THE TOBACCO SUPPLY CHAIN

13. the industry of tobacco in Colombia

12. Production costs

Production costs the structure of costs of tobacco production in Colombia varies greatly according to the type of tobacco which is cultivated, the particularities of the cultivation process and the quality and availability of the factors of production. However, it can be pointed out some common elements in structures of costs related to the production of different types of tobacco.

In all cases it is noted that labor has been gaining share in the cost structure, since the annual adjustments are made according to the minimum wage and this traditionally increases above inflation. The land lease payments constitute the second account in importance within the total costs, due to the cultivation of tobacco in Colombia is performed traditionally under the method of sharecropping.

The tobacco in Colombia Colombia the tobacco industry faces basically three types of industrial processes after the curing in the estate: the manufacture of cigarettes, the manufacture of cigars and classification and desnervado for export of tobacco.

The production, however, is concentrated in two companies: Coltabaco S.A., created in 1919 and located in Medellin (recently acquired by the Phillip Morris), and Protabaco, founded in 1960 and is located in Bogotá. Coltabaco has as a subsidiary to tobacco Rubios of Colombia, which is in charge of the primary exploitation and a first process of industrialization. Production is oriented at 90% to meet the domestic demand, using own agencies and private distributors; the remaining 10% is sold in the markets of the United States, Spain, Holland, Russia, Surinam, Central America, Paraguay, Bolivia and Chile. At the beginning of the 90s, these companies had great difficulties in the domestic market, since more than 60 percent of the national consumption of cigarettes was attended with imported products, legally and illegally.

THE TOBACCO SUPPLY CHAIN

11 prices

Prices Colombia, as a small producer and exporter, is a price taker, for this reason the prices of tobacco in Colombia follow the world trend; his training at the internal level presents certain differences in relation to other agricultural products, since the demand for tobacco is a demand for the final product (cigarettes), not traded on stock exchange and dominates the production contract.

10 the world tobacco

the tobacco in the world world production of tobacco presented a strong growth, in the eighties his behavior was very irregular, presenting with significant levels of production and others with levels well below the average.

Today the ILO considers smoking as another product that does part of the food and beverage group in crisis and proposes that the effects on the policy changes that produce anti-smoking campaigns in the reconfiguration of the employment in the sector, are studied and reviewed. Although the tobacco companies contribute unquestionably to create jobs and wealth and to raise the overall standard of living in countries, more and more employers recognize the need to dispel the doubts of customers with regard to the safety of their products, and they are adopting codes of conduct that guide them in relation to the development of their human resourcesenvironmental management and interaction with their customers. Even some companies are sponsoring campaigns against youth smoking, which also is a strategy for staying in the market.

9.Apparent Consumo

In Colombia the tobacco is consumed in all socio-economic strata and in all regions of the country, mainly in the form of cigarettes. According to the survey of income and expenditure of the DANE, Colombian families spend on average $23.788 monthly (2002 pesos) for the purchase of products made from tobacco (cigarettes, cigars, Sting, etc.), the apparent consumption of tobacco in Colombia grew about 5.1% annually during the period 1991-2003. This behavior is contrary to the one presented in general in the world, where consumption dropped by 1.46% per annum during these years, despite the increase in consumption in developing countries.

Despite growth presented by the apparent consumption of tobacco in Colombia, consumption per capita is still lower than in other countries of the world. (of tobacco per capita, higher than the one registered in the countries of the Andean (0.48 kg / HAB.), HAB.), NAPHTHA

(1.36 Kg. / all this reflects that the national production has increasingly decreased participation in the consumption of the national industry, said behavior is explained by the increased import of tobacco sued by the industry for the manufacture of cigarettes and lower exports of other types of tobacco.)

Form of consumption in Colombia

8.The crop in Colombia Productivity

7. production system

In general, the performance of tobacco in the country presented a behavior of ups and downs with an upward trend.

As for the blond tobacco crop productivity varies greatly between regions, due to the differences in the quality of the land, traditional farming practices and the availability of irrigation. The highest yields were presented in la Guajira and Tolima, where the average yield during the period was 2.4 Tm. / and 2 Tm. / on the other hand, in Boyaca and Caldas yields declined at an annual average rate of - 1.2% and - 4.6% respectively, reaching on average just 1.5 Tm.

