ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(81)674
Vol.1981/0199

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(81)674 final
Brussels.19thNovember 1981
POSSIBLE INCLUSION OFTOBACCOINTHESYSTEMFOR
THESTABILIZATION OFEXPORTEARNINGS
(Communication fromtheCommission totheCouncil)
'
v .^|2;i :'o
fvv'''sif
'...H
COM(81)674final

Commission Study with aview tothe
possible' inclusion oftobacco inthesystem forthe
■_ •stabilization ofexport earnings
•V
t,Communication tothe Council )-.
1.Adeclaration bythe ACPStates concerning tobacco ,annexed tothe second Lome
Convention ,states that "thepossibility ofinclusion oftobacco inthe STABEX
system shall boexamined atthe .first session oftheCouncil ofMinisters due
cotake place after the entry into force ofthe Convention ".
Inaseparate declaration regardi.ng the same product ,theCommunity' -says that it'
"undertakes toconsider ,within the framework ofadministration ofthe
Convention ,thepossibility ofincluding tobacco inthe 3TRBEX system within the
limits ofaquantitative ceiling ofexports totheCommunity ttobefixed at
thecurrent level ,provided that the introduction cfsuch arrangements does
not disturb the Consmunity tobfcco market ".
Atitsmeeting in'Luxembourg on3and 10April this year ,the first tobeheld
after the entry into force ofthesecond Lome Contention ,theCouncil cf .
Ministers called ontheCommittee ofAmbassadors toadopt aposition onits
behalf regarding theinclusion oftobacco inthelist ofproducts covered by •
theStabex system onthebasis ofareport drawn upb<fthe Conroissioft ofthe
European Communities .
2,Expert earnings fro.n tobacco areof -considerable importance fortwoAC?States ,
Malawi andZimbabwe ,andoflesser .importa resfor athird ftate Tanzania .
Tnose countries export earnings from tobacco ,expressed asapercen -Caere of
total experts ,are asfollows for the period JS .''6-79 s

\2
Cou-vxy J1976
Malav;ii jΛ2.8%1977 ! ¡'.a'7:' !107?
i i 148 ..I'-'.' : j55„3% I54,7 "
Zimbabwe 2 27 .,8% 22 .4% 22,1% 29.2%
Tanzania 3 4.9% 4.8% 6.1% !3.7%
Moreover ,since tobacco-growing requires considerable labour ,the importance
oftheproduct for thecountries concerned can also beappreciated interras of
its incidence onthe level ofemployment intheagricultural sector (seeAnnex
III )„
3.Incontrast toalmost all theother products covered bythesystem ,which
originate exclusively from tropical and equatorial regions ?tobacco is
cultivated inthe Mernbe' -States ,The major Community producers are Italy ,and
Greece ,which produce over 120.000 tonnes each (seeAnnex Iforproduction trends
inthe ACP and Member States concerned ).
Most ofthetobacco grown inEurope comes from less-favoured regions such asthe
Mezzogiorno inItaly ,and inparticular theAvellino area ,which suffered a
disastrous earthquake on23November 1530 ,and certain regions ofNorthern
Greece such asMacedonia and Thrace ,Since the soil 'inthese areas is 1particularly
•F*
aria ,there isnosufficiently profitable alternative tothetobacco-growing .
Covered bytheCommunity' scotcroon agricultural policy ,theorganization ofthe
market setupin1970 (Regulation EECNo727/70)isbased onthe following
three essential components :
(a.)Th£ .orice _andjj^teryen^ion^s^stem isbased ontheneed toprovide Community
producers ,bymeans ofappropriate cbtamon provisions ,with guarantees
International Financial Statistics ,IMF ,Kay 1981 .
^JAOandMonthly Digest ofStatistics .
Annual Trade Report ,Ministry ofExternal Trade ~Estimate onthebasis of
provisional figures for 1979 .

