tempted by prices that triple those paid in the collection mouths of Missionsmany producers are selling their tobacco crop on the black market step before shipping to Brazil by clandestine steps. It is estimated that at least twelve million kilos have crossed the border, with which the harvest in Misiones will be one of the lowest in history.
While Tobacco companies pay 500 pesos a kilo at the time of delivery, on the other side of the border the value fluctuates between 16 and 17 reais, around 1,500 to 1,600 pesos. The tobacco producer who markets through formal channels then receives a series of payments such as Special Fund for Tobacco (FET) and other benefits that raise the price to around 1,000 pesos per kilo. However it is 30% less than what Brazilians pay.
Carlos Knoll, president of the Association of Tobacco Growers of Misiones (APTM), the body that brings together most of the tobacco growers of the province, said that until now 18,270,000 kilos of tobacco were collected in its Burley, Virginia and Criollo Misionero varieties, far from the estimated 30 million. The Ministry of Agriculture and Production had been more cautious, as it had calculated that the harvest would close with just over 26 million kilos.
“We had expectations of more kilos because we have not suffered from drought this year. There was good production, but unfortunately we see that smuggling will have brought us between 11 and 12 million kilos”, the leader admitted to the Primera Edición de Posadas newspaper.
Knoll did not hesitate to describe the situation as “a disaster because this will have consequences in a sharp decline in Misiones’ participation in the FET”, but also acknowledged that smugglers arrive at the producers’ farms and offer them more than 1,000 pesos a kilo under a warehouse, without having to pay the freight or running the risk of moving the bales to the coast of the Uruguay River, one step before being shipped to Brazil.
Producers’ associations have called for greater control over the circulation of tobacco on the roads. They said it’s not very difficult to know which side goes to Brazil, as the pick-up points are on Route 14, further away from the border. “A shipment that goes to the Uruguay River coast does not go to a legal collection,” they said.
For his part, the president of the Cooperative Tabacalera de Misiones (CTM), Jorge Kappaunn, estimated that almost half of the producers have sold at least part of their production to the Brazilian market.
As a result of the smuggling, the Cooperative has estimated that the collection there alone will be reduced by 3.5 million kilos. When the rains became regular, they expected to harvest about 10.5 million kilos, but they barely exceeded seven million.
The manager said the tobacco leak in Brazil it will have a significant impact on the arrival of resources from the Special Tobacco Fund. In this sense, he said that the drop could be 40% and this will also complicate the financing of tobacco farmers’ social work.
From the Cooperative they decided it for the new campaign they will not deliver inputs to those producers who have sold their tobacco outside assembly points.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.