Changing the Tobacco Culture

With reduced demand for cigarettes, tobacco companies are helping farmers broaden their income base, writes BAIDURA AHMAD.

MORE and more Malaysians have quit smoking over the past decade, thanks to relentless anti-smoking campaigns and periodic increases of duty on cigarettes.

British American Tobacco (Malaysia) Bhd, Malaysia’s biggest cigarette company with a market share of about 63.5 per cent, expects sales volume across the whole Malaysian market to fall between five and 10 per cent this year, from 18 billion sticks in 2004. The company ascribes the forecast decline in sales volume on significantly higher cigarette prices due to a steep tax increase last September.

Other reasons include the Government’s policy to reduce the output quota of tobacco leaves, implementation of marketing reforms to suit the requirements of the Asean Free Trade Area (Afta), the World Trade Organisation and the dumping of smuggled cigarettes.

While most health-conscious Malaysians rejoice in this knowledge, there is a group of people who are not too happy about it; the 12,000 or so tobacco farmers and their families nationwide who have been dependent on the crop for their livelihood all their lives.

That is why another cigarette company, Philip Morris (Malaysia) Sdn Bhd (PMM), is looking into ways to help the tobacco grower- curers (they not only grow the tobacco, they and cure it as well) who supply tobacco to the company survive the reduced market demand. It does this by making sure the farmers plant only the best quality leaves, teaching them some of the most advanced planting and harvesting techniques. PMM also encourages the farmers to plant other cash crops to supplement their incomes.

PMM, one of the country’s leading exporters of tobacco products, recently took the media on a tour of selected tobacco farms in Kelantan. PMM holds more than 17 per cent of the local cigarette market with its brands like Marlboro, L&M and Next.

Mukhtar Taib, in his 60s, is one of the many farmers in Kelantan who works under Philip Morris’s guidance. His 20,000 tobacco plants in Bachok, a tobacco farming community half-an-hour’s drive outside the state capital, Kota Baru, looks fresh and healthy with leaves as wide as an adult’s arm.

“I have put five children through university from the money I have earned selling tobacco leaves for the past three decades. Nowadays, I have two workers as none of my children are interested in taking over the farm,” Mukhtar tells visiting reporters at his farm.

Nearby is his typical kampung house, a single-storey wood and concrete structure, with his 20-something-year-old Japanese car parked outside. He pointed out the modest surau that he and the villagers are in the midst of building, using money collected from the villagers and whatever he earns from his tobacco farm.

Kelantan and Terengganu are the two major tobacco-growing areas in Peninsular Malaysia, with about 14,615ha or 92.7 per cent of the total cultivated area. Ninety one per cent of the tobacco farmers are male, and nine per cent are women. The family sizes of tobacco farmers are estimated at about 4.7 members in Kelantan and 6.1 members in Terengganu.

The tobacco industry is big business. In 2002, the Government collected RM1.8 billion in import duty, excise, sales and corporate taxes from the RM4.5 billion industry. Tobacco accounted for some RM700 million in exports in 2002. Local production also helped the country to save RM300 million in foreign exchange. The industry benefited 118,000 individuals – farmers, factory workers, processing workers, distributors and retailers. Most of the proceeds from sale of processed tobacco is enjoyed by the growers.

A study conducted by a local university indicated that the nett farm income of farmers ranges between RM2,059.39 and RM2,604.20 per month. These farmers not only produce green tobacco leaves but also process the leaves for local cigarette-manufacturing companies.

This year, the Government has reduced the tobacco production quota for local demand to 10.3 million kg from 13.2 million kg last year, and 15 million kg in 2003. This 10.3 million kg tobacco production can be translated to between RM140 million and RM150 million in earnings for the farmers.

Of the overall quota, PMM hopes to achieve its share of 2.7 million kg, PMM manager of Leaf and Agronomy, Abdul Adziz Hasan, says. Of the 2.7 million, 1.7 million kg of the tobacco is expected to come from grower- curers from the Peninsula while the rest will come from growers in Keningau in Sabah.

Abdul Adziz says that over the years, PMM has used the plantation techniques and practices developed by its headquarters in the US to guide local farmers. One of the most recent programmes is the Good Agricultural Practice Programme (GAP) which is designed to bring innovation to the tobacco farming community.

With GAP, local farmers such as Mukhtar improved their tobacco yield and quality at a reduced cost. It also helps prepare the farmers for competition in the more liberalised Afta environment in 2010. Several neighbouring countries, such as Thailand and Indonesia, have already listed tobacco and related products under Afta’s Common Effective Preferential Tariff scheme to sharpen their competitive edge.

“Under the GAP, we give farmers free fertilisers and insecticide and teach them innovative ways to produce good crops. Last year, we spent more than RM3 million for this purpose,” Abdul Adziz says.

The insecticides used are neem tree-based, which reduces the chemicals that go into a leaf. Under an integrated pest management scheme, the farmers and growers are taught that they should check for pests before they spray the insecticide. The previous practice was to spray religiously every five days, a process which also affected the health of the farmers.

Another environment-friendly effort is to do away with plastic sacks to transport the cured leaves to PMM’s processing plant in Pengkalan Chepa. An open bale system, where the leaves are left uncovered and just tied up with jute rope, was introduced. These processes also make sure that there are less foreign ingredients (bits of plastic) in the tobacco, which means a better grade and more money to the farmers and curers.

Since last year, about 1,100 farmers and 3,000 grower-curers have benefited from the GAP, and PMM has already collected about 120,000kg of tobacco from the peninsula and 220,000kg from Sabah.

PMM also actively promotes crop rotation so farmers can gain additional income, maximise land utilisation and have better, more environment- friendly pest control. Working with Mardi (the Malaysian Agricultural Research and Development Institute), PMM gets the farmers to plant banana, corn and neem trees (even going to India, where neem are plentiful, to learn the ropes), rear goats and start fish ponds. In hilly Keningau, the premium quality fragrant rice is planted.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui recently said that tobacco planters and curers who have ventured into integrated crop farming, particularly kenaf (the fibre of an East Indian hibiscus plant used to make rope) cultivation, need not worry about a market for their new crops.

Several private companies involved in the automotive industry have expressed their intention to forge cooperation with the National Tobacco Board (LTN) to use kenaf in sample testing for fibres, Chin said.

He said the Government, through LTN, is identifying several other crops to be integrated with tobacco to ensure that the income of tobacco farmers is not affected by the decreasing demand for tobacco leaves. The crops included padi, maize, sweet corn, watermelon, groundnuts and herbs.