Background to the EU tobacco regime

Some € 973 million was spent in supporting the EU tobacco regime in 2001 (2.3% of the EU budget. Greece received € 376 million, Italy € 339 million, Spain € 115 million and France € 77 million. A 3% levy is applied to finance conversion to other crops; this will increase to 5% in 2004. Premiums are paid under a quota system linked to the volume of production, but subject to quality criteria. The EU produces about 348,013 tonnes of tobacco a year (0.4% of EU agricultural output and 5.4% of world production) with 75% of this production coming from a limited number of areas of Greece and Italy. This makes adjustment particularly difficult. In the last decade European producers have switched to specialist varieties, yet 'the market price of tobacco is too low to cover production costs'. As a consequence farmers' profitability is dependent on CAP direct payments. The area under tobacco has been decreasing at a rate of 2.6% per annum, but yields have risen around 35% over the 1990s. Some 212,000 people are employed in raw tobacco production, some 2.4% of the workforce in the EU agricultural sector.Some € 973 million was spent in supporting the EU tobacco regime ..