3
regarding employment andstandard ofliving equivalent tothose which they
hadpreviously enjoyed under thenational organization ofthemarket .
This has been achieved bymeans ofamarket organization which ,byits
norm price and intervention price system ,hasparticularly favoured the
contractual sale ofCommunity production onbetter terms than third world
production .
(b)The ^norm_j?rice must bedetermined each year soastoensure sufficient
remuneration fortheproducers ,account being taken ofthedirection tobe
given toproduction byreference tothetrend ofdemand and also therational
management and economic viability ofundertakings .
β
(c)The ijiterven tion_pr ice,fixed atalower level (90% )than thenorm price ,
must reflect theminimum price atwhich theproducers canbeassured of
selling their tobacco .This iswhy theintervention agencies (State )have to
buy inatthe intervention price all the tobacco which isoffered tothem by
thegrowers ,namely the share ofproduction forwhich purchasers have not
been found onthe market .
Moreover ,inorder tofacilitate theContractual Sale oftobacco ,apremium
isawarded tonatural ahd legal persons purchasing leaf tobacco directly
from Community growers andprocessing itinto baled tobacco .
Toobtain thepremium ,theparties concerned must have concluded contracts
with growers orbought leaf tobacco atsales byauction .
Since thenorm price fixed bytheCouncil isnormally higher than theprice
ofcomparable tobacco imported from third countries ,thepremium isa
specific incentive which guarantees thefreedom ofcontract ,onthe tobacco
market andenables growers toobtain aprice very close tothenorm price
andtherefore toenjoy afair income .Itshould benoted that the
intervention price andthepremium arenotcumulative .

4
4.Although theIntervention system setupbytheCommunity forEuropean farmers
includes aguarantee covering price fluctuations ,itdoes not however contain
anyparticular provision toremedy reductions inearnings due toafall in
quantities resulting from factors such asproduction hazards ,natural
disasters andunfavourable economic climate .This isoneofthemajor
differences bycomparison with the system forstabilizing export earnings ,set
upwhen the first Lom€ Convention come into force and continued ,with
substantial improvements ,under thesecond Lorqe Convention .Fortheperiod 1975
to1979 ,most Stabex interventions were carried outprecisely insituations
where there hadbeen falls inproduction andexports .
Bearing inmind production conditions intheCommunity ontheonehand ,and the
high guarantee level proposed bytheStabex system ontheother ,certain Member
States oftheEEC arereluctant toinclude aproduct such astobacco inthe
•Stabex system .
5.Such anextension would ineffect mean granting ,outside theCommunity ,anauto­
matic guarantee limited tothequantity ofproduction from which Community
! , 1
tobacco producers donot benefit . !
6.Initsdeclaration ontobacco *theCommunity suggests thepossibility of
including tobacco "within thelimits ofaquantitative ceiling ofexports to
theCommunity ,tobefixed atthecurrent level ."
Amore detailed examination ofthis formula reveals itsrisks from thepoint of
view oftheStabex system .Past experience hasshown that theresults achieved
intheprocessing ofdossiers ,inparticular thespeed with which compensation
canbemade assoon asearnings have dropped ,depend essentially onthesystem 's
automatic mechanism being respected .Theapplication oftheformula expressed
above could create anunfortunate precedent ,bysetting upakind of"alacarte "
mechanism where each product would beconsidered according toitsownparticular

iriir
5,
features and this would then seriously affect the concept ofanautomatic
mechanism for theapplication ofthe system .
7.Tothese difficulties can beadded afurther one ,due tothe structure ofthe
world tobacco market .Apart from State monopolies ,demand isoligopoly-based ,
with seven oreight companies covering 80%ofthemarket (1).
1 •r -\ -»
Apart ,from iron ore ,which will soon bedropped from the list ofproducts
covered bythesystem ,there isanother product ,ylang-ylang ,■for vrhich demand
hasmuch the same features .But this issuch amarginal product ,and the
situation ofthemajor seller issodesperate ,that anexception has been made .
For tobacco ,however ,thepossibilities ofcollusion ,andconsequently the - -
system being triggered off improperly must beseen against themagnitude
oftheamounts inquestion .Such possibility should beconsidered all themore
carefully since one ofthemain ACP exporting States hasdecided inthenear
future tostart reducing itsTobacco-growing areas .
8.Itwould bepointless todeny that theinstability ofexport earnings from
tobacco causes Malawi ,Zimbabwe and ,toalessor extent ,Tanzania the same
difficulties asallabrupt fluctuations inearnings ,inparticular those
affecting thetropical agricultural products covered byStabex .
There are ,however ,(twomajor obstacles )tothe inclusion oftobacco inthe
•list ofStabex products :
-theincompatibility with acommon agricultural policy whose aim,among others ,
istoencourage theuseofCommunity tobacco over andabove imported tobacco
andwhich forthis purpose provides asystem ofpremiums tobuyers ofCommu­
nity tobacco ,since itisimpossible toachieve thesame preference with '
adequate protection attheborder (customs duties consolidated inGAIT ,total
exemption from duties within theframework ofLom6 ,S„G„P =);
-theeconomic dimension oftheproduct andtheoligopoly basis ofdemand forit.
(1)Doc .CNUCED TO/B/C^1/205

