Committee concludes that this does them no favours, since producers remain trapped in a sector with no real long-term prospects. Pressures from the World Trade Organisation, and the implications of new members joining the Community, mean that subsidies cannot continue at present levels for long, so a new approach is needed. The Committee calls for a phased reduction in subsidies, combined with financial incentives to tobacco producers to look for other livelihoods. Regional development programmes and the provision of infrastructure would also help to put the economies of tobacco-growing areas on a more sustainable footing.