Tobacco farmers considering switch to high income crops

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Tobacco farmers are considering switching to high income crops ahead of a total tobacco ban that is expected go into effect in 2020. Ahead of the ban the tobacco industry has conducted a study into alternative crop models and the report of the study has been presented to the Minister of Industry and Commerce Rishad Bathiudeen yesterday (June 26).

The report titled “Farmer Perspectives on Proposed Tobacco Growing Ban and Opportunity to Diversify” was presented to the Minister by Dr. Chatura Rodrigo of Green Space Consultancies (GSC). According to Minister Bathiudeen, about 200,000 farmers are directly involved in tobacco cultivation and they will require to change to alternative crops in 2020. Importation of cigarettes, and tobacco also will be banned from 2020. Around 500,000 are employed in this sector directly and indirectly.

Minister Bathiudeen said the proposed new crop models by Dr. Chatura Rodrigo are commendable since they recommend high income export crops such as Okra for these tobacco farmers so that their high (profit) margins shall continue and shall bring positive benefits to the exports sector as well. “Therefore we believe that this ‘crop switching’ will have only minimal effects if these models are used by tobacco farmers,” the Minister said.

The research, carried out by Green Space Consultancies proposes that the ban is implemented over a four-year period so that tobacco farmers can transition to other cash crops. Tobacco expert panel at yesterday’s event has indicated that Tobacco is considered as an Industrial Crop, more than a commercial crop and since the bulk of the harvest is used for nicotine products, it immediately ends up in industrial/machine processing, unlike many other commercial crops.

Among all types of full time farmers in Sri Lanka, tobacco farmers are one of the most profitable, earning regular margins of 20 percent or higher, according to the industry.A tobacco farmer representative at the session said that many leading tobacco farmers have well-established value chains and this could be easily used in diversification to alternative, high margin crops. Dr. Chatura Rodrigo said the farmers who grow tobacco for cigarette manufacturing are used to forward contracts with guaranteed prices and a market place; therefore, they expect a value chain that provides them the same conditions.

He added that however, farmers believe they need support from the government in identifying feasible diversification options. “Government must play a lead role in this regard to identify suitable crops and provide financial assistance,” he said adding that evidence-based policy making is needed.

The GSC�s research report proposes four models of diversification of Lankan tobacco farming ahead of 2020 ban; tobacco-cash crop model for export oriented value chains, tobacco-cash crop model under Good Agricultural Practices (GAP) value chain for EU, tobacco-organic cash crop value chain aimed at the export market, and tobacco specific fruits aimed at local manufacturers under guaranteed prices. The report recommends that the following three cross cutting themes could be used to make the above four models even more profitable-incorporating animal husbandry, Gliricidia cultivation and aquaculture/ornamental fisheries.

ccording to Minister Bathiudeen more than 3300 metric tons of tobacco are produced in Sri Lanka. When it comes to cultivation, only a very small percentage of lands are used -at 0.07 percent of all agricultural lands only- by tobacco, a factor which helps to speed up any proposed diversifications.

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