6
Inthe light oftheforegoing ,itwould seem that asolution totheproblem
ofthefluctuating earnings ofACPtobacco-exporting States cannot befound
within the Stabex system .
Free access totheCommunity market fortobacco originating intheACP States ,
asprovided forby (the second Lome Convention ),must beconsidered the
maximum advantage possible since this isaproduct which issubject totherules
governing the common agricultural policy . . ,

ANNEX I:PRODUCT ION
/1/1
MALAWI
Tonnes
Year 'FLUE 3URLEY FIRESFIREΝSUN/AIR ORIENTAL TOTAL
Í977 19585 10170 586 18Oil 2922
1568 51841.361
1978 20.850 105831,042 "15360.3.224 568 51627.724
1979 25155 1¿9021,223 11.0641,627 446 54416.178
1980 26626 I7690 820 9000 1,155 350 55,641.697

ANNEX .I:PRODUCT ION 1/2
TANZANIA
Tonnes
Production
YearFlue Cured (Virgina )Fire Cured (Dark )Burley (AirCured ) TOTAL
¡970 /71 8816 3155mm Π971
1971 /72 10558 2.504 7 13069
1972 /73 10736 1855 11 12652
1973 /74 15277 2985 12 38274
1974 /75 11930 2259 23 142!2
\
1975 /76 14548 4546 50 19144
1976 /77 14600 3.697 31 18328
1977 /78 14319 2668 33 17213
1978 /79
\13204 3997 40. 17236
I
Source :TAT{

ANNEX I:PRODUCTION 1/3
ZIMBABWE
oftobacco 197U-1980
Tonnes
:aar Flue-Cured Oriental Burley
1970 51507 136 3126 54,769
S97ï 59866 540 5445 65451
1972 60892 140 5320 66352
1973 67980 140 5832 73952
1974 71601 1-40 3798 75.539
!975 83920 90 2775 86785
1976 no533 100 2182 112815
1977 S3374 50 1698 -85122
1973
Ν*'82969 52 2140 85161
5979
Χ
?9801i3687 13 2778 114.482
\')4500 40 2700 127240TOTAL
Source :Zimbabwean Tobacco Association

s*
(ÏR'RECi
|.PRODUCTION OFEAW TOBACCO
Year Tonnes
1969-1971 88.000
1977 120.000
1978 127.000
1979 123.000 Sourc® ;PAO
PRODUCTION BYTYPE (based on1979 harvest )
Production Areas ' Quantity
purchased
1.BASMA 25042
a)zone (1) 24215
b)zone (2) 827
2.KATERINI &BASHI BAGLI 117Θ6
a)Katerini S1558
b)Bashi Bagli 223
3.ΚΑΒΑ KOULAK CLASSIC 21335
4.ΚΑΒΑ KOULAK WO'H CLASSIC 14032
a)zone (i) 8413
b)zone (2) 56!9
5.MYRODAT AACRIN10N 6 i39
6,ZICHMOMYRQDATA !133
7,TSEBELIA 20847
a)zone (1) 15464
b)zone (2) 5042
c)zone (3) 341
8,MAVRA 5584
a)zone (1) 4889
b)zone (2) 695
9.BURLEY ¡7450
a)zone (î) 14595
b)zone (2) 2855
TOTAL !23348 ,Source :
National Tobacco
Board ofGreece
,y .

f
èJîhEK .IsPRODUCTION
TOBACCO PRODUCTION TN TTR.L'V
(intonnes )
"FLUE CURED "VIRGINIA
Year 1978 16.085 onha 9405
" 1979 22.500M«<10200
" 1980 21.000 ,If
1it10400
BURLEY
Year J978 45.476 onha 14216
" 1979 53.860«1t«14493
" 1980 50.000It
.»It15000
.KENTUCKY-
Year 1978 8.872 onha 6075
" 1979 10.423»1tl6270
*' 1980 9.000rtft5800
MARYLAND
Year 1978 3.469 onha _ 1139
" 1979 3.25391 h985
"1980 3.500It ti!000
PARAGUAY
Year 1978 3.659 onha 2823
" 1979 3.86490tl2652
" 1980 3»20015 992650
HAVANNA
Year 1978 4,997 onha 2483
" 1979 7o00QM3a2i
" S980 8.200tv Øf4000

-42
EENEVENTANC
Year1978 748onha 70*
"1979 378"" 333
"1980 400 "" 25C
BADISCHER G.
Year1978 624onha 321
"1979 523 "" 286
"1980 500 "" 30C
ROUNDTIP
Year1978 570onha 329
"1979 526 " 316
"1980 500 " 300
XANTI
Year"1978 7.555 on«ha 6768
1979 8.535 ""6738
"1980 8,500 ""6750
PERUSTITZA
Year1978 6.208 omha 5098
"1979 8„262 ""53!4
"1980 8.000 "" 5000
ERZEGOVINA
Yeai^;1978 11.248 onha 8655
"1979 14=527 "" 8422
"«980 12.000 ""850Q
//
Sources Minstry forAgriculture andForestry
4.

