TI JanFeb2016 • TPI Q1

Issue link:

Contents of this Issue


Page 61 of 67

TPI 12 Q1 2016 2015 crop. Here is what is known as of January 2016: • Only 25 percent–about 2,140 tons from a total of 8,560 tons–of 2015 Indonesian crop production of both Besuki Dekblad and Omblad is free from the Mount Raung ash. • Most of the TBN Crop is burned and not useable. • The additional culling of affected leaf from salvageable leaf has delayed preparation of leaf for the export markets as well as the notification of season pricing. • Hellmering Kohne–the marketing and sales arm of TTN (leading exporters of TBN) has decided not to purchase any tobacco from the 2015 Indonesian crop. • Some customers (like J. Cortes, Agio and other leading EU cigar manufac- turers) will skip the 2015 Indonesian crop altogether. • There is not much uncommitted 2014 crop inventory remaining and available. The pricing of what is salvaged from the 2015 Indonesian crop will be high. Overall at this stage it looks like no ma- jor cigar manufacturer will touch the 2015 Indonesian crop. The Indonesian cigar in- dustry (Besuki and TBN) has lost up to 80 percent of the crop. Production of cigar leaf costs much more than cigarette styles and requires significant investments. This volcanic eruption will continue to have a significant financial impact on all Indone- sian producers, farmers and their fami- lies. It can be appropriately called "The Indonesian Tobacco Tsunami of 2015." The only question is do cigar companies have the required inventories to carry them through to the first quarter of 2017. Mount Raung was certainly not in their strategic plans at the time budget-driven inventory draw-downs were adopted. As the saying goes: Aim for the best, factor in the worst. Our sympathies to the Indonesian cigar tobacco farmers. TPI { Volcano Destroys Indonesian Crop } The effects of the Mt. Raung eruption will be felt by the Indonesian tobacco community for years to come. Culling affected leaf from salvageable leaf may help, but it delays exports and the major manufacturers are still avoiding the 2015 Indonesian tobacco crop. LEAF CHEMICAL CHARACTERISTICS • Top 2 Leaves–Filler. Higher nicotine • Next 2 Leaves–Binder. • Next 3 Leaves–Wrapper. • Last 2 Leaves–Filler. Lower nicotine Leaf grading is based on color, length, veins and holes and directly impacts price. Add volcanic ash on the tobacco plants and the results are devastating to leaf quality.

Articles in this issue

view archives of TOBACCO INTERNATIONAL - TI JanFeb2016 • TPI Q1