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The Tobacco Industry in Thailand Vol. 12 No. 11 November 2003


November, 2003

How or why man came to smoke is anyone’s guess. For 10,000 years humans had used agriculture as a means to procure food. But here was a plant that was so unpalatable that one day, some bright spark decided to set fire to it…and before long the whole village was puffing.

The Americas are the indigenous home of tobacco. Mayas are depicted in hieroglyphics smoking leaves tied with a string. The Aguaruna tribe of Peru supposedly experimented with hallucinogenic enemas. Less adventurous Americans simply chewed the leaves.

The plant was first exported via Christopher Columbus himself, and was popularised in the 16th Century by Jean Nicot (for whom Nicotine was later named) and Walter Raleigh. After returning from his globe hopping to Elizabethan England with two strange new imports, the potato and tobacco, Sir Walter Raleigh was reclining in his chair smoking a West Indian pipe one day, when his servant entered the room, and believing his master to be on fire, threw a bucket of water over him. Or so the story goes.

However strange the phenomenon of smoking, the craze certainly spread. Finding Europe too cold for cultivation, colonists imported tobacco seed to Africa, the Middle East and Asia.

The first tobacco cultivation in Thailand began just before WWII under the auspices of the British American Tobacco Company (BAT). However, the momentum was lost in the war and they pulled out, only to be replaced by the Thai Tobacco Monopoly (TTM), who even today own the sole right to manufacture and sell cigarettes in the Kingdom. TTM manufactures Khrong Thip and Falling Rain; they also export tobacco.

In effect, no foreign company makes cigarettes in Thailand; they only process tobacco and sell it to manufacturing giants such as Philip Morris and BAT.

In the Chiang Mai region, these tobacco processors are STEC (Siam Tobacco Exporting Corporation) and the U.S. based Dimon Leaf Thailand Ltd., who opened factories in Lamphun in 1967 and 1972 respectively. These companies buy dried tobacco directly from “curers”, who are like feudal lords dotted around the northern countryside, who in turn, buy green leaf directly from the farmers.

With not much more than 50 years experience in tobacco farming - where plantations are traditionally passed down from father to son - Thailand is a novice in this industry. And yet, Thai tobacco is quickly becoming a rising star in the global market, and Chiang Mai is the new hub. The fertile lands and climate of northern Thailand were heaven-made for tobacco cultivation.

The tobacco plant enjoys days in the sunshine, but prefers the night time cool. It’s that drop in temperature that stops tobacco growing too quickly; instead, it concentrates its minerals and fibres into a stronger, more compact plant, and when fully ripe, looks like an enormous lettuce.

In northern Thailand, seedlings are planted by farmers between August and December. The crop is harvested every two to three months. This makes tobacco an excellent cash crop for farmers: they receive cash in hand every harvest when their pick-up trucks loaded with fresh green leaves arrive at the Curing Station for weighing. Farmers generally receive approximately 4 Baht per kilo of green leaf. An average farmer owns 2.5 rai of land, and earns perhaps 25,000 to 35,000 Baht every two to three month harvest, of which he may have to pay back a maximum of 10,000 Baht to the curer for pesticides, fertiliser and equipment.

There are three varieties of tobacco: Flue-Cured Virginia (FCV), Burley and Oriental. FCV grows around Chiang Mai, in districts such as Chiang Rai, Nan, Phayao, Lamphun and Lampang. Burley - which many reckon to have great potential in Thailand, despite some worrying rates of microbacteria - grows in lowland regions: Phrae, Uttaradit, Sukhothai, Petchaboon, Tak. Oriental leaf grows only in Isaan and falls under the monopoly of TTM. All three varieties of leaf can end up in the same cigarette due to a complex buying system that mixes qualities and quantities of different tobacco cuts. (Philip Morris’ recipe for Marlboro filler is still top secret) FCV plants produce fewer leaves than Burley, and the FCV farmer should expect to produce between 200 - 300 kilos of Dry Leaf per rai annually. Burley cultivation on the other hand, can be as high as 350 kilos per rai. In total, Thai farmers are producing 54,000 tonnes of tobacco per year. When all the maths are done, you’ll find that there are around 100,000 tobacco farmers in northern Thailand, plus a further 20,000 in Isaan. If we assume that each farmer has a family, then it’s no exaggeration to state that well over half a million people in Thailand alone rely on tobacco cultivation.

