Regulatory Offer championing Reducing Flame(s) Risks from Cigarettes Chapter 2 2.1 Introdution
The Canadian tobacco production consists of tobacco growers, in-between tobacco marketers, cigarette and other tobacco-product manufacturers, wholesalers and distributors, and importers. This chapter provides a common overview of the manufacture, with principal stress on the tobacco products industries and certain focal point on cigarette manufacturers.
This chapter also presents a baseline replica of the price configuration of a symbolic cigarette manufacturer. This mock-up desire wait on as a foundation prep following examination of the payment of complying with a cigarette ignition propensity measure.
The tobacco products industries gathering includes manufacturers of cigarettes, cigars, fine-cut tobacco and tobacco leaf. In 2002 and 2003, cigarettes accounted prep nearly 85 percent of the trade assembly's home shipments. During slate year 2002, cigarette manufacturers produced adapproaching 41.3 billion cigarettes, and sold adapproximately 40.7 billion. Of this aggregate, 38.2 billion, or 94 percent, were sold domestically; the weigh was exported or sold duty-free.
Tobacco-product manufacturing represents a truly little section of private job, but is a elevated value-added function with admore well-spring paid employees. Show 2-1 shows that production trade was 2,135 persons in 2001, or adapproaching lone percent of sum (total) manufacturing occupation in that year. Producing workers in the production earned mean annual wages of more than $66,000, or almost 80 percent more than the mean manufacturing worker. Non-manufacturing employees in the tobacco consequence industries earned adabout 41 percent more than their trade counterparts, with usual salaries of more than $81,000 per year.
Display 2-2 (next servant) depicts the trade graphically. In putting together to the tobacco growers, a few other industries furnish cigarette manufacturers with inputs representing cigarettes, including reconstituted tobacco products, daily, filters, chemicals, packaging supplies, and machinery. The cigarettes manufactured domestically, along with imported cigarettes, are then sold to wholesalers that passenger) liner the output to a number of retailers all (the way) through the country. Each of the greater sectors relating to cigarette manufacturing is described in more element in the following sections.
Sources: Rothmans Inc., 2002, , online at http://www.rothmansinc.ca/eng_annual.asp;
Condition Canada, Canadian Tobacco Society Stock Exchange Division in Canada (in percent), 1980-2001 , at one's disposal online at http://www.cctc.ca/cctc/EN/industrywatch/faqs/canadian-tobacco-company-market-share-canada-1980-2001/aspect?set_language=en&cl=en;
Physicians championing a Smoke-Free Canada, , at online at http://www.smoke-free.ca/Function/business_retail.htm;
Production Canada, , to hand online at http://www.ic.gc.ca/canadian_industry_statistics/cis.nsf/idE/ cis3122empE.html
During the 1990's, Canada produced an norm of 71,700 tons of tobacco per year, and imported an norm of 9,880 tons of tobacco per year. Tobacco exports averaged 25,380 tons per year between 1991 and 2001.However, new figures mark that Canadian tobacco manufacture dropped to 49,000 tonnes harvested in 2002.
Well-spring: Statistics Canada.
Ontario is Canada's largest tobacco manufacturer, accounting prep nearly 90 percent of Canadian tobacco producing (notice Present 2-3). Quebec and Prince Edward Islet develop most of the outstanding tobacco. The preponderance of this tobacco producing consists of flue-cured varieties, but Ontario produces a short total of unilluminated tobacco as well. This unilluminated tobacco is blended with the other varieties to furnish the peaceful savour that is lone to Canadian cigarettes.
Three tobacco marketing boards undertaking as intermediaries between Canadian tobacco growers and tobacco manufacturers:
The Ontario Flue-Cured Tobacco Growers Marketing Scantling is the largest of these organisations, representing nearly 1,000 producers. The other two organisations stand (in) for about 100 producers and 60 producers, respectively. L'Business des Producteurs de Tabac Jaune du Quebec is the lone middleman in Quebec.
The tobacco-marketing boards modulate manufacturing of tobacco and equip a licit avenue via which growers may vend their crops. At the outset of each growing time, these intermediaries conform upon a desired manufacturing even along with a objective cost championing private sales. In latest years, this private cost has been set down adapproaching 50 percent higher than the earth exchange expense.
Tobacco manufacture declined during the delayed 1970's and adbeforehand 1980's, but remained admore immovable in the 1990's (Note Show 2-3 aloft). However, as eminent formerly, it has begun to turn down (at) one time more, to 49,000 tonnes in 2002.At the identical interval, the charge of tobacco has steadily risen above the years, as can be seen in Show 2-4.
Fountain-head: Statistics Canada.
Cigarette manufacturing requires a replete sweep of producing factors, including machinery, travail, vivacity and materials. Aside from tobacco, the primary matter components of cigarettes incorporate papers, filters, chemical additives, flavourings, reconstituted tobacco products, and packaging. As is discussed in Chapter 3 and Chapter 4, championing the purposes of analysing the impacts of a cigarette ignition propensity measure, the most consequential of these other inputs is daily.
