More Ease of Access for Croatian Tobacco on Foreign Markets?

Lauren Simmonds

Welcome news for Croatian tobacco producers as a new law being prepared will enable them to organise their sales themselves.

As Marija Brnic/Poslovni Dnevnik writes on the 7th of August, 2018, long-term lobbying by tobacco producers for the Croatian system of production finally adjusts to the market has given rise to a positive result, as a proposal for a new tobacco law should be put in place, which is expected to put a spring in the step of this sector.

At this stage, the Ministry of Agriculture has expressed no desire to talk publicly about the draft law, but will unofficially confirm that the final liberalisation of the market is set to follow, a process in which two companies, Hrvatski Duhani (TDR owned) and Agroduhan (under the ownership of the state), have played leading roles.

This liberalisation will happen within a framework that is respected in other countries, because of the desire for protection from the black market, this production is, as a rule, under special supervision in all countries. However, Croatia is far more confined than when compared to other, especially Western European countries, as the two companies mentioned are only registered in the official register as tobacco processors, and thus the only ones with whom the producers could contract production.

The current law on tobacco, says Željko Aragović, President of the Croatian Association of Tobacco Producers, left no room for producers to trade freely with their production across the EU and beyond.

This is what is now being negotiated with the Ministry of Agriculture, with attempts to solve it through the establishment of producer organisations. They would, according to Aragović, be registered in two models, either as co-operatives or as stock companies. However, the special surveillance that applies to this segment, which is especially sensitive to the black market, would remain in force because, as Aragović points out, tobacco producers and processors are part of an extremely important legal and controlled regime of labour done through contracts, but the expected changes in legislation open up a much wider range customers of raw tobacco to them, and thus the possibility of obtaining significantly better purchasing prices.

Despite the media perception often showcased by the global anti-smoking campaign, tobacco is still very much sought after, both on the European and on the global market. Domestic producers are also convinced of the need for the final “transition” of this production system, given the fact that Europe itself faces a shortage of tobacco, with 50 percent of the demand being covered by imports from third countries. The demand for tobacco is still high in Arab countries, and Croatian producers believe there is a lot of room for improvement when it comes to the organisation of the system which will enable the survival of that economic branch, a branch in which Croatia has a long tradition.

As the existing system has had an overall negative impact on tobacco production, producers say that official statistical data shows that production has almost halved over the last ten years, and about 600 family farms have been lost, and the value of production has decreased by about 70 million kuna.


Click here for the original article by Marija Brnic for Poslovni Dnevnik


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