The Cost of Smoking: How the Farmers Are Left Fuming

By webadmin on 11:35 pm May 28, 2009
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Hera Diani

Bojonegoro, East Java. The clock struck an hour past noon; the field was sweltering hot, without the hint of a breeze. But the tobacco farmers from Samberan village, a three-hour drive from the East Java capital of Surabaya, still went out to work the second shift that day.

The month of April is when the farmers start the five-month-long process of farming tobacco.

“It’s much easier to take care of a baby than to handle a tobacco plant,” said Iskak, who has been growing tobacco for more than 30 years and owns less than a hectare of land.

Tobacco is high maintenance, he said, and it takes several processes to get it to harvest, from land tilling to nurturing seedlings for a month before they take root. The plant requires just the right amount of water and is highly sensitive to the weather, especially rainfall patterns. Climate change has created headaches for the farmers, causing some of their crops to fail and degrading the quality of the surviving plants.

Then there’s the numerous attacks by pests in the past few years. “It used to be only caterpillars, but now there are fleas as well,” said Kadi, another farmer. “And insecticide just doesn’t work.”

On top of these troubles, after decades of growing and supplying tobacco to cigarette producers in Bojonegoro, including Gudang Garam, Dji Sam Soe, Wismilak and 369, the farmers seem little better off.

Insufficient Incomes

Government officials and tobacco companies argue that millions of people are dependent on the industry for their livelihood, but research shows that the farmers’ incomes are far below the national average and many of them, stuck in a cycle of poverty, seem eager to switch crops.

Tobacco use has increased almost sixfold from 35 billion cigarettes consumed in 1971 to 202 billion in 2004. However, land for tobacco cultivation only increased from 170,000 hectares in 1971 to 200,000 hectares in 2004.

Less than half of the 466 farmers in this village of 2,000 people own their land; the rest are peasants, earning Rp 30,000 ($2.85) or less a day. Many farmers are still living in homes with dirt floors.

Even those who own land say they wind up with meager profits. Farmers need to have at least Rp 18 million to plant a hectare of tobacco, Iskak said, with the money sometimes obtained by taking out a loan.

“A hectare of land produces about 1.5 tons, and if the quality is good, it’s sold for about Rp 13,500 a kilogram, or a total of Rp 20 million,” he said. “That only leaves us Rp 2 million profit, or Rp 400,000 a month.”

Big producers like Gudang Garam hold sway in villages like Samberan, leasing the farmers the land, lending them fertilizers and seeds, and deducting money from their crop payments.

But farmers say they have no say in the selling price and are at the mercy of the companies in other ways. Last year, Gudang Garam declined to buy the entire harvest of tobacco in Samberan, saying the quality was not good enough. The farmers were then forced to sell their tobacco for only Rp 3,000 to Rp 4,000 a kilogram, far below the market price, to traders who apparently resold the supply to the tobacco factories in the area, also below market price.

Last year’s losses forced Abdul Somad, a middleman between the farmers and the factories, to quit. He had received fertilizer and seeds from Gudang Garam to distribute to the farmers and later collected the harvested tobacco, receiving a commission from the company.

“I collected tobacco produced by 60 farmers, covering 25 hectares. Last year was tough because the company didn’t want to buy tobacco, leaving me with millions of rupiah in losses,” he said, adding that he would rather find a new job.

Not Worth the Risks

Farmers in other regions face the same situation, according to recent research by the Demographic Institute at the University of Indonesia’s School of Economics. Indonesia has 198,000 hectares of tobacco plantations, the vast majority in East Java, Central Java and West Nusa Tenggara, where the research was conducted.

The study shows that most farmers have worked for an average 16.82 years, farming 7.14 hours a day, but only earn Rp 413,374 a month — less than half the national minimum wage of Rp 883,693 a month. Women and children also work on the plantations and receive smaller wages.

Most of the farmers, regardless of whether they own their land, stay in modest houses with either dirt or cement floors.