With regard to the cultivation of black tobacco, type Cubita, productivity is that yields have grown at a very small rate of 0.1% per year, they have decreased in Magdalena - 0.4% average annual and Sucre at a rate of - 0.9%. In 2003, the highest yields presented them the Department of Sucre with 2.4 Tm. / followed by Bolivar with 2.1 Tm. /

As to how that occurs, the country presents several types of cultivation procedures, which vary depending on the type of tobacco, the region where the harvest is carried out form of land tenure, the type of farmer and the market to which the product is aimed. Notwithstanding the foregoing, there are certain common elements to most of the growers of tobacco in Colombia, that can be used to describe the system of production of this product.

In general, tobacco-growing is labour intensive work, undemanding water, is handled without shade and with little use of chemical inputs if compared to other common crops in the country.

Predominant production by contract or mandate of production, which specified the number of clumps, or planting areas, the expected production, supervision or advice on cultivation and the prices of the leaf, according to the classification of each company. Contracts are awarded directly by the companies buyers, in the case of crops located in the interior of the country and include intermediaries, in the case of crops from the coast.

6. varieties and areas of production in Colombia

In Colombia, the tobacco is produced in various climates with different grades of soils and climates, ranging from the closest to the sea level with more than 30° C up to heights of 1,600 meters above sea level with an average of 20° C.

The different characteristics of the soil and the climate generate differences in the properties of the sheet. These differences affect the substitutability of the leaf in the manufacture of tobacco and lead to a regional specialization in accordance with the trend of demand and the availability of factors of production for each crop type. Each geographical area produces a special type of blade that is adapted to different uses: cigarettes, cigars, and smoking or chewing tobacco.

In Colombia, both the blond tobacco and dark tobacco is cultivated.

Burley tobacco presents leaves ovolanceadas, large, Tan and medium texture allowing drying in caney. In general, the tobacco is collected by Coltabaco, Protabaco and blond tobaccos through its local agencies using production contracts, and is mainly oriented to the manufacture of soft cigarette.

4. Early cultivation

Tobacco is a product originating in America, used by the natives of the continent many centuries before the arrival of the conquistadors.

In Colombia commercial tobacco production dates back to the colonial era.

3. Importance of the cultivation of tobacco in Colombia

5. Features of the culture and process of production

The blond tobacco

The Black tobacco

Blond tobacco, Burley type, is transported to the caney to be selected, then it is loaded to be dried or cured. Black tobacco, type cubita, are also threaded in the caney where heals 15 or 20 days before heading out to the mercado4. According to the type of curing or drying to which are subject leaves four main tobacco types are distinguished:

• Curing ovens. Also known as "flue-cured Virginia" or just Virginia. It owes its name to the fact of having been used for the first time in this U.S. State. Is used as heat source, coal, gas or firewood; the process consists in to circulate hot air through the tobacco leaves, so it is customary the use of fans.

• Cured by fire (smoke). The drying method is similar to that used in the previous type, with the difference that in this heat is openly offered and this direct exposure to smoke gets its characteristic flavor and aroma.

• Air-cured. It is dried to the environment with minimum artificial control of moisture; in this type include Burley tobacco and black and blond tobaccos.

• Dried in the Sun. Oriental tobaccos belong to this type and its strong flavor is obtained by direct drying in the Sun. After this process, the tobacco is classified by quality grades, is packaged and packed in bundles of 20 to 50 Kg; the product at this stage is identified as deveined tobacco leaf, which is sent to the outside or is consumed by the domestic industry in the manufacture of cigarettes.

Black tobacco, type Garcia, has large, wide and thick leaves and is grown mainly in Santander, in the municipalities of Capitanejo, Enciso, San Miguel, San 10 chain of tobacco Juan de Miranda, Malaga, Molagavita, San Gil, Villamier, Barichara, Curiti, Pinchote, Aratoca, Jordan, Cabrera, Mogotes, Onzaga, San Joaquin, Giron, Saints and Piedecuesta. and in Boyaca, in the municipalities of Cobarachia, Soatá, Tipacoque, San Mateo, Mocarabita and macaws. About 57% of its production is gathered directly by the industry of cigarettes through planting contracts previously agreed and the rest of the production is acquired cash by cigarette companies.

Is mainly produced in Santander, in the municipalities of Capitanejo, Enciso, San Miguel, San Juan de Miranda, Malaga, Molagavita, San Gil, Mogotes, Onzaga, and San Joaquin; in the North of Boyacá, where stands the town of Gutierrez; in Santander in the North, in the municipalities of Abrego, Ocaña, Villa del Rosario, los Patios and Cúcuta; in the Tolima, Huila, and is being expanded in Quindío, in Valle, Cauca and Nariño.

