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WNTD 2017 – Tobacco Farming: Need for a Shift Towards Alternative Crops

Economic and Health Policy Research, American Cancer Society

In recent years, there has been a marked shift in tobacco leaf production from some higher-income countries to lower-income countries in Africa and parts of Southeast Asia. This transition has occurred mainly due to combinations of factors including vigorous promotion by the tobacco industry, support from governments, a perceived lack of alternative livelihoods by some farmers, and faith in the economic benefit of growing tobacco. For years, tobacco industry lobbyists and tobacco control advocates have argued about the economic importance of tobacco farming for these developing economies. For many countries that are heavily dependent on tobacco leaf exports, such as Malawi, tobacco growing is a substantial or even crucial part of their foreign exchange earnings. In other countries, such as Kenya, where tobacco leaf production accounts for only 0.03% of the GDP, cultivation nonetheless has significant economic impact in the few districts where it is concentrated. In both scenarios, tobacco growing takes on political importance as a result of its economic status. In most of these countries, however, little is known about the actual lives of these tobacco farmers. Accordingly, recent studies conducted by the Economic and Health Policy Research program at the American Cancer Society (ACS), in partnership with the International Institute of Legislative Affairs (IILA) in Nairobi, the University of Zambia School of Medicine, the Centre for Agricultural Research and Development in Lilongwe, and Action for Economic Reforms in Manila, focus on the livelihoods of tobacco farmers in Kenya, Zambia, Malawi, and the Philippines. In addition, in partnership with the World Bank and SurveyMeter, the ACS team is now examining similar issues in Indonesia. Although these countries rely heavily on agricultural production and/or exports, individual-level surveys have shown that the farmers themselves rarely profit from the cultivation and sale of tobacco.

Across many African countries, hundreds of thousands of tobacco farmers cultivate tobacco leaf on small plots of land, and most live in poverty. Usually the entire family, including women and children, help in land preparation, growing, harvesting, curing, and selling this highly labor-intensive crop. There is an enormous disconnect between what farmers earn for selling their crop and the amount of tobacco leaf needed to make a cigarette. In 2015, one kilogram of tobacco leaf earned a farmer between one and two US dollars on average. That amount of leaf can be used to make more than 50 packs of cigarettes that will sell for many times what the farmer receives. To make matters worse, many farmers sell their harvest under a contract system that favors the tobacco leaf buyers and often leaves the farmers’ households in chronic debt. Leaf buyers of all types—including multi-billion-dollar leaf-buying enterprises as well as the large tobacco companies themselves—generally provide key agricultural inputs (pesticides, fertilizer, herbicides, etc.) to the farmer, the cost of which is later subtracted from the sale price of the harvest. Since these companies typically dictate the cost of the inputs, grade the quality of the leaves, and then decide the price of the harvest, the farmers are at a disadvantage. Often, farmers end the season in debt and must grow tobacco again the next season to satisfy their creditors. This vicious and unjust cycle is driving the engine of tobacco farming in many countries, often among the least developed in the world. In addition to this often-lopsided relationship that favors tobacco firms, farming households must work disproportionately more hours cultivating tobacco leaf compared to other crops, and as a result miss out on other economic opportunities.

For example, a survey conducted in Kenya by ACS and the IILA revealed that tobacco farmers’ perceptions of their profits are much larger than their actual profits. These perceived profits are a simple calculation of the revenues from selling leaf minus direct costs such as physical inputs and transportation of the leaf to market. In contrast, actual profits incorporate a minimum value of the household labor used to produce the tobacco. Focus group discussions revealed that most farmers simply do not factor in the time and effort spent by household members to grow tobacco leaf. This situation is concerning because it leads most farmers to perceive their profits to be much larger than they really are, and potentially to make poor economic decisions. In the case of Kenya, while the perceived profit for contract farming is suggested to be $253 per acre and that for independent farming to be $393 per acre, these profits quickly evaporate when labor costs are incorporated, leaving contract farmers with a net loss of $14 per acre and a profit of a mere $41 per acre for independent farmers.

Solving the problem of tobacco farming is a world development issue. Farmers are often extremely poor. There are also issues of gender equality that are intrinsic to tobacco farming. Although the process of tobacco production requires enormous effort from both males and females of a family, it is the male who most typically controls the income in most countries.

Tobacco leaf production is rarely economically viable for these farmers, yet there are forces pulling them towards this unprofitable endeavor. Although farmers  often have a strong desire to shift to alternative crops, there are several hindrances. First, there are issues with a lack of market access and established value chains for alternative crops. Second, these farmers lack available credit to pursue alternatives, which the tobacco companies are seeking to address through contracts, but in a way that often perpetuates inequities. Third, there is a lack of business education, which is demonstrated by the fact that farmers place little or no value on their labor. Fourth, governments offer little or no help to educate farmers to grow other crops – most governments have reduced or even eliminated vital agricultural extension services. Shifting to alternative crops will be a challenge, and will not alleviate all of the challenges farmers face, but with a concerted and supported effort from governments, it is possible to begin to address the supply side of tobacco control and to improve the lives of these farming households.

 


This post was drafted by Jeffrey Drope with contributions from Michal Stoklosa and Amitoch Kohli

ACS Staff

Economic and Health Policy Research, American Cancer Society

The Economic and Health Policy Research program seeks to address cancer worldwide by conducting research on the economic and policy aspects of risk factors to cancer, including in the areas of tobacco, nutrition, physical activity and harmful alcohol use. We also examine issues around the economics of health equity, including access to care.

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