Thai tobacco farmers often work together to harvest the crop, avoiding the expense of labourers. They get up before dawn and pluck the huge green leaves from a plant which is usually taller than them. The leaves are then separated into high, middle and low racks, according to their position on the plant (higher leaves usually contain more nicotine, starch and minerals). At this stage, the farmers of Burley in Sukhothai must dry the leaves, grade the tobacco themselves, and deal through an entrepreneur; whereas the FCV farmer of Chiang Mai drives the racks of tobacco leaf in his truck to the eagerly awaiting curer.

The curer pays the farmer his 4 Baht per kilo, “cures” it, and then sells the tobacco on to Dimon, STEC and TTM for, let’s say, 65 Baht per kilo. It sounds like an enormous mark-up, but it’s not: it takes at least 8 kilos of fresh FCV tobacco leaves to make 1 kilo of dry leaf. And then there’s the huge investment of the Curing Station itself.

The racks of leaves are hung in air-tight chambers and steam dried until they are brown. Tobacco is essentially 90 % water and of the remaining solid matter, 25% of that is starch. During the 36 – 48 hours that the leaves wilt and yellow the starch is transformed into sugar. Ultimately, it is the fine balance of sugar and nicotine that influences the flavour of the finished product.

At each stage of the process, agronomic expertise is of paramount importance. From pest control to the fertiliser mix, from seedling to bale, every step is monitored and recorded by agronomy teams. Many of the agronomists employed at Dimon and STEC are from Brazil or Zimbabwe, which are two of the most successful producers of tobacco in the world. The agronomist must exercise his horticultural skills and scientific savvy to ensure that all conditions are right for successful cultivation. In the past two or three years, the benefit of foreign agronomists in Thai tobacco fields is apparent in the improving quality of Thai tobacco and the greater yields.

After a few days in a curing chamber, the dried tobacco emerges, a shadow of its former self in weight. The leaves are then sorted into bales and packed into the trucks which take them to the factories just outside Lamphun. The factories are immense with often over 200 workers at a time sorting, chaffing, separating and cutting the dried tobacco until it finally results in that fine, soft, brown “filler” we see inside today’s cigarette. The tobacco is tested every 20 minutes by lab technicians who monitor the rates of nicotine and sugar. Very little is lost in waste (perhaps 8%) and even the midriff of the leaf can be processed to make “snuff”. The tobacco is kept in the warehouse and sold on to buyers (cigarette manufacturers) who may come from any corner of the world.

Thailand produces just 5% of the world’s tobacco, but its production has been rising steadily since a drastic drop in 1997 during the “Asian Crisis”. Tobacco and cigarette taxes are now the third highest source of revenue in the country.

Recently TTM announced that they will soon be moving their cigarette manufacturing factory from Bangkok to Chiang Mai. The new factory at Maejo brings TTM closer to the area of raw material and will undoubtedly offer employment to the region. TTM currently employs 1,500 workers at its Bangkok factory and manufactures no less than 26 billion cigarettes a year. Technical Deputy Managing Director, Chaichana Chitkrua told Citylife that he expected the new Chiang Mai plant to be up and running in less than one year and that he expected production to be similar to that of the Bangkok factory.

But, where there’s smoke….

Of course it’s not all jolly hockey-sticks in the industry. A recent court case in the United States has had a massive ripple effect on the international marketplace: Philip Morris International (PMI) have been hit for $ U.S. 206 billion (the largest settlement in history, and almost as much as the proposed budget to rebuild Iraq!) in compensatory damages for allegedly “tricking” the public into believing that Marlboro Lights were less dangerous than regular cigarettes.