Schweitzer-Mauduit Supranational, Inc., an supranational corporation with headquarters in the Unified States, is a diversified manufacturer of bonus talent papers, and is the sphere's largest supplier of charge papers to the tobacco industry. Schweitzer-Mauduit supplies adapproaching 90 percent of the newspaper required near Canadian cigarette manufacturers. The fellowship's chief cigarette tabloid grinder is located in Spotswood, Original Jersey, while strand operations that provide heart to the Spotswood quern are located in Winkler, Manitoba. Schweitzer-Mauduit produces PaperSelectä championing reduced ignition propensity (Rend) cigarettes that are currently marketed in the Common States beside Philip Morris. Not single does it keep the capabilities to turn out Philip Morris' Tear (apart tabloid, but Schweitzer-Mauduit also has a letters patent of its own championing Rend daily in both the Unified States and Canada. Schweitzer-Mauduit's apex rival in the Canadian cigarette-paper exchange is the Trierenberg Assembly, which supplies nearly 10 percent of the Canadian Stock Exchange. Trierenberg has also developed Asunder) products.
Three Canadian manufacturers govern Canada's cigarette Stock Exchange, accounting championing more than 98 percent of private sales:
Queenly is the largest producer, holding close up to a 70-percent allotment of the market. Rothmans, Benson & Hedges Inc. and JTI-Macdonald Corporation possess Stock Exchange shares of adapproaching 17 percent and 12 percent, respectively. Present 2-5 depicts the market-place shares of the three larger manufacturers. Other, medium-sized competitors embody Large Tributary Enterprises, Tabac ADL Tobacco, and Bastos du Canada. There are also a few smaller competitors such as Lanwest Technologies, Family Tobacco, Lepine, and Tabac Tabec that develop low-cost cigarette brands.
There are nearly 40,000 tobacco-product retailers in Canada. These retailers embody grocers, supermarkets, convenience stores, little self-governing shops, medicament stores, and gas stations. Apportionment costs, which incorporate the costs of wholesalers and retailers, account for championing 12 percent of sum (total) sales. In aggregate, retailers deserve almost $700 million a year in mark-up proceeds, and wholesalers be worthy of almost $140 million a year, which translates to almost $3.00 per carton and 60 cents per carton, adseparately.
Fountain-head: Condition Canada.
Sole a hardly companies introduce cigarettes prep traffic in Canada and these imports explain prep less than single percent of the Canadian cigarette market. In 2002, this represented on 200 million cigarettes with a dollar value of seal to $20 million. The most in favour imported brands embody Gauloise, Gitane, Davidoff and Fantasia.
The share of Canadians who smoke has declined on the years, as seen in Present 2-6. As of 2001, almost 22 percent of the people smoked, including close by 20 percent of the aggregate female inhabitants and 24 percent of the aggregate virile populace.
Origin: Statistics Canada.
Although cigarette sales possess fallen in late years, Display 2-7 shows that the Canadian cigarette production serene produces between 40 and 50 billion cigarettes each year. Moreover, tobacco sales furnish great revenues because of taxation to the federal and regional governments. As seen in Display 2-8, close by 44 percent of the terminating retail expense of cigarettes in 2003 was owing to local taxes, while another 30 percent was owing to federal taxation.
Origin: Statistics Canada.
Fountain-head: Statistics Canada.
To take apart the striking of an ignition propensity criterion on cigarette manufacturing costs, a baseline representation of the outlay form of a characteristic cigarette producer was developed. Show 2-9 presents this mock-up.
The figures in Show 2-9 present that totality manufacturing costs (i.e., earlier operating profits and taxes) championing a symbolic cigarette industrialist are nearly $5.70 per carton. Of this a add up to, materials comprise the larger price constituent, while (hard) work constitutes a somewhat little part of costs, reflecting the as a rule automated properties of cigarette production. Purchased leaf tobacco is the largest unmarried outlay input at $1.15 per carton, or more than 20 percent of totality costs. Handling, bear and storage costs prep tobacco at the ahead (of time) situation of manufacturing are also momentous, at nearly 17 percent of totality costs. Ensuing steps in the manufacture operation - tobacco processing, stopple making, and cigarette making - together account for representing adapproaching 19 percent of sum (total) costs. Packaging and shipping costs substitute for 14 percent of the aggregate, while prevailing function expenses (which comprise structure depreciation and ad(up) above) explain representing the extant 30 percent.
The representation estimates operating profits of $4.43 per carton. Way, operating profits replace nearly 44 percent of the before-tax wholesale charge of a carton of cigarettes. When taxes are entranced into give a reason for, nevertheless, the expense charged beside manufacturers - an estimated $10.12 per carton - represents single 19 percent of the estimated wholesale charge of $53.01 per carton.
Appendix A provides history data on the replica's event.
(1) Materials price includes riddle materials, adhesives, newspaper wraps and flavourings.
(2) Materials price includes daily, tipping materials, starch, adhesives and ink.
(3) Materials outlay includes packets, lamination, mouldable Sometimes, rend band, adhesives, cartons and cases.
(4) Includes Local Tobacco Levy, Federal Excise Levy and Federal Excise Burden.
5 Rothmans, Inc. 2003 Annual Description . Figures prep the year ending Step 31, 2003 arranged based on billions of sticks and equivalents shipped domestically.
6 Statistics Canada, "Producing and Character of Tobacco Products," Catalogue no. 32-022-XIB, December 2002. Exports and duty-free sales are not reported singly prep the total year because of confidentiality requirements of the Statistics Action.
7 Agriculture and Agri-Food Canada, 2002, .
9 Statistics Canada, 2001,, Census Agricultural Zone, and Census Dividing.
10 Agriculture and Agri-Food Canada, 2002,.
11 Agriculture and Agri-Food Canada, 2002,.
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