Tobacco has been used by people for centuries, but cigarette smoking and large scale cigarette manufacturing appeared only in the 19th century. Cigarette smoking has since spread worldwide and in 2000 about one in three adults, or about 1.1 to 1.2 billion people worldwide, smoked. It is estimated that smoking is responsible for four million deaths in the world each year (WHO, 1999a). The number of smokers is expected to increase to 1.6 billion people by 2025 as a result of growth in adult population and increased tobacco consumption (World Bank, 1999).
Consumption of tobacco and tobacco products, by smoking in particular, is considered to impose a net social cost to society. Smoking and tobacco use are increasingly considered to have acquired the dimensions of an epidemic. According to various studies, tobacco related deaths will rise dramatically over the next 25 years, unless current smokers quit smoking (World Bank, 1999, p.80).
Tobacco and tobacco products, however, are produced, traded and consumed legally, as all other products, and their production and trade is subject to the same rules and regulations as all other products. Thus, although many countries take active measures to reduce smoking and other tobacco use as a policy for reducing tobacco-related social costs, economies of other countries have to depend heavily on tobacco growing and tobacco-related manufacturing for employment and income.
The objective of this study is to provide a forward picture of tobacco production, consumption and trade to 2010. The specific objective is to use a standard commodity production, consumption and trade framework to construct a model for the major tobacco producing, consuming, importing and exporting countries and apply the model to project tobacco production, consumption and trade to 2010 for all countries and for the world as a whole. The projections should take account of changing consumer habits, technologies and likely developments in national and international policy relating to tobacco, in particular the likely impact of the Framework Convention on Tobacco Control (FCTC). Alternative scenarios incorporating various price and non-price policy measures including raising cigarette taxes, reducing protection to tobacco production and the adoption of bans on advertising and promotion of cigarettes in various countries could be incorporated as appropriate.
The work includes two parts. The first part provides a detailed account of trends and their determinants in tobacco consumption, production and trade over the past 30 years. The second part provides consistent projections to 2010 of tobacco consumption, production and trade, using a standard commodity model approach.
The first part focuses on the period 1970 to 2000 and reviews past trends in tobacco leaf production, cigarette and tobacco leaf consumption, tobacco product manufacturing and trade in tobacco leaf and tobacco products. The review uses, whenever possible and at least for the major producing and consuming countries, econometric work for estimating supply response parameters, income elasticities of demand, and price transmission from the international to the domestic markets. The review includes two commodities, tobacco leaf and tobacco products (mainly cigarettes).
The second part focuses on projections of tobacco leaf production, demand and trade to the year 2010. The methodology is based on a standard commodity model. The base year is 1998 (in fact the average of the three years 1997-1999). The model was built using the parameters estimated in the first part with historical data from the period 1970 to 2000. Then, the results are examined at the country level for conformity with a priori knowledge about developments in the particular country concerning production policies, consumption trends and restrictions, as well as trade flows. The consistency of trade flows with production and demand projections is also ensured.
The structure of the report follows the methodology outlined above. The first part examines production of tobacco leaf, consumption of leaf and cigarettes, cigarette manufacturing and tobacco leaf usage, and trade in tobacco products during the period 1970 to 2000. Then the second part examines the projections of consumption, production and trade of tobacco leaf. Two annexes provide statistical details for the world and for major countries and details of the methodology used in the projections.