Amid a shortage of cigarettes in Argentina after factory closings due to the coronavirus pandemic, the black market cigarette trade has surged -- an illegal economy with relatively low risk and high return.
In the weeks after Argentina put in place a mandatory quarantine on March 20, contraband cigarette seizures have spiked, La Nación reported.
From April 25 to May 5, authorities seized 100,000 packets of cigarettes worth an estimated 10 million Argentine pesos (nearly $150,000), according to official data published by La Nación. The amount equated to one-fifth of all contraband cigarettes seized in 2019.
Several seizures -- large and small -- have occurred in provinces along Argentina's northern border with Paraguay. On May 7, authorities in Misiones seized 1,000 packets hidden in an ambulance. One day later, in nearby Formosa, styrofoam packages labeled as medicine were found to conceal 500 packets of cigarettes.
Earlier in the month, on April 24, authorities in Formosa uncovered 34,000 packets wedged in a truck's door panels, Argentina’s Ministry of Security reported.
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According to a 2019 report by the Anti-Contraband Association of Latin America (Asociación Latinoamericana Anticontrabando - ALAC), illegal cigarettes accounted for approximately 12 percent of local cigarette sales in Argentina, Clarín reported.
The smuggling of tobacco products in Argentina increased nearly 250 percent between 2017 and 2018, officials said.
InSight Crime Analysis
Although Argentina has historically been home to a large market for contraband cigarettes, the current shortage is creating fresh opportunities for smugglers.
A local official in the province of Formosa, one of Argentina's main gateways for both contraband cigarettes and marijuana, told InSight Crime that this illegal economy is attractive because it carries far fewer consequences.
“If you are caught trafficking drugs, you face around four years in jail, while smuggling cigarettes can put you behind bars for a few days, with a fine," the official said.
The same trafficking routes largely serve for both cigarettes and marijuana -- moved across the river on Paraguay's southern border into the provinces of Formosa and Misiones. Even though traditionally crime groups trafficking cigarettes and marijuana are not the same, there have been cases where both were found.
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Paraguay cigarette production spurs much of the black-market trade. Neighboring Brazil is also a primary destination.
It is estimated that nearly three-quarters of illegal cigarettes consumed in 16 Latin American countries originate in Paraguay, according to a study published in Foreign Affairs. The country is estimated to produce some 65 billion cigarettes a year but consumes only around 2.5 billion.
Former Paraguay President Horacio Cartes has been at the center of the illegal cigarette trade. His family’s company, Tabacalera Del Este, is one of the main sources of smuggled tobacco, particularly to Brazil and Argentina. It owns brands, such as Rodeo, that are commonly smuggled.
The illicit trade also cheats governments in the form of lost tax revenue. Argentina's cigarette makers have even warned that the production shutdown will result in massive losses.
With an estimated 5.4 million smokers in Argentina, further shortages of locally produced cigarettes will only make the black market trade in tobacco trade more lucrative.
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