Tobacco:

1
Tobacco

• Global Policy

2
Overview

• Tobacco History
• Social Costs of Tobacco Consumption
• Social Benefits of Tobacco Production
• Global Tobacco Trends
• Effects of Socioeconomic Policies
• Conclusions and Recommendations

3
Tobacco History
4
Tobacco Timeline

• 100 BCE indigenous Americans began smoking
  tobacco
• 1492 Christopher Columbus discovered tobacco
  smoking in America and brought it to Europe
• 1500 tobacco smoking was introduced to the
  Middle East via Turkey
• 1530 tobacco was introduced to China
• 1560 the Portuguese and Spanish shipped tobacco
  to Africa
• 1612 tobacco was grown commercially for the
  first time
• 1788 tobacco was introduced to Australasia with
  the first fleet from Europe

5
Modern Tobacco Consumption

• The principle mode of tobacco consumption in the
  West has changed as follows
• 18th century snuff
• 19th century cigars
• The switch from snuff to smoking tobacco was
  partially made possible by the invention of
  phosphorous friction matches in 1833
• 20th century cigarettes
• In 1881 the cigarette machine was invented
• In 1901 Imperial Tobacco and the British American
  Tobacco Company were formed
• These are two of the biggest cigarette producers
  today

6
Tobacco Legislation and Research Timeline

• 1633 Turkey institutes death penalty for tobacco
  smoking
• 1939 American scientists discover a link between
  tobacco smoking and lung cancer
• 1981 Japanese researchers report on dangers of
  second hand smoke
• 1987 State of Victoria (Australia) institutes
  the first tobacco tax to establish a health
  foundation countering tobacco
• 1993 South Africa passes the Tobacco Products
  Control Amendment Act

7
Social Costs
8
Healthcare

• Cigarette consumption is at higher than socially
  optimal level

• Overall annual healthcare cost attributed to
  smoking 6-15 of total healthcare costs
• High-income countries 6 GDP
• Low- and middle-income countries 2 GDP (World
  Bank)

9
The Environment

• Deforestation
• Pesticides and herbicides
• Soil depletion and erosion

10
Social Benefits
11
Employment

• Total Industry 60 million employed
• Manufacturing 1.2 million
• 840,000 are in China, India and Indonesia
• More labour intensive in developing world
• Higher salaries than similar industries
• Growing 38.9 million
• 31 million are in developing countries
• Global average female earnings are 78 of male
  earnings
• Home industries 20 million

12
Production and Exports

• Over 6.3 billion tonnes of tobacco is produced
  annually
• 5.7 billion tonnes is produced in 7 countries
• China, India, Turkey, Indonesia, S. Korea,
  Pakistan and Japan
• Annual earnings from exporting tobacco is over
  21 billion
• For some developing countries tobacco represents
  a large percentage of export earnings
• Malawi 58
• Zimbabwe 32
• Macedonia 16
• Kyrgystan 8

13
Biotechnology

• The tobacco plant is useful to biotechnology
• Tobacco generates biomass quickly
• The tobacco genome is relatively easy to
  manipulate
• Much of the genome has be sequenced due to
  research by tobacco companies
• Bioremediation is a promising potential new use
  for tobacco plants

14
Net Loss

• According to the World Health Organization, net
  social loss (social benefit minus social cost)
  for the tobacco industry is
• US27.2 million for every additional 1000
  tonnes of tobacco traded in the global market

15
Tobacco Trends
16
Tobacco Consumption

• From observation of world maps of cigarette
  consumption there are low levels of cigarette
  consumption in
• South America
• Africa
• South Asia
• There are high levels of
• cigarette consumption in
• North America
• Central and East Asia
• Europe
• Australasia

17
Economic Indicators

• There is a higher percentage population of
  smokers in developed countries than in developing
  countries
• The percentage population of smokers in a country
  is not tied to
• GDP
• Taxes
• Level of cigarette production

18
Agriculture

• In countries where there is a higher than average
  percentage population of smokers, a higher
  proportion of agricultural land will be devoted
  to tobacco crops

19
Tobacco Legislation

• Countries that spend more per capita on public
  health care have stricter tobacco legislation
• These countries have a slightly lower percentage
  of smokers
• Smokers in countries that have stricter
  legislation smoke fewer cigarettes

20
Price of Cigarettes

• The number of cigarettes smoked per smoker is
  correlated to the price of tobacco
• Tobacco is an elastic good

21
Price of Cigarettes

• Countries that produce more cigarettes are likely
  to have lower taxes on cigarettes
• Like most natural resources,
• the real price of
• Tobacco has been
• decreasing since the
• 1960s

22
Socioeconomic Policy
23
Barriers to Trade

• International trade agreements moving towards
  reducing trade barriers
• Increased trade increased smoking
• High-income versus low-income
• Liberalized trade versus closed market
• Cigarette consumption increase of 10
• GATT has provisions to protect public health if
  applied to domestic and foreign products

24
Subsidies

• Direct price support or indirect input subsidies
• Example European Union, India, Turkey
• Prices high and stable
• Support for small family farms
• Control imports of tobacco from abroad to
  conserve foreign exchange
• Maintain political support
• Encourage tobacco production and thus tobacco
  consumption

25
Taxes

• Cost-effective policy instrument
• Tax Revenue
• Burden on high-income versus low-income
• Tax has positive correlation with social policies
• Tobacco tax would allow poor people to live
  better, work cheaper, and to send their goods
  cheaper to market (Smith, 1776)
• Is there an optimal tobacco tax level?

26
Social Policies

• Information shocks
• Turkey 8 decrease
• Advertising ban
• High-income countries 6 decrease
• Counter-advertising
• Sweden 11 decrease
• Smoking restrictions
• Function of tax

27
Conclusions and Recommendations
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Conclusions

• Framework Convention on Tobacco Control (WHO)
• Tax increases are a highly effective way to
  reduce tobacco consumption
• High-income versus low-income countries
• Social policies are also effective and can be
  funded using a portion of tobacco tax revenue
• Health risk issues

29
Recommendations

• Global tobacco policy should be implemented based
  on shared principles
• Multi-pronged approach
• Raising taxes
• Disseminating information
• Banning advertising and promotion
• Restricting smoking by location

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