ANNE7-CII y^ II/1/2/3
IMPORTS OFRAWTOBACCO INTOEEC£9
£RiGiNILTi.N9,1N™A£,P„SI,^XESCONCERNED
YEARTANZANIAMALAWI ZIMBABWE
IQuantity
(tonnes)Value
(ÎOOOEC'Â )Quantity(tonnes)Value
(1000ECM )0uaηtit\
Xtonnea)Value
ClOOOECM )
f
1975 7699 15034 23283 39656 1 2
11976 9515 19628 2103S 44579 ~ -
1977 7547 14559 21802 48704 » -
1978 15659 35303 37436 89306 - -
1979 iO656 24689 30707 64455 ...
^/
/

ANNEX -II
EXPORTS-GREECE
Country of1977 1978 1979
destinationQuantity
Ctonnes)Value
1000$ -Quantity
(torVnes)Value
*1000$Quantity
(tonnes )Value
1000$
EECMemberStates 12043 31534 24229 72972 18089 595i4
Belgium , 1358 3577 2864 8637 2312 7524
France !263 2538 2431 6311 I382 2777
Germany 7708 19664 14472 44183 11661 38942
Denmark 46 167 117 370 146 555
Italy 858 3352 1719, 5906 1284 5291
United Kingdom161 455 93 263 299¡977
Netherlands 649 1781 2533 7302 934 3i58
Ireland-
_ - - 71 290
Exports toall
destinations j
"!53087 154120 70466 217950 55279 192252

■,a:. II/4p.
Ί·
EXPORTS -GREECE !
TOBACCO EXPORTS IN1980
(Provisional figures )
Country ofdestinationQuantity
(tonnes )Value -
1000$ '
EECMembe.rStates 18664 60524
Germany JO767 34291
France2308 5333
Italy 1579 6254
Belgium-Luxembourg 20!0 6893
Νether1ands Ì9!5 7415
"Denmark 33 75
UnitedKingdom 52 222
Exports toalldestinations 69633 213560
Sumrriav-y bytypesoftobacco
– – –
•ì'..J.1IJll F-Ì-.L M _
Oriantal-typetobacco 53"525 177893,
'/
Burley 16092 35658 '
Virginia 16 9
TOTAL 69633 213560
r \1
source tNations !Tobacco BoardofGreece ,

EXPORTS OFITALIAN TOBACCO
(intonnes )
Type Year toEEC ..Outside EEC
"Light aircured "
(Burley )1977
1978
19799778
13 -150
1593621485
22801
28653
"Flue cured " 1977 1786 3125
(Virginia and 1978 1951 2281
Maryland )
?1979 3442 3639
"Sun cured "
(Oriental )1977
!978
19793393
3163
38187552
6955
13636
"Fîrç cured "
(Kentucky )1977
1978
19792773
3 S72
23683188
4590
2911
"Dark air cured "
(Havanna ,,Badish ,
Paraguay )1977
1978
1979729
396
3391147
1012
844

ANNEX :III III/1
./l\
GREECE
(basedon1979~-harve-st)
AreaCultivated .Number of
Types Number of inStremas Labour
Production Areas growers (1strema-lOOOm *)daysper'
strema
1.BASMA 29291 209168 39
a)zone(1) 27636 199229 39
b)zone(2) 1655 9936 * 39
2.KATERINI &BASHIBAGLI 7250 78565
a)Katerini 7065 76795 27,5
b)BashiBagli 185 1770 33
3.ΚΑΒΑKOULAK CLASSIC 17975 188.077 22.6
4.ΚΑΒΑKOULAK NONCLASSIC 14434 118053
a)zone(1) 9042 68582 25
b)zone(2) 5392 49471 23,5
5.MYROWTAAGRIΝION 6153 45037 27
6.ZICHKOMYRODATA !104 7616 25
1.TSFBELIA 20098 170186
a)zone(1) 13782 122556 25
b)zone(2) 5934
/45167 25
c)zone(3) 382 2463 25
tì,MAνΚA 7296 57424
a)zone(1) 6SAj 52502 18
fc)zone(2) 75! 4922 !8
9.BURLEY 3173 58490
a)zone{Ì) 2453 48329y..7 16„5
b)zone(2) 720 ¡0161 25
TOTAL
„, ,,,)067/4 932636 -

