Friends of Tobacco

Tobacco Industry Profile 1996

403 B East New Bern Road, Kinston, North Carolina 28501
Phone & Fax (919) 522-4769 *


Prepared by:
The Tobacco Institute
1875 I Street NW
Washington, DC 20006
(202) 457-4800
(All data for calendar year 1995, unless otherwise stated.)

Consumption

Total US consumption including overseas armed forces was: *Consumption figures for little cigars are no longer broken out by the US Department of Agriculture.

The output of cigarettes from US factories was 760 billion. Of the total, 12.5 billion cigarettes were shipped to overseas forces, including Puerto Rico and other US possessions and 243 billion to other countries.

Expenditures

US expenditures for tobacco products were estimated at $49 billion, an increase of $1.5 billion. More than $45.7 billion, or 93 percent of the money used to purchase tobacco products, was spent on cigarettes.

World Production

World production of tobacco in 1994 was estimated at 6.44 million metric tons. The leading leaf-producing nations were:

US Tobacco Production

Tobacco Growers
Tobacco was grown on 124,270 farms in 23 American states and in Puerto Rico. The federal government issued approximately 346,000 allotments to grow tobacco in 1995. The allotment total is larger than the number of farms because some farms are given allotments of more than one type of tobacco.

The acreage harvested was approximately 674,300, up one-half of a percent from 1994, with a yield 17 percent below that of 1994 at 1,962 pounds per acre. The total US harvest was 1.32 billion pounds, down nearly 16 percent from 1994. The types of tobacco grown in 1995 include flue-cured, 38.4 million; Southern Maryland, 18.8 million; dark air-cured, 9 million; and all cigar types, 19.6 million.

Tobacco growing requires about 250 man-hours of labor per acre harvested. By comparison, it takes about three man-hours to grow and harvest an acre wheat. The more than one-half million farm families involved directly and indirectly in producing tobacco in the US were aided by additional seasonal workers.

Tobacco Sales
Nearly all of the nation's tobacco was sold at auction in 136 designated markets. The small remainder was sold directly from farms or by farmers' cooperatives.

The average price of the 1995 flue-cured crop was $1.79 per pound, while burley brought $1.85 per pound. This represents an increase of about 1.5 cents for burley and an increase of 9 cents for flue-cured from 1994 prices.

Crop Income
Tobacco was the seventh largest cash crop in 1995, behind corn, wheat, hay, soybeans, cotton and rice. The tobacco crop was worth almost $$2.3 billion, representing approximately 2.7 percent of the total for all cash crops and farm commodities.

Estimates of cash receipts from the 1994 tobacco crop were:

Millions of dollars

North Carolina         $871             Florida             $31
Kentucky                615             Connecticut           8
Tennessee               178             Pennsylvania         22
South Carolina          187             Maryland             19
Virginia                147             Missouri             10
Georgia                 133             Wisconsin             9
Ohio                     28             Massachusetts         2
Indiana                  25             West Virginia         5

Tobacco is also grown in Alabama, Arkansas, Illinois, Kansas, Louisiana, Minnesota, New Mexico and the Commonwealth of Puerto Rico.

Manufacturing

Factories
In FY 1992, 114 factories in 21 states had federal permits to manufacturer tobacco products. Facilities were concentrated in the southeast and mid-Atlantic states.

In FY 1992, 272 warehouses in 33 states were authorized to export tobacco. Federal permits to manufacture cigarette papers and tubes were issued to four establishments in three states.

Employment
An estimated 42,900 persons were employed in tobacco manufacturing during 1993 on a monthly average basis, representing hundreds of millions of payroll dollars. The 36,700 employees on the production lines in the average month earns $627.95 a week for a 37.4-hour week.

Of all the manufacturing employees, about 80 percent, or approximately 29,500, were employed by cigarette manufacturers, and earned $769.33 for a 37.4-hour week. Over 88 percent of the production workers, or 26,200 employees, were involved in cigarette-making. The rest worked in other aspects of tobacco manufacturing, including stemming and redrying the leaf.

Retail

Retail
The Bureau of Census, Business Division, estimated in 1992 that 625,000 retail outlets distributed tobacco products.* The following figures have been compiled from surveys and reports by tobacco industry associations and trade magazines to provide an overview of retail outlets and sales.

Retail tobacco shops numbered 3,664 in 1995. Of the retail tobacco shops, 1,020 are retail outlets specializing solely in tobacco products. Tobacco sales at one-half of these stores averaged $500,000 or more in 1995.

In 1995, combined outlets of traditional convenience stores numbered 82,300. Total tobacco sales in these stores equaled $10.9 billion. Of that total, traditional operators had tobacco sales of %5.6 billion, while petroleum marketers had tobacco sales of $5.3 billion.

Cigarette sales from 400,000 vending machines totaled approximately $2 billion in 1994.

Supply Network

Related Industries
Dependence on a complex industrial and service network greatly extended the contributions of tobacco to the nation's economy. The need for farm and manufacturing materials, supplies and equipment, as well as services ranging from transportation to advertising, provided employment for additional millions and added billions of dollars to personal and business income in all the states.

