Domestic tobacco products ambitious to enter new markets

After considerable cigarette import in the amount of 9 billion which cost significant $150 million for Azerbaijan, the state government make a call to increase tobacco production.

With 47-percent smoking population, who use in the average 15 cigarettes a day, Azerbaijan produce only 1.6 billion cigarettes from over 10 billion consumed in the republic.

To increase the capacity of the existing cigarette factories and establish the new ones, the government targets to double production of tobacco by 2021 from the current 3,200 to about 6,000 hectares.

PhD in Economics Rufat Guliyev positively assessed establishment of the Association noting that this is a good step to bring together all producers of tobacco, as well as exporters, and establish links between them.

“This step will create a synergistic effect and will allow to use each other's experience, and share technologies. Over the past 15 years, new varieties have been introduced in the production of tobacco products,” Guliyev told Trend.

The creation and further development of the association, according to the expert will provide great support in the search for new markets.

“Tobacco is a very specific commodity, and in conditions of intensified tobacco control in Europe it was practically impossible to plant tobacco everywhere. In addition, the world has almost ceased subsidies in the sphere of tobacco growing. In this regard, I believe that the association will allow producers to organize their problems in a more coordinated manner,” he said.

The primary goals of the association should be to bring Azerbaijani tobacco to international standards and search for sales markets.

“Currently, the sale of tobacco as a raw material is encountered with great problems, since there is considerable competition due to the fact that almost half of the territories of Africa and South America are covered by tobacco plantations. In addition, it is necessary to start breeding new seeds to improve the quality of tobacco,” Guliyev said.

The country harvested 3,700 tons of tobacco in January to September 2017, which is 19.3 percent more than the same period of last year, according to the State Statistics Committee. In this period, the country produced tobacco products worth 27.48 million manat, which is 12.8 percent less than in January to September 2016.

Overall, the tobacco seed was sown only in three regions including Sheki, Zagatala and Gakh in 2015, whilst now it is sown in 13 regions.

The recent five-year program approved for the development of the tobacco production in Azerbaijan, is going to decrease import of foreign products. Today, domestic production provides only 16-17 percent of consumer demand, and the implementation of the state program will bring this figure up to 70 percent.

Meanwhile, recently the prices for cigarettes, with a share of 1.92 percent in country’s total import, will soar in Azerbaijan, since the government is discussing changes in excise tax rates for imported products.

Excise tax rate in Azerbaijan is quite low, [4 manats per 1,000 pieces of imported cigarettes and cigarillos and 10 manats per 1,000 pieces of cigars], so the changes envisage increasing excise rates on imported tobacco and alcohol products.