While an appeal is pending, everyone in the business is keeping tight-lipped about the dangers of smoking. Thailand is soon to follow Canada and Brazil in depicting graphic images of sick infants and dying cancer patients on the cover of cigarette packets. Cigarette vending machines have been outlawed, and officially from November 8th last year, smoking is no longer permitted in air-conditioned stores, restaurants, schools, hospitals and government offices.
Since smoking was first revealed as a health risk in 1952, the industry has had to fight an uphill battle. Lung cancer is the most obvious risk. The head of the Thai Health Ministry’s Department for Disease Control goes one step further: “On average, non-smokers live to be 77 years of age. Smokers die 12 years younger.”

For some, the downfall of the industry can’t come soon enough. “An absolute social evil,” says David Hanlon, an Australian NGO activist. “If crop substitution can be successful in eradicating opium, then why not tobacco?”
The WHO (World Health Organisation) has been the most vocal in calling for smoking curbs, specifically calling for total bans on advertising and public smoking. Within the Thai government there is opposition to the industry too: Public Health Minister, Sudarat Keyuraphan claimed recently that “cigarette companies continue to lure people into taking up smoking through cunning advertisements.”

Faced with escalating harassment, the main players in the game like PMI have been forced into “strategies for acting socially responsible” like funding anti-domestic violence campaigns in an attempt to whitewash their image.

Companies claim they are being victimised and warn against the ramifications of civil suits that could bankrupt the entire industry. And it may have a point: the domino effect of lawsuits in the USA alone has already created a bandwagon. One 64 year old lung cancer patient in California was awarded $28 billion in damages, although that figure was finally reduced substantially. Claimants are suing on behalf of lost relatives; air hostesses are claiming disability due to the (unproven) effects of second hand smoke; and then last year two lawyers, one of whom was the questionable Mr Johnnie Cochran of O.J. fame, even filed a lawsuit claiming to represent EVERY underage smoker in the country. It would appear that each one of us has a claim against cigarette manufacturers.

The gloves are off for a showdown: in one corner the lawyers and lobbyists; and in the other, multinational companies and Third World farmers.

Thai tobacco production is rising, but so is anti-smoking legislation. So although Thailand is rising as a player in tobacco cultivation, TTM’s sales of cigarettes have dropped dramatically. We are suddenly becoming more accustomed to non-smoking environments; not to mention the strange phenomenon of Thai TV blurring images of smoking, while actively glorifying violence.

The threat to the industry is real. The huge revenue that tobacco provides and the millions of people who rely on cultivation are not factors that should be brushed aside.

Does it follow that if we ban cigarettes because of toxic levels, then cars will be next?

At the end of the day, over one billion people on this planet choose to smoke; perhaps the only feasible solution is to find a way to produce cigarettes that are less harmful.
by Colin Hinshelwood
The Tobacco Industry in Thailand      Highlanders’ Space in Time: an oral history
l  Review  l
   Review 1:
We are interested by your products: tobacco of Verdzhiniya and Berleu is a sheet and with the separated vein.What year harvest?What packing? Is a price FOB?We in a month need about 60 tons.If you have in a presence a tobacco write prices to us.
Thanks and best regards,

D.Galitskogo st.,13/21
Khmelnitskaya region,
Firm TSP-Sapfire
Tereshchenko Sergey
Tel mobile-+38 067-380-23-88
+38 063-955-95-88
e-mail: tereshchenko77@yandex.ru
From: Sergiy    [ 12 July 2011 17:53:53 ]
   Review 2:
Excellent article. Informative and balanced. Does Colin know the area of tobacco grown (,000ha) - now of course in 2011?
From: neil morton    [ 02 July 2011 04:46:42 ]
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