ANNEX III
TANZANIAIII/2
Flue-cured Tobacco Production :Costs andReturns per ha
Production Year 1979 /80,Marketing Year 1980 /81
«· Smal Iholder Production
«
Yield kgper ha 750
Producer Price :Shper kg 10.50
Realisation :.Sh 7,875
Production Cost Labour Days Input Cost :Sh
Firewood cutting and transport 35
Soedbed preparation ,sowing ,watering 45
Land preparation ,ridging etc. 95
Fertiliser application 4
Soedling transplantation 50
Wooding ,re-ridging 55
Topping andSuckering «25
Harvesting 125
Curing 21
Grading andbaling 120
Barn construction and maintenance 25
NPK :750 kmper haatSh2.20 per kg
(including 8.5% TRDB interest )- ·-1,790
Thiodan dust :12kgper haat
Sh5.20 per kg+10%transport
+8.5% interest;
75
Barn flues :20units χ3atSh45.00
+10%transport +8.5% interest
;(econ .life :3years )358
Watering cans :2per haatSh45.00
+10%transport +8.5% interest
(econ .life :3years )36
Empty drum :2per haatSh50.00
+10%transport +8.5% interest
(econ .life :3years )40
Hand tools :hoe (Sh25.00 ),axe
(Sh18.00 ),panga (Sh16.00 ),knife
(Sh17.50 )(econ .life ,tobacco use
only 5years ).
I«
30
Total Production Cost :Sh 600 2,329
Gross Margin :Sh 5,546
Return perLabour Day :Sh 9.24
Note :These arethecosts ofapeasant producing above average yields

III/3
yb)■
Fire-cured TobaccoProduction :CostsansReturnsperha
Production Year1979/80-MarketingYear1980/81
9
Smallholder Production
Yield·::kgperha 650
ProducerPrice:.Shperha 6.25
Realisation :Sh 4,063
Production Cost LabourDaysInputCost:Sh
Firewoodcuttingandtransport 30
Seedbedpreparation,sowing,watering 50
Landpreparation 90 464
Seedlingtransplantating 50·1
Fieldcultivation 80•
Harvesting 80
Tyingtobaccotosticks 15
Curing,grading,marketing .65
Barnandtyingshed
construction andmaintenance40
Sulphateofammonial :250kgperha
atSh1.71·pWkg+TROBinterest
at8.5% -*464
Thiodandust:12kgperhaatSh2.50
perkg+10%transport +8.5%TRDB
interest36
Wateringcans:2perháatSh60.00
+10%transport +8.5%TRDB
interest(econ.life3years)'72
Handtools:hoe(Sh25.00),axe
(Sh18.00),panga(Sh16.00),knife
(Sh17.50)(econ.life,tobaccouse
only,5years)30
TotalProduction Cost:Sh 500 602
GrossMargin;Sh 3,461
ReturnperLabourDay:Sh
'.6.92
Note:1)differentunitcostsapplicableforRuvuma,themainproduction centre
forfire-cured tobacco
•-(2XThesearecostsofapeasantproducingaboveaverageyields.

Flue-cured Tobacco:SeasonalLabourUsefromSampleFarms(mandaysperha)
Operation Sept OctNov·DecJanFebMarAprMayTotal/ha-
SeedbedPreparation 24.714.8 39.5
Watering 12,616.84.2 33.6
BarnBuiIding 16.618.818.8.18.816.6 89.6
GrassCuttihg 3.73.7 7.4
FirewoodcuttingStransport 3.56.96,96.96.9 31.1
Cultivating/Planting 13.135.635.613.1 97.4
Weeding *'?-710.910.92.7 27.2
Topping/Suckering 4.97.91.0 13.8
Harvesting 7.915.815.87.9 47.4
Curing 7.933.433.433.47.9116.0
Grading 24.432.632.68.297'.8
Baling
/-•-'4.416.84.425.6
Totals 61.174.168.272.268.284.287.290.720.5626.4
Source:M.P.Collinson AReportontheComparative EconomiesofVirginia(flue-cured )andAromaticTobaccoson
FamilyFarmsinTaboraDistrict"ERBPaper70.7