The tobacco agriculture policy in Ukraine

Krasovsky K.S.

Alcohol and Drug Information Center, Kiev, Ukraine

Introduction. Raw tobacco production in Ukraine was very high in the 1980s. It declined in the early 1990s and especially in the late 1990s – the average annual production in 1996-2000 was less then 3,000 tons. In January 2001, the parliament adopted the law, which stated that every tobacco factory should use a minimal proportion of Ukrainian grown tobacco. The law was lobbied by the All-Ukrainian Association of tobacco growers, but was attacked by the tobacco industry.

Aim. Since both sides defend only their vested interests, we try to consider the situation both from the points of view of public health and state revenue.

Methods. We compare import raw tobacco policy in different countries and considered consequences of the import raw tobacco duty increase in Ukraine.

Results. While Ukraine proclaims to protect domestic tobacco growers, import tariff for raw tobacco in Ukraine is very low. It is very favorable to transnational tobacco companies, which control most of tobacco market in Ukraine, but does not protect local tobacco growers, state revenue, nor public health. From the health perspective higher tariffs are seen as preferable to lower tariffs to the extent that the higher import duties may lead to increased production and sales costs (and hence increased prices) for tobacco products.

Conclusions. To protect domestic tobacco growers, it is reasonable to establish a high specific duty for foreign tobacco to discourage the import of cheap tobacco from other countries. The Law provision on the obligatory content of domestic tobacco in cigarettes produced in Ukraine is unjustified from the point of view of international law, national economics, and public health. A substantial increase in raw tobacco import duties is the best solution for the national economy and public health, while it is definitely against the vested interests of tobacco industry.