Criminal syndicates involved in Melbourne’s tobacco war are increasingly growing their own crops in secret farms across Victoria as law enforcement agencies crack down on the lucrative black market trade.
The farms, which syndicate members and facilitators lease from unsuspecting owners, act as insurance for cigarette shipments intercepted by border officials and provide a steady supply of “chop chop” to feed back into tobacco shops.
Police loading tobacco bales seized in Delahey during raids across the state in July.Credit: Victoria Police
Victoria Police’s Detective Inspector Graham Banks, the head of Taskforce Lunar, which targets organised crime groups in the illicit tobacco trade, said criminals were turning to tobacco farming because of its low cost and very high returns.
Tobacco is an extremely efficient crop to grow. With the right soil and weather conditions, a seedling can grow into a mature plant ready for harvest in just a few months.
The Australian Taxation Office estimates a large-scale farm can yield upwards of 25,000 kilograms of green leaves, which can be dried into approximately 3000 kilograms of “chop chop” or rolled into hundreds of thousands of individual cigarettes.
“There’s obviously good money to be made in selling it for ‘chop chop’ or making their own cigarettes. They’ve worked out that that is an effective way of making significant money,” Banks said.
Aerial image of an illicit tobacco farm in regional Victoria.Credit: Australian Taxation Office
“Some of them are quite invested in it. Most of what we see is connected to a particular person. They need to be to get access to that distribution route.”
Police uncovered a seven-acre tobacco crop at the rear of a property in Arcadia, south of Shepparton, in March that had yielded more than four and a half tonnes of tobacco – the equivalent of almost $9 million in lost government revenue.
Less than two months later, in May, officers found two large kilns they allege were used to dry tobacco and almost two tonnes of dried tobacco leaf in a home in Undera, about 40 kilometres north of the Arcadia farm.
Tobacco is an extremely efficient crop that can reach maturity in a matter of months.Credit: Australian Taxation Office
A separate series of raids in July uncovered evidence of recent tobacco harvests at three properties in Landsborough and one in Barkly.
Crops have also previously been found in Pentland Hills, Bunbartha, Katunga and Nathalia.
However, it is unclear how big the illicit farming industry is, since the Australian Taxation Office, the agency responsible for regulating it, does not keep data on the number and location of the farms.
In its 2021-22 tax gap report, the ATO estimated the illegal production of tobacco in Australia accounted for about $400 million in lost excise.
However, that figure is likely to be an underestimate given the explosion of the black market in the two years since the data was collated.
The ATO declined a request for an interview, and when presented with a list of questions about the illicit tobacco industry, it told The Age it did not comment on organised crime syndicates.
“We are committed to targeting growers and sellers of illicit tobacco to disrupt distribution to the retail sector and ensuring they face the consequences of their actions,” ATO assistant commissioner Jade Hawkins said in a statement.
“Engaging in the illicit tobacco trade is a serious offence and is far from victimless. These crimes are calculated, deliberate and take vital funding from essential community services such as healthcare and education.”
The ATO hasn’t issued any licences to grow tobacco in Australia since 2006 and none to manufacture it domestically since 2015.
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