“Such a low income is not worth it compared to the risks taken by farmers, like climate change, pests and price decreases,” said researcher Abdillah Ahsan. “Buyers also decide the prices and quality of tobacco and there is no standard set on them.”

There are about 40 grades of tobacco, according to the research, but no set determining standard, so it’s up to buyers to decide. In many cases, he said, they manipulate farmers by saying the tobacco they sell is of the lowest grade.

Farmers also complain, Abdillah said, that the price of fertilizers, insecticides and seeds are rising but the price of harvested tobacco remains stagnant. The maximum price is Rp 25,000 a kilogram.

Widening Wealth Gap

The farmers’ lack of fortune is in strong contrast to those of the cigarette giants. PT Hanjaya Mandala Sampoerna reported Rp 9.10 trillion in sales in the first quarter of 2009, while Gudang Garam had Rp 7.65 trillion in sales.

Cigarette czars Michael Hartono and brother Budi Hartono, producers of Djarum, are the richest men in Indonesia with a collective wealth of $1.7 billion, earning them a place on Forbes magazine’s global billionaires list for 2009.

The Indonesian Clove Cigarette Producers Association and Gudang Garam could not be reached for comment.

Tulus Abadi, from the Indonesian Consumers Foundation, said new regulations on tobacco farming were urgent given how it’s practically controlled by the cigarette industry without any intervention by the government.

“Tobacco farmers have only been used as politicking tools and [ammunition] against tobacco critics,” he said. “The cigarette industry always manipulates the number of farmers.”

Figures from the Central Statistics Agency (BPS) in 2005 showed that there were 683,000 tobacco farmers, 258,000 people working in the cigarette factories and some one million more involved in distribution and trade.

But Industry Minister Fahmi Idris said that at least 12 million people depended on the cigarette industry for their livelihoods, and cited this as the reason why it was difficult for Indonesia to sign the World Health Organization’s Framework Convention on Tobacco Control, which provides a framework for controlling tobacco production and sale. State revenues from the tobacco industry totaled Rp 52 trillion in 2006, making it Indonesia’s largest taxpayer.

Indonesia joined 167 other countries in signing the treaty in 2004, but remains one of only four nations that have failed to ratify it. Without ratifying the treaty, there are no limits on tobacco production, while farmers remain powerless and have no bargaining power in setting tobacco prices.

“Cigarette producers can stock up tobacco for two years, unlike farmers. When asked to pay a higher price, they say they won’t buy the tobacco and that importing it is much cheaper,” Tulus said.

About 35 percent of Indonesia’s tobacco supply is imported, mainly from Zimbabwe.

Difficult Switch

The Demographic Institute’s research shows that about 65 percent of tobacco farmers want to find other jobs or businesses, even when they own their own land.

In Samberan, some farmers have already tried planting other crops. Last year, Bojonegoro district launched a project for farmers to plant melons and corn. The harvest was good but no marketing strategy was in place, so they couldn’t sell their produce at premium prices. Some melons and corn were never sold and rotted.

“There is also a problem with a lack of infrastructure, particularly water. So when the dry season comes, we can only plant tobacco,” Iskak said, adding that fertilizer was also scarce because most supplies were going to newly established plantations in the area.

The farmers’ dependency on cigarette factories remains high. Many women work as cigarette rollers, earning Rp 20,000 a day.

“If the cigarette factories are closed, for example, the economy of this village will subside and the unemployment rate will soar as tens of thousands of people in this district work at the factory,” said Azis Zainul Abidin, a teacher in Samberan who helped with the Demographic Institute’s research. “But farming [other crops] can be empowering; it can replace the cigarette factory in the economy.”

Abdillah urged the government to issue policies that can improve farmers’ welfare, for example, by providing alternative jobs. These, he said, can be combined with an increase in the tobacco excise tax and the additional state revenue can be allocated to help farmers switch to other crops.