Almost as important as cheese for export

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Switzerland is an important location for the tobacco industry. All major international companies – Philip Morris, British American Tobacco and Japan Tobacco International – have their research, administration and production headquarters here.

There are no official figures on how much money the tobacco sector contributes to Swiss value creation. A 2017 study by the accountants KPMG came to an estimate of 2.1 billion francs for cultivation, production and distribution. However, Swiss demand could very well be satisfied without Swiss tobacco: the degree of self-sufficiency is less than five percent.

Three quarters are exported

There is therefore little left in the country. Three-quarters of the approximately 25 billion cigarettes produced annually in Germany are exported. Each year, Switzerland exports tobacco products worth just over half a billion Swiss francs. That is almost as much as the export of cheese.

Swiss tobacco is mainly used as a so-called filler tobacco, which is mixed with other aromatic varieties for the cigarette or cheroot. The market value is correspondingly low: the price that purchasing cooperative Inlandtabak (Sota) pays to tobacco growers consists mainly of excise duties on cigarettes.

The cultivation is far removed from a free market economy: Sota buys the entire harvest from the farmers at fixed prices and sells it to the tobacco multinationals. While the Sota pays up to 17.20 francs per kilo, depending on the quality, it receives only a fraction of this price from the cigarette manufacturers. The smokers pay the difference – without the taxes it wouldn’t be worth growing tobacco in Switzerland.

Healthcare costs run into the billions

In Germany, more than 60 percent of the cigarette price consists of excise duties and taxes. By far the largest item of this is tobacco excise duty, of which 2.1 billion francs flowed to the AHV in 2020. In addition, more than 13 million Swiss francs in taxes annually go to two completely different funds: one co-finances tobacco cultivation in Switzerland (Sota), the other is dedicated to tobacco prevention.

Of course, the health consequences of consumption also have a huge economic impact. Medical treatments and loss of income cause annual costs of 3.9 billion Swiss francs. And according to the Federal Office of Health (BAG), an average of 26 people die every day from smoking – 9,500 a year.

Source:Blick