Tobacco farmers are losing out to illicit cigarettes

(File, AFP)
(File, AFP)

Groblersdal – Seven years ago, maize farmer Ntando Sibisi switched to growing tobacco, but now fears this sector is under threat from the illegal trade in cigarettes.

“South Africa is losing, from production to sales, because the illicit cigarettes are dumped here and sucks our money without any benefits for us,” he said in Groblersdal on Wednesday.

Sibisi started farming maize and other crops in 1993. In 2010, he was enticed to join the tobacco market, which he said changed his life for good. He is part of a group of farmers who supply the Limpopo Tobacco Processors and British American Tobacco.

However, he said many farmers would find themselves out of work if efforts were not made to stop the trade in contraband cigarettes, which are sold for less than regulated cigarettes produced locally.

Sibisi was at the announcement, in Groblersdal, of an effort to stop the trade in contraband cigarettes.

More than R10bn lost

“South Africa has lost more than R10bn over the past five years just because these companies don’t pay taxes,” said Christo van Staden, managing director of Limpopo Tobacco Processors.

South Africa produces 14.5 million tons of tobacco annually which accounts for 80% of national production. The remaining 20% is distributed by illicit suppliers.

"Government is suffering a massive loss of revenue as manufacturers are not paying taxes, and foreign illicit suppliers avoid duty fees. It has got a bigger effect on growth of not only tobacco but all other commodities that farmers grow. 
 
“If this process does not stop, it will eventually end the tobacco industry in South Africa. There won't be tobacco farmers anymore. It affects everybody, government will lose revenue.”

Limpopo economic development MEC Seaparo Sekoati said the illicit trade had a huge impact on the economy as dealers avoided trade rules.

However, police say the battle against cigarette smuggling is being won.
 
Lieutenant-Colonel Moatshe Ngoepe said efforts were being made to stop the influx of contraband cigarettes at ports of entry and across the country’s borders.

“It was very rife in the past, but we are dealt with smuggling,” he said.


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