China Aims to Increase Tobacco Farmers’ Income

Tobacco production in China, rooted in the vast rural areas, is both the foundation of the country’s sustained and healthy development of its tobacco industry as well as being an important means of support for farmers in poverty-stricken areas.

The State Tobacco Monopoly Bureau (STMA) has always attached great importance to the stable and sustainable development of tobacco production. Through expanding the channels for tobacco farmers to increase income, promoting the transformation and development of tobacco farmers, and implementing special subsidy policies, the industry has steadily raised tobacco farmers’ income by increasing tobacco inventory and controlling tobacco-planting areas.

China has seen a gradual loss of tobacco farmers. This is because farmers have faced challenges from both internal and external factors, such as an increasingly stringent tobacco control environment, the reduction of cigarette consumption, the reduction in the overall volume of cigarettes, tobacco crops being vulnerable to natural disasters, difficult land circulation, no fields to plant tobacco, etc., sounding the alarm for the sustainable development of the tobacco industry.

Another large factor having an impact is China’s excessive tobacco inventory, which restricts production and affects the stable development of the Chinese tobacco industry. Since 2013, the industry has gradually implemented total volume control, and the country’s tobacco purchases have reduced from 54.88 million loads at the peak of 2012 to 37.65 million loads in 2017, a decrease of more than 30%. Currently, due to a variety of factors, the tobacco stock of continues to increase, with the shelf-life increasing from 37 months to 43 months. According to the work deployment of the National Tobacco Work Conference in 2018, the country’s tobacco production and purchase plan this year will be 35 million loads, which is 6 million loads fewer than the previous year’s plan. This reduction in volume is the most since the total macro-control of tobacco production in 2013.

At the same time, more than 70% of the tobacco production areas in China are distributed in poor and border areas. The cultivation of tobacco is the main economic source for the local people, playing a very important role in local poverty alleviation.

The implementation of various STMA policies have achieved excellent results for the sustainable development of tobacco production up to now.

In 2017, under the premise of increasing farmers’ income, the tobacco industry vigorously promoted the comprehensive utilization of facilities resources, diversified operations and assisted industrial development, and actively expanded the channels for tobacco farmers to increase income. These efforts have enabled tobacco farmers to gain a total income of RMB56.5 billion from tobacco production in the past year, with tax increased to RMB11 billion. The average annual income of tobacco farmers was RMB49,100, up by RMB1900 year-on-year. It is estimated that tobacco farmers will increase their non-tobacco income by RMB14.8 billion, effectively offsetting the decrease in revenue due to the tobacco reduction plan.

Last year the industry further intensified macroeconomic regulations and control over tobacco work and implemented a special subsidy policy for reducing the area of tobacco cultivation in impoverished counties, aiming to further increase precision assistance. Based on the 2017 tobacco planting area plan and as per the State Council’s Thirteenth Five-Year Plan for Poverty Alleviation, China’s tobacco industry will subsidize RMB400 per mu (1 mu=667 sq.m.) for cultivation areas in impoverished counties to help farmers adjust to the industrial structure and consolidate the results of poverty alleviation. The policy will remain unchanged for three years and will be carried out after the field transplanting this year.

In addition to the overall layout of and efforts made by the Chinese tobacco industry, tobacco production areas were allocated in accordance with STMA policies with a view towards active exploration and innovation. For this, a number of advanced demonstration areas in Guizhou and Sichuan (typical tobacco-producing regions of the country) have merged, contributing to the accumulation of valuable tobacco farming experience and growing numbers of tobacco farmers.

In order to strengthen the management of and assistance to tobacco farmers, improve their technical level, and stabilize their development, the tobacco industry will advance the income increase of tobacco farmers to a strategic height. In the past, the industry’s support for increasing the income of tobacco farmers focused on the construction of infrastructure, such as repairing water cellars and building mountain roads. A lot of manpower and material resources were invested to solve many problems such as irrigation of tobacco fields and transport of tobacco, benefiting local agriculture. At present, tobacco growers should pay more attention to the conditions created for them to increase their income and consciously participate in the process.

China Aims to Increase Tobacco Farmers’ Income

China Aims to Increase Tobacco Farmers’ Income

Production control will help increase farmers’ income

At the national meeting on the income increase of tobacco farmers in 2017, Guizhou Provincial Bureau demonstrated its efforts in promoting tobacco farmers’ income increase.

Guizhou serves as the second largest tobacco-producing region in the country. To increase the income of farmers, the province has explored and implemented a new method by relying on the main business and diversified development. It also determined the income increase of tobacco farmers by local conditions, established a technical system, built sales channels, and improved work systems. As a result, the province achieved remarkable results. With 470,000 loads reduced in tobacco production in 2017, Guizhou Tobacco strived to realize RMB6.42 billion in tobacco planting income, RMB360 million in cash subsidies for special distribution, and RMB320 million in diversified income. The total income of tobacco farmers reached  RMB7.1 billion, and the average household income was RMB72,500.

Tobacco businesses in Sichuan province have also made efforts to make good use of planning resources, tobacco policies, and donated funds to help the majority of tobacco farmers shake off poverty. In the tobacco-producing areas, comprehensive utilization of infrastructure such as nursery sheds, intensive barns, and tobacco farm machines have been strengthened. In the crop rotation period and slack winter season, efforts have been focused on increasing the multiple cropping index of tobacco fields, extending the industrial chain, and expanding diversified operations so as to open up new channels to allow for the farmers’ income increase. In 2017, the average tobacco-planting scale of each household in Sichuan province reached 15.4 mu, the total income of tobacco farmers was RMB5 billion, and the average household income was RMB61,000; of which non-smoking revenue was RMB760 million, an average household income increased by RMB8,900.

From the history of China’s tobacco development, the overproduction in 1997 left a profound lesson for the industry. It took nearly a decade for the entire industry to restore tobacco production to normal levels. Due to the lack of supply of high-quality raw materials for many years, the development of cigarette industry enterprises has also been affected, causing both industrial and commercial parties a heavy price. From the perspective of long-term development of the industry, total production control will become the new round of normal development. Affected by the tobacco control situation, the future production and volume of cigarettes will not be greatly improved. With the diversity and personalized development of cigarette consumption, the proportion of fine cigarettes and short-sized cigarettes will gradually increase, and the consumption of tobacco will further decrease. The use of tobacco is monotonous. Once the tobacco manufacturing enterprises fail to take it, they will inevitably affect tobacco production and the interests of tobacco farmers. From a long-term perspective and the actual needs, the work of controlling the total amount must be carried out unremittingly. Therefore, safeguarding the promotion of tobacco farmers’ income will be one of the key jobs for tobacco in the future. China Tobacco expects to better solve the related problems caused by the reduction of tobacco farming areas through releasing more policies to introduce more practical methods to increase farmers’ income.