South Africa’s tobacco value chain hits back at cigarette ban

South Africa’s tobacco value chain hits back at cigarette ban
Government’s ongoing ban on the legal trade in tobacco products during the lockdown period to contain the COVID-19 pandemic, has resulted in a strong backlash from industry role players. Photo: FW Archive

Fightback from major role players in South Africa’s tobacco value chain, together with some civil rights organisations, against government’s ongoing ban on the legal trade in tobacco products is rapidly gaining momentum.

The illegal cigarette trade in South Africa has been rife during the lockdown regulations imposed to contain the coronavirus disease (COVID-19) pandemic, and resultant restrictions placed on the sale of tobacco products.

Farmer’s Weekly previously reported that TAU SA had issued a formal request to President Cyril Ramaphosa to urgently establish a judicial commission to investigate the illegal trade of cigarettes during lockdown period and uncover the parties involved.

The Black Tobacco Farmers’ Association (BTFA) had also issued a statement accusing government of being “in bed” with tobacco bootleggers and of having “done a deal with the devil”.

The statement added that South Africa’s black tobacco growers were on the verge of financial ruin, due to the ongoing ban and as a result of competition from illicit tobacco products being sold on the black market during the lockdown period.

Civil rights organisation, AfriForum, announced that it had served a lawyer’s letter on the Minister of Co-operative Governance and Traditional Affairs, Dr Nkosazana Dlamini-Zuma, to inform her that it would be taking legal action if the ban on tobacco products was not urgently lifted.

Sinenhlanhla Mnguni, chairperson of the Fair-trade Independent Tobacco Association (FITA), said on Friday: “We have today received a directive from the Pretoria High Court that our matter will be heard on 9 and 10 June before a full bench of the High Court.”

Information provided by FITA said that the association was challenging the tobacco ban and the reasons given therefore by Dlamini-Zuma and other members of the National Coronavirus Command Council.

The country’s largest private tobacco manufacturer, British American Tobacco South Africa (BATSA), announced that it too, with support from Japan Tobacco International and other representatives of the country’s tobacco value chain, had started urgent legal proceedings to fight the ban.

“BATSA has made every effort to constructively engage with the government since the ban came into force, including making detailed submissions […] to various ministers as well as directly to the Presidency. To date, no formal response has been received from government, and BATSA has also not been included in any of the government’s consultation processes so far,” BATSA said in a statement.

With regard to the illicit trade in tobacco products, Christo van Staden, managing director of Limpopo Tobacco Processors (LTP), said: “The tobacco industry as a whole has been under pressure for some time now, due [mainly] to the fact that before the lockdown started the total market already consisted of approximately 40% illicit products.”

LTP processed tobacco leaf acquired from various tobacco farmers, and sold more than 80% of this to BATSA.

He added that should the ban on tobacco not be lifted soon, a significant number of tobacco producers would have no option but to reduce the size of their operations or cease operating all together.

“This has the potential to significantly increase the number of unemployed workers, particularly in rural areas.”

LTP represented 100 commercial farmers who produced 11 million kilograms of tobacco, and 150 black developing farmers who produced 250 000kg of tobacco per annum.

In addition, Van Staden said the ban on tobacco had resulted in many consumers resorting to supporting the illicit trade in order to obtain tobacco products.

“Should the ban on tobacco not be lifted immediately, consumers will continue to use illegal products, which will further grow the already high illegal tobacco product production and sales in South Africa and will continue to cost the fiscus billions of rand.”

In a statement, Agri SA appealed to government to investigate and act on the illegal trade of tobacco products and called for the ban on the formal trade of tobacco products to be lifted.

“The state loses taxes to the tune of R1,5 billion monthly. The only winners are those benefitting from the illicit trade. Surely this is not assisting our efforts to prevent the virus from infecting more and more people and the economy from recovering from the lockdown,” Agri SA said in a statement.