ITGA Crop Monitor: February 2020_nº1
As it is customary the year begins with the tobacco price negotiations in the South American countries: Argentina, Brazil, and Colombia. Tobacco growers' associations start their meeting with the tobacco companies and leaf dealers. The price of tobacco has been stagnated for quite some time while production costs have evolved in the opposite direction. In the case of Argentina, the increase in production costs has been dramatic. The value of the domestic currency, the peso, has severely devalued in recent years leading to strong inflation which erodes tobacco growers' purchasing power. The peso value fell by 39% from January 2019 to February 2019. The prices for tobacco are defined only at the end of the season and tobacco growers are left to withstand the rising production costs during the entire year.
In anticipation of the negotiation meetings, Misiones' tobacco growers calculated the cost of growing 13,000 plants to be 155,000 pesos (US$ 2,560) ensuring a production cost per kg averaging between 95-100 pesos (US$ 1.57 to 1.65). The associations will negotiate with 130 pesos (US$ 2.15) per kg in mind. This price would ensure that tobacco growers can earn something for the effort they have developed during the year.