JOHANNESBURG – The country’s tobacco industry on Friday welcomed the launch of the Black Tobacco Farmers Association (BTFA) and described the move as a step towards forcing government to act against illicit cigarettes.
Tobacco Institute of SA chairman Francois van der Merwe said the institute viewed the formation of the BTFA as a necessary step in ongoing fights against escalation of illicit cigarettes in the country.
Van der Merwe said the cigarettes have cost farmers and the fiscus billions in earnings.
“It’s just an indication that those farmers can see that their livelihoods are going down the drain because the government is not doing enough to clamp down on the illicit trading of tobacco,” Van der Merwe said.
This week economic consultancy firm Econometrix warned the Treasury yesterday against increasing excise tax as this would lead to South Africa further haemorrhaging billions in lost revenue.
The company said that recent excise rises combined with rampant illegal cigarette trade had seen the South African Revenue Service (Sars) miss its targets.
Econometrix, in a study commissioned by British American Tobacco South Africa (Batsa), said tobacco excise revenue has dropped R1.94 billion in two years, despite successive increases in tax rates.
Econometrix chief executive Dr Azar Jammine said that the government had been raising excise taxes every year for several years now, but in recent years, this had not resulted in more money for the fiscus.
“Treasury’s estimation of tobacco excise tax income has also been significantly off for the past two years,” Jammine said. “The gap between expected and real tobacco excise income was an astounding R1.65bn in 2016/17, which increased to R1.71bn in 2017/18.”
BTFA founding member and chairperson Ntando Shadrack Sibisi said the industry was losing R8 billion to the trade of illegal cigarettes every year.
Sibisi called for an immediate crackdown on illegal cigarettes, saying: “Not only are our members at risk but 10 000 jobs in the broader tobacco farming sector are at risk as the legal cigarette market declines rapidly.”
The Mpumalanga tobacco farmer said the BTFA was aimed at empowering black tobacco farmers through training and mentorship programmes; improving living and working conditions in farms; and advocating against the illegal cigarette trade.
“The future of farming relies on a symbiotic relationship between farmers, government and all industry stakeholders,” he said.
The BTFA, he said, would give the farmers a formal voice to engage with government.
“It’s a wonderful development and I will give them all the support that I can to make sure that they have a platform to talk to government,” he said.
“This will give them a voice to say to government you’ve got to protect us or else our future will just disappear.”
He lashed out at illicit tobacco traders for killing the industry, saying: “Those guys don’t buy even 1kg of their leaves in South Africa. They don’t care about our industry.”
This month the Upington police confiscated illegal cigarettes valued at over R364 000 during a raid at a business premise in Keimoes.