Exports and Imports
The US remains the leading exporter and importer of tobacco. In 1994, the value of US exports of leaf and manufactured tobacco products was $6.7 billion, $1 billion more than 1993. Imports were valued at approximately $853 million, a decline of nearly 45 percent. US tobacco trade contributed more than $5.8 billion to the US trade balance last year. $1.6 billion more than the industry's $4.2 billion trade surplus of 1993. This is a new record.

Leaf
Approximately 196,794 metric tons of unmanufactured leaf tobacco, valued at $1.3 billion, were exported. Leading markets for US leaf were Japan, Federal Republic of Germany, Taiwan, Thailand and Turkey.

Imports of unmanufactured leaf totaled 291,000 metric tons and were valued at $692.7 million, almost a 54 percent decrease in value from 1993.

Nearly 25 percent of the leaf imported, or 72,000 metric tons, was oriental leaf for use in domestic cigarettes. Turkey continues to be the major supplier of oriental leaf, followed by Greece and Bulgaria.

Products
The value of exported manufactured products in 1994 was $5.3 billion, cigarettes accounted for 92.5 percent of this figure. Imported manufactured products were valued at $162 million.

Supply Network

Related Industries
Dependence on a complex industrial and service network greatly extended the contributions of tobacco to the nation's economy. The need for farm and manufacturing materials, supplies and equipment, as well as services ranging from transportation to advertising, provided employment for additional millions and added billions of dollars to personal and business income in all the states.

Exports and Imports
The US remains the leading exporter and importer of tobacco. In 1995, the value of US exports of leaf and manufactured tobacco products was $6.6 billion, a decrease from 1994. General imports decreased from 1994 to 221.4 million pounds. US tobacco trade contributed more than $5.9 billion to the US trade balance, surpassing the record set in 1994.

Leaf
Over 209,560 metric tons of unmanufactured leaf tobacco were exported in 1995, the highest amount since 1992. Leading markets for US leaf were Japan, Federal Republic of Germany, the Netherlands, Turkey and Thailand.

Imports of unmanufactured leaf totaled 291,000 metric tons and were valued at $555.7 million, a 20 percent decrease in value from 1994.

Over 51 percent of the 85,500 metric tons leaf imported was oriental leaf for use in domestic cigarettes. Turkey continued to be the major supplier of oriental leaf, followed by Greece and Bulgaria.

Products
The value of exported manufactured products in 1995 was $5.2 billion, while unmanufactured products were valued at $1.4 billion. Imported manufactured products were valued at $162 million.

Cigarettes
Approximately 231 billion cigarettes were exported in 1995 to 111 countries, up nearly 5 percent in quantity from 1994. They were valued at $4.85 billion. The leading destinations were Belgium-Luxembourg, Japan, Lebanon, Saudi Arabia and Singapore.

About 8.7 billion foreign cigarettes, valued at $71 million, were imported.

Other Products
Cigar and cheroot exports included 102 million units, valued at $8.2 million, down 12 percent in volume and up 2.4 percent in value from 1994.

About 109 million units of foreign cigars and cheroots were imported with a value of $92.1 million. Exports of pipe and roll-your-own tobacco in bulk increased to 91.8 million pounds, with a value of $325.4 million. Exports also included 1.9 million pounds of snuff and chewing tobacco worth $8.2 million, up 21 percent in volume and 5 percent in value. from 1994.

Shipping
98 percent of all tobacco leaf exported was shipped from the following ports in the US:

Port                   Metric Tons         Value (thousands)

Norfolk, VA            133.177               $876,696
Wilmington, NC          30,386                191,119
Los Angeles, CA         19,118                125,771
Charleston, NC          14,537                102,654
New York, NY             2,969                  7,023
Savannah, GA             2,720                 12,669
Philadelphia, PA         1,294                 21,943
San Juan, PR             1,048                 30,982
Miami, FL                  917                  6,581
San Francisco, CA          912                   5824


Cigarettes accounted for approximately 87 percent of the value of manufactured tobacco products exported. Major ports shipping cigarettes overseas were:

Port                   Units (billions)    Value (millions)

Norfolk, VA            86.4                $1,879
Los Angeles, CA        38.1                   793
Seattle, WA            30.9                   685
Savannah, GA           15.8                   223
Wilmington, NC         15.3                   310
San Francisco, CA      11.1                   258
Charleston, NC          9.2                   121
Baltimore, MD           6.8                   145
Miami, FL               3.4                    75
Portland, OR            3.3                   104

Government Receipts from Taxes

Tobacco Taxes
About 31 percent of the receipts from domestic civilian retail sales of tobacco products went to federal, state and local treasuries in the form of consumer excise and sales tax. These totaled close to $15 billion in FY 1995 (ending June 30).

Federal, state and local governments collected over $13.5 billion alone in consumer excises on all tobacco products in FY 1995. Cigarette taxes represent 97 percent, or nearly $13.1 billion.

Federal, state and local excises on other tobacco products totaled $421,500 million.

Since 1863, when cigarettes were added to the tobacco products taxed by the federal government, governments at all levels have collected over $299 billion in tobacco excise tax. Cigarettes have accounted for 96.4 percent of that, or $288 billion.

