Банкеръ Weekly

Briefs

SCANDAL SMELLING OF BULGARIAN TOBACCO

The amendments to the Regulations for Application of the Tobacco and Tobacco Products Act, approved by a governmental decree in the last days of former premier Kostov's cabinet, injure producers' interests and lay a trap for the new Agriculture Minister Mehmed Dikme, the Association of Tobacco-Growers in Bulgaria alarmed.
The document, published in the Official Gazette Issue No 62 of July 2001, is considerably different from our expectations in its part regarding the quality requirements to the product in the purchase of this year's crop of broad-leaved Oriental tobacco, the Association's Deputy Chairman Vesselin Todorov said at a press conference. Surprisingly for producers, the former government has approved without any consultations with the interested sides amendments to the so far effective regulations, introducing higher qualitative requirements for the purchase of the new tobacco crop. The former governors pointed out as a motive the necessary synchronization of Bulgarian legislation with the requirements of the European Union and international standards. Until last year leaves over 20 cm of the broad-leaved Virginia brand were qualified as first class, and the average purchase price for the brand was BGL2.57/kg in 2000. The higher criteria to be applied during the new purchase campaign for broad-leaved tobacco, starting on August 10, will reduce prices by some BGL0.56/kg on average, producers' estimations show.
Till last autumn both traders and tobacco-growers were using the requirements of the Bulgarian State Standard (BSS) to determine the quality of the product. The suspension of their application created necessity for setting new qualitative standards. However, former agriculture minister Ventsislav Vurbanove and his officials delayed the working out of draft amendments to the Regulations for Application of the Tobacco and Tobacco Products Act. Thus, just a few days before the start of the purchase campaign, the agreement reached between producers and buyers in the end of 2000 for applying the BSS in 2001 as well, was practically changed.
The Association of Tobacco-Growers will insist on postponing the enforcement of the new Regulations by a year, and on gradual introduction of international standards. The proposal is to be discussed by the Management Board of the Tobacco Fund with the Ministry of Agricuture.
Private tobacco-growers suffer additional losses from the comparatively low minimum purchase prices which are not based on a market principle, but are set through administrative channels. Under the currently effective administrative procedures, the difference between the real production price and that at which tobacco is bought, is covered by the Tobacco State Fund, which releases subsidies to producers. Farmers say that scheme also injures their interests and they will propose amendements to the Tobacco and Tobacco Products Act, under which they should be getting the equivalent of the production price, and the State should be paying compensations to traders if it wants to keep the prices of tobacco products.
It's intolerable to pursue a social policy by cigarettes'
prices at the expense of the heavy labour put by some 600,000 people whose fortune depends on tobacco-growing, Vesselin Todorov commented to the BANKER weekly. Cigarettes' prices should go up by some 40-50% in order to avoid leaving the profits for traders alone, he said.
We aren't going to sell a single kilo of tobacco until the problem regarding the new qualitative requirements is settled, Ivanka Gencheva, a producer from the Pleven region said.
Bulgaria imports more broad-leaved tobacco than is grown in the country, figures of the National Statistics Institute show. The European Union has set a quota of 70,000 t for Bulgaria, but last year's output did not exceed 30,000 tonnes.
The Association of Tobacco-Growers will insist in front of the new Government for working out an overall strategy for the development of tobacco-growing in Bulgaria as soon as possible, in order to establish a fair economic balance in the relations between the State, traders and producers. This is the only way to implement European standards in domestic tobacco-growing.

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