Brazilian Growers Group Celebrates 70th Anniversary

Taco Tuinstra, Global Editor in Chief at 2Firsts, reporting from Argentina

During the International Tobacco Growers Association’s (ITGA) recent regional meeting in San Salvador de Jujuy, Argentina, participants repeatedly praised Brazil as an example for other origins. Not only does the South American country consistently rank as the world’s largest tobacco exporter by volume, but it is also widely recognized for its leaf quality and good agricultural practices. Brazilian growers are global leaders when it comes to yields, soil preservation, reforestation and the eradication of child labor.

This enviable position is due in part to the country’s integrated production system, which is characterized by a high degree of coordination between tobacco buyers and growers. Tobacco companies provide farmers with agricultural inputs, extension services and financial support, and commit to purchasing the entire harvest at prices negotiated based on quality. The farmer in turn gets a guaranteed market, significantly reducing the risk associated with agricultural activities.

Another element behind the success of Brazil’s tobacco business is the strength of its institutions. Manufacturers, merchants and leaf producers each have professional organizations representing their interest and interacting with other stakeholders. Tobacco growers, for example, have benefited from the support of Afubra. Founded in 1955 by tobacco farmers seeking mutual support against challenges such as hail damage and market instability, the organization has evolved into a significant player in Brazil’s tobacco sector. Representing more than 90,000 growers—some 80 percent of southern Brazil’s tobacco producers—Afubra’s initiatives now encompass technical assistance, environmental education and programs aimed at diversifying members’ incomes.

The growers group is led by President Marcilio Drescher, who was born into a tobacco-farming family. As an adult, he cultivated 1-2 ha of burley in Santa Catarina, one of Brazil’s leading tobacco-producing states. Later, he directed a local farmers’ union, a position that led to a seat on Afubra’s council and ultimately to that organization’s presidency.

2Firsts caught up with Drescher and asked him about the outlook for Brazilian leaf as Afubra celebrates its 70th anniversary.

Congratulations on your anniversary. How are you celebrating this milestone?

We kicked off celebrations at Afubra’s headquarters in Santa Cruz do Sul. The event was live-streamed to all branches in three producing states, Rio Grande do Sul, Santa Catarina and Parana. A second celebration was held at the ExpoAgro exhibition in Rio Pardo, which was attended by some 400 tobacco farmers and their wives. We will keep the momentum going with additional celebrations throughout the region, culminating at Afubra annual general meeting in July.

What do you consider to be Afubra’s greatest accomplishment?

Our organization was founded to provide tobacco growers with mutual insurance against hail damage, which was unavailable in the market. The Brazilian government provides no support or subsidies to the tobacco growing sector, so we take care of ourselves. The creation of this insurance system remains our greatest accomplishment. Even today, our scheme remains unique in the world.

What in your view are the greatest challenges facing the leaf tobacco sector in Brazil?

The greatest challenges facing our members are agricultural labor and farmer succession. Farm families have been shrinking, which means they must hire workers—but these are hard to come by in Brazil nowadays. And when labor is available, it comes at a very high price, so this inflates our cost of production.

At the same time, the young generation is disinclined to carry on their parents’ businesses. When farmers retire, their operations simply stop. This situation, by the way, is inherent not just to tobacco but also prevalent in other crops.

What can be done to address these problems?

There is not much that can be done other than providing better incomes. The price of tobacco has gone up in recent years, which offers an incentive even for reluctant youngsters. But without this, the next generation will leave the farm to study in the cities or do something else. Without incentives, it’s difficult.

Is it possible to mechanize tobacco production?

You can mechanize to some extent, but beyond that you will lose quality. The reputation of Brazilian tobacco is in large part built on manual labor.

How do the earnings of tobacco compare to those of other crops?

The average tobacco farm in southern Brazil measures 14 ha, of which only 2.5 ha is used to cultivate tobacco. The remainder of the property is dedicated to other crops or purposes. Yet these 2.5 ha are responsible for 55 percent of the farmer’s earnings, which means tobacco generates a disproportionately high share of the grower’s income.

Please comment on the current crop in terms of volume and quality. What factors influenced this year's crop?

The volume of this crop is significantly higher than that of the previous one because the previous harvest suffered an average productivity drop of over 20 percent. This year, things returned to normal, with normal or even good productivity in some instances. As for quality, it is also generally reasonable in most producing regions across the three southern states.

So, the reason this crop is much larger—with an estimated supply of approximately 700,000 tons—is the return to normal productivity levels and an increase of nearly 10 percent in planted area. This increase was driven by the attractive prices received by producers in the previous harvest, which prompted existing growers to expand their planting areas and new producers to enter the business.

How have Afubra’s members and associates been affected by the emergence of next-generation products (NGPs)?

We have not yet observed producers being affected because the demand for Brazilian tobacco—which is exported to over 100 countries—has held up. All this new consumption of nicotine in other forms has not yet had a significant enough effect for us to say it has had an impact.

What has affected us more are issues with illegal tobacco and cigarettes coming from other origins, or even those produced illegally within Brazil—often using Brazilian-grown tobacco that ends up in those markets.

Do you see a role for Brazilian tobacco in the NGP business? What changes, if any, will the Brazilian tobacco industry need to make to serve this growing segment?

We do not yet clearly envision everything this new market might offer us, or how it could harm us due to changes in consumption habits. So, for now, many doubts remain, and it is difficult to predict anything with precision.

Are you optimistic or pessimistic about the future of the tobacco sector in Brazil, and why?

I remain optimistic because Brazil has established itself as a global benchmark in tobacco due to its productivity and quality. It's a very artisanal product, produced by small farmers. Socially, this is a very important aspect considered by some markets.

We’ve now reached a point where organizations like Afubra, federations, unions, and even Sinditabaco [the interstate tobacco union, representing tobacco companies], through companies, are discussing the restructuring of the integrated system, which has gone somewhat off course and needs to be treated more seriously.

The system needs to return to functioning with full responsibility on both sides. The companies, in particular, have strayed a bit from the serious path of the integrated system, and the producers also have their part to play.

In this way, I am very optimistic that Brazilian tobacco will remain a global benchmark for a long time, just as it is today.

Cover photo：Visitors admire tobacco during Afubra’s annual Expoagro exhibition in Rio Pardo, Rio Grande do Sul, Brazil. | Photo: Taco Tuinstra