Blond tobacco

Tobacco for more than one century has been linked to the Colombians in aspects economic, cultural and social life. As shown in graphic 2, with the exception of a couple of years, the greatest number of people employed in the cultivation of black tobacco; in 2003, the number of workers with - Agrocadenas 5 treaties amounted to 16.463, of which 53% was employed in the cultivation of black tobacco.

In the year 2003, in Colombia, were cultivated 16.131 acres which yielded 34.458 tonnes, of which around 47% corresponded to the different types of tobacco and the remaining 53% black tobacco type Garcia and cubita. The cultivation of tobacco was 0.41% of the total area cultivated in the country, the 0.46% of the area of transient crops tobacco and black tobacco 0.37% of the area of permanent crops.

The chain of tobacco is also an important generator of fiscal resources for the nation and the departments. Some tributes with which has taxed the chain are: 1.5% of withholdings at source on the tobacco sold by the farmer; 16% VAT with destination to the National Treasury; a tariff for imported products, with destination to the National Treasury, of 10% for tobacco without devein, 15% for unmanufactured tobacco deveined and 20% on the CIF price for cigars and cigarettes; 10% on cigarettes as support to sport in the departments

Tobacco is a member of the Solanaceae family, Nicotiana Tabacum is the main species cultivated for commercial production.

Since tobacco is native to tropical climates, in these, the plant vegeta better and harvest is early.

Soils suitable for farming depends on the variety and type of tobacco, for example, the tobacco Virginia type needs poor, sandy soils, and is best suited to warm climates; While blond tobacco, Burley type, is a bit more rustic, cures in caney and need even more organic and fertile soils, it adapts to low marginal coffee climates.

Tobacco production is highly intensive in hand work and is often grown as an annual plant. In Colombia the tobacco is a product of semester or nine months, depending on the climate and rainfall in the region where it is grown; dark tobacco is a crop of a longer duration, the planting is done between February and June and monthly collections, between August and December are conducted.

INTRODUCTION

CONTENT

The chain of tobacco in Colombia is relatively short, they constitute it in the primary link, the production and processing of leaf tobacco and the industrial phase, the manufacture of cigarettes. Tobacco results in other products such as cigarettes, cigars, and mixtures of tobacco for pipes which, however, are less important in the country.

primary production of tobacco presents limitations important derived among other reasons for the returns, although they have a growing trend above the global average, 1.6 t / as world, 12.9 Tm. / and are lower than those presented by the United States.

This is due to different factors, among others, to the low absorption of technologies by some farmers, to the cultivation of some lands not suitable, the deficiency in water for irrigation, the low utilization of the capacity of seeds of certain plots, the limited use of inputs in some crops and resistance to change farming practices susceptible of changes towards efficiency.

Colombia has advantages in the production of tobacco in terms of production costs, which are a third of those presented in the United States, since the country is cheaper labor and land rental.

-Introduction

2. Structure and value of the chain

3. Importance of the cultivation of tobacco in Colombia

4. Early cultivation

5. Features of the culture and process of production

6. Varieties and areas of production in Colombia.

7. Production system.

8. Production in Colombia

9. Productivity of the crop in Colombia

10. Consumption apparent

11. Tobacco in the world

12. Price

13. Production costs.

14. The industry of tobacco in Colombia

2. Structure and value of the chain

In Colombia, the tobacco chain is composed of two links: the first is related to the primary sector and consists of leaves of tobacco blonde and black without devein or stripped; the second contains all the produc-Agrocadenas 3 cough elaborated based on the leaves of tobacco, as blonde and black, tobacco cigars cigarettes, pure and tobacco smoking.

The value of tobacco purchased by the industry reached a total of US $27 million, of which 46% corresponded to the national tobacco, 23% to national black tobacco, and 31% to imported tobacco.

The $169 million the tobacco industry product accounted for 0.57% of the total production of the domestic manufacturing industry, which was US $29.653 million in 2001.

The institutional actors in the chain are:

1 Farmers who cultivated around 13.451 hectares divided between different areas of the interior of the country and the Atlantic coast in 2002 and tobacco which are grouped into 12 farmers organisations affiliated to the National Federation of producers of tobacco (Fedetabaco).

2. Cooperatives of farmers whose essential work has focused on supporting the marketing of tobacco in branch.

3. Las distributors international which are engaged in planting, collect and suited the Atlantic coast tobacco for export: C.I. Espinosa Tabacos S.A., C.I. Tairona S.A., associated in ASOTABACO and ADFA House.

4. National cigarette industry consisting of COLTABACO S.A. and PROTABACO S.A.

5. Tobacco blond S.A. dedicated to contract production of blond tobacco for export.