A political economy of the tobacco supply chain in an Eastern Mediterranean country: The case of Lebanon

TL;DR

This paper explores the tobacco supply chain in Lebanon, highlighting issues like monopolization and ineffective policies, and suggests reforms to improve market competitiveness and sustainability.

Contribution

The paper provides a novel analysis of the political economy and supply chain dynamics of the tobacco industry in Lebanon.

Findings

Lebanon's tobacco market is characterized by monopolization and conflicting stakeholder interests.

A lack of national tobacco strategy leads to ineffective policies and poor agricultural practices.

Proposed reforms include dissolving the state monopoly and introducing tax and legal changes to promote competition.

Abstract

The literature on tobacco has traditionally focused on health effects, public policies for tobacco control, and smoker profiles. However, there is a notable gap in understanding the supply chains and industry practices within the tobacco market. This paper addresses this gap by examining the structure of the tobacco market in Lebanon. Using an exploratory qualitative research approach, this paper maps the tobacco supply chain in Lebanon and investigates the interactions among various stakeholders, including key policymakers, regulators, researchers, and industry experts, as well as their underlying interests. Lebanon is a compelling case study due to its high smoking prevalence, the presence of a state-owned tobacco monopoly (the Regie Libanaise de Tabacs et Tombacs (Regie)), and the ongoing financial crisis that has affected various sectors, including the tobacco industry. The findings reveal three key issues: a complex political economy centered around monopolization and conflicting interests, the absence of a clear national strategy on tobacco leading to ineffective policy formulation, and inefficient tobacco cultivation practices requiring reforms for sustainable agricultural development. To address these issues, it is proposed to foster a more competitive and revenue-efficient tobacco market through the dissolution of the Regie monopoly via horizontal and vertical integration. This includes adopting an excise-specific tax on domestically manufactured tobacco goods and optimizing sales taxes on locally traded items. Secondly, expanding antitrust laws to encompass the tobacco industry and introducing legislative measures for fees and taxes are recommended to create an enabling environment for competition and revenue generation. Thirdly, reforming tobacco cultivation practices requires abolishing the current cultivation licensing framework, offering financial compensation to existing license holders, and supporting farmers in transitioning to alternative crops.

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