Federal
In FY 1995, the federal government's share was $5.8 billion. Cigarette taxes accounted for almost 98.2 percent. A total of $166,669 million in taxes on other tobacco products was collected. The federal cigarette excise tax rose from 16 cents per pack to 20 cents on January 1, 1991. The federal cigarette excise tax increased - to 24 cents - on January 1, 1993.

State
All states, and the District of Columbia, impose consumer excises on cigarettes, 43 also tax cigars and smoking or chewing tobacco, snuff or a combination of products.

Total state tobacco consumer excise tax revenue in FY 1995 was $7.5 billion, over 96 percent of which came from cigarette excises. About $304 million was collected on other tobacco products. As of July 1, 1995, the states' cigarette excises range from 2.5 to 81.5 cents per pack, averaging 32.5 per pack.

Local
Tobacco taxes in 451 cities and counties yielded approximately $185 million in FY 1994. Of that amount, $181.2 million, or 99 percent, resulted from taxes on cigarettes. Eighty-two local governments also collected $465,000 from taxes on other tobacco products.

Government Tobacco Programs

Farm Quotas
In 1994, the USDA continued to administer laws to stabilize tobacco production and assure the grower fair prices. Most tobacco farmers, through periodic referenda, favored marketing quotas. Because of the production controls, less tobacco was produced and prices were higher than would be likely without them.

Loans
With grower approval of marketing quotas for a tobacco type, price supports for it were mandatory. Under the program, the Commodity Credit Corporation (CCC) made loans to farmers through their cooperative associations, with the tobacco as collateral. The associations handled and sold the tobacco, repaying loans as the tobacco was sold. The realized cost of the tobacco program since it's start in 1933 was about 0.1 percent of the cost for all 13 farm commodity price support programs. In FY 1995, loan repayments totaled $425 million, while new loans totaled $161 million. The loans are to be repaid with interest to CCC as the collateral tobacco is sold by the associations.

In 1982, Congress revised the price support program, requiring tobacco farmers to pay into a fund to offset any losses, assuring that its continued operation will be at no cost to the American taxpayer.

Grading
USDA's Agricultural Marketing Service (AMS) inspected and graded all tobacco before auction. Government grade standards were the basis for CCC loans. Beginning in FY 1982, tobacco farmers paid user fees for grading. In FY 1995, AMS collected $12.4 million from tobacco farmers, including investments. Daily market news reports informed growers of prices and market conditions. This service cost approximately $1 million in FY 1995.

Tobacco's Contribution to
America's National Economy

In 1996, The American Economic Group (AEG) performed an analysis of the US tobacco industry to determine its impact on America's economy during 1994.

Based on that analysis, it is estimated that the tobacco core sectors in the US economy generated $44.7 billion of the US Gross National Product (GPN) and directly supported 662,402 jobs that produce and deliver tobacco products.
The tobacco industry's estimated spending-induced impact on America's GNP was $64.9 billion - far more than expenditures on tobacco products alone. This impact was generated by tobacco workers' expenditures on goods and services of other, non-tobacco, business sectors throughout the United States.

The AEG study estimates tobacco industry activities in all 50 states produced these contributions:

1994


                               Core and                   Spending-
                               Supplier                   Induced

GNP                             $44.7 billion              $64.9 billion
Jobs                            662,402                    1,150,111
Compensation                    $15.1 billion              $39.1 billion
Federal, state                  $20.6 billion              $15 billion
and local taxes

Sources: American Economic Group, Inc., 15th Street, NW Suite 311, Washington, DC 20005

American Wholesale Marketers Association, 1128 16th Street, NW, Washington, DC, 20036

Convenience Store News, May, 1996

Retail Tobacco Dealers of America, Inc., 107 East Baltimore St., Baltimore, MD 21202

Smoke Shop Magazine, Vol. 23, No. 5, Sept/Oct 1996

The Tobacco Institute: The Tax Burden on Tobacco, Vol. 30, 1995, 1875 I Street, NW, Washington, DC 20006

Tobacco Merchants Association, PO Box 8019, 231 Clarksville Road, Princeton, NJ 08543-8019

US Department of Agriculture: Agricultural Marketing Service and Financial Management Division; Consolidated Farm Agency Service, Economic Research Service, Tobacco Situation and Outlook; Foreign Agricultural Service, World Tobacco Situation; Statistical Reporting Service, Crop Production 1995 Summary, Crop Values 1995 Summary

US Department of Commerce: Bureau of the Census, US Exports EA-622, Census of Agriculture, 1992; Census of Manufacturing, 1992; Census of Retail Trade, 1992; Census of Wholesale Trade, 1992

US Department of Labor: Bureau of Labor Statistics, Supplement to Employment and Earnings

US Department of Treasury: Bureau of Alcohol, Tobacco and Firearms

Vending Times: Census of the Industry, 1995
Web space donated and produced by Fuji Publishing Group
Jump back to the Fuji Publishing Group Home World
Jump back to the Fuji Publishing Group Cigar Page
URL= http://fujipub.com/fot/96profil.html
Copyright © 1997 Fuji Publishing Group All rights reserved.