15 December 2917:
Indonesia tobacco farmers are in a quandary. They do not grow enough tobacco to meet local cigarette production. Tobacco companies import large quantities of leaves (about 50 percent) to produce cigarettes for local consumption as well as for export. However, the government has recently drawn up regulations restricting leaf imports.
Over the years, leaf imports and exports have steadily increased (see Table), but Indonesia has remained a net importer of leaves. Land devoted to tobacco growing constitutes a minute 0.4% of agricultural land. Leaf prices are subject to quality which is determined by weather conditions and growers have remained poor.
Indonesia imports tobacco leaves from the top leaf producing countries (see Table): The biggest volume of 50,700 tons from China, followed by 4,300 tons from Brazil and 4,000 tons from the USA.
Previously, tobacco industry groups criticised cheap leaf imports and tobacco control measures for hurting their industry. As a way to protect farmers, in September this year, the Ministry of Trade introduced import restrictions on tobacco leaf, called Regulation on Provisions on Tobacco Import (Permendag No. 84 of 2017). However this has drawn protests from industry groups.
Similar old arguments are being spewed. The Indonesian Tobacco Farmers Association (APTI) claims 6 million workers will be affected – 6 million workers is an often cited figure to detract attention from the 6 million who die because of tobacco use. Indonesian Clove Farmers Association (APCI) criticized the regulation claiming it will potentially reduce the productivity of the tobacco industry.
GAPRINDO (Association of Indonesia White Cigarette Manufacturers) which routinely blames tobacco control for problems faced by the industry, now provides three problems that domestic cigarette industry face, none of which has anything to do with tobacco control: lack of raw material because local tobacco supply is not enough, tobacco quality that does not meet brand requirements, and the local variety of tobacco that does not match factory requirements.
GAPRI (Federation of Associations of Indonesia Cigarette Companies), wants the government to postpone the import regulations claiming it must prioritize reward instead of punishing the industry. GAPRI is silent on the trillions of Rupiah in taxes which goes towards helping tobacco growers annually.
Tobacco growing is not as lucrative as the industry portrays it to be. According to a recent study by the World Bank Global Tobacco Control Program, tobacco farming is not economically viable to most Indonesian farmers. Findings of the study show:
- Poverty is widespread among tobacco farmers – 72% of tobacco farmers are poor compared to 11% of the general population in the country;
- Food insecurity was common among tobacco-farming households – more than 60% of households reported insufficient food for the household;
- Former tobacco household’s total income were higher ($3,797) than current tobacco household’s total income ($2, 921).
While many countries are moving away from tobacco growing, the Indonesian Ministry of Agriculture is encouraging tobacco farmers to increase tobacco production to reduce the import of raw materials for kretek cigarettes. Currently Indonesia’s tobacco import is around 150,000 tons per year costing around Rp50 trillion.
Indonesia is moving in the opposite direction despite all the problems associated with tobacco growing and trapping farmers in a cycle of poverty. Farmers who have shifted from growing tobacco to other crops are earning more and doing much better.