Chinese City Successful in Industrialization of Tobacco Production

Source from:  Oriental Tobacco newspaper 04/26/2004

Liuyang City? a major tobacco-growing region in south central China's Hunan Province? has been successful in the industrialization of tobacco production over recent years. [b]TRINITY TOBACCO PRODUCTION MANAGEMENT SYSTEM[/b] With the support of Changsha Cigarette Factory, which is one of the 36 key Chinese tobacco manufacturers, Liuyang City created a so-called trinity tobacco production management system integrating the role of the tobacco manufacturer, the government and the tobacco company in 1998. Through several years of great efforts, tobacco production has developed extraordinarily rapidly. Over the past five years, Liuyang City Tobacco Company has turned itself into a powerful enterprise with 520 million yuan (62.6 million U.S. dollars) in fixed assets, from what it was a poorly managed enterprise with less than 10 million yuan (1.2 million U.S. dollars) in fixed assets and over 9 million yuan (1.08 million U.S. dollars) in debts. In 2003, Liuyang City Tobacco Company earned 100.68 million yuan (12.1 million U.S. dollars) in operating profits, including 94.85 million yuan (11.4 million U.S. dollars) in manufacturing profits. In the same year, the average income of tobacco growers almost doubled to 1,200 yuan (144.5 U.S. dollars) from the level of 632 yuan (76 U.S. dollars) in 1997. In inspecting tobacco plantations in Liuyang in February, a top leader of the State Tobacco Monopoly Administration (STMA) called the tobacco-growing region of Liuyang a system for leaf tobacco production in China. The 1998 creation of the trinity tobacco production management system ushered in a period of rapid development of tobacco production in Liuyang. Under the system, Changsha Cigarette Factory, Liuyang City government and Liuyang City Tobacco Company cooperated in establishing high-quality leaf tobacco production plantations in the city. For Liuyang City government, it took the development of high-quality leaf tobacco as a priority project in reforming the local agricultural system, as a new point of economic growth and as a poverty-alleviation project. In an effort to turn Liuyang into a base of guaranteed supply of leaf tobacco as a main raw material for its highly lucrative cigarette production, Changsha Cigarette Factory ? the producer of the highly popular Baisha brand family ? extended great support to Liuyang City in terms of technology, funding and marketing. It has invested over 18 million yuan (2.16 million U.S. dollars) in establishing Liuyang City Tobacco Science Research Institute, and has designated more than a dozen highly qualified researchers to Liuyang to provide services of research and development. Meanwhile, Liuyang City Tobacco Company has played a leading role in the development of high-quality leaf tobacco. It has taken the development of high-quality leaf tobacco as a vital and priority project, with the leadership doing all what it can to promote the development of this project. In implementing the project of developing high-quality leaf tobacco, the three parties have cooperated with one anther closely, and the trinity tobacco production management system has functioned in a well-coordinated and highly efficient way. As a result, Liuyang City Tobacco Company managed to extricate itself from a difficult period and entered a new phase of rapid development. In 2001, Liuyang City Tobacco Company succeeded in presenting Heyuan brand leaf tobacco ? the first high-quality leaf tobacco developed in Hunan Province. From 1999 to 2001, Liuyang City Tobacco Company was successively rated as a national-level model unit in leaf tobacco production. In 2002, Liuyang City was rated as a model county-level city in leaf tobacco production. The rapid development of tobacco production has brought about quick growth of socio-economic efficiency in Liuyang, with the tobacco manufacturer, the government, tobacco growers and the tobacco company in an all-win situation. The STMA has rated the trinity tobacco production management system of Liuyang as the Liuyang Model for structural reform of the tobacco industry of China. [b]TOBACCO PLANTATIONS INTEGRATION SYSTEM[/b] Before the unprecedented success, the people of Liuyang do not feel contented. Rather, they are making greater efforts to win more success in reform and development. In 2002, Liuyang City developed the so-called tobacco plantations integration system while sticking to the trinity tobacco production management system. The tobacco plantations integration system gives way to autonomy of tobacco growers. It provides for the integration of tobacco plantations in rural areas under the management of different administrative authorities to establish large tobacco-growing plots each with a unit areas under the management of different administrative authorities to establish large tobacco-growing plots each with a unit area of 2,000 to 6,000 mu (133 hectares to 400 hectares), in disregard of the definition of administrative boundaries. Instead of being appointed by administrative authorities, leaders in charge of tobacco production in integrated tobacco plantations are democratically elected from among village officials or outstanding tobacco growers. For their parts, local township governments and tobacco monopoly administrative authorities extend technical and policy guidance to tobacco production in integrated tobacco plantations, which are under unified planning, are covered by unified technical schemes, are operated in a unified way, are given unified leaf tobacco purchase prices and are under unified management. [b]ESTABLISHMENT OF ASSOCIATIONS OF TOBACCO GROWERS[/b] On the basis of developing the trinity tobacco production management system and the tobacco plantations integration system, Liuyang City has also developed the system of establishing associations of tobacco growers, in light of the local realities. In Liuyang City, the associations of tobacco growers are established by tobacco growers on a voluntary basis and are managed by themselves. The establishment of associations of tobacco growers has contributed to upgrading the form of organization of tobacco growers, realizing large-scale, industrialized and specialized tobacco production, and promoting both the technical level and efficiency of tobacco production in the region. So far in 2004, on the basis of its successful experience in developing and applying and the trinity tobacco production management system, the tobacco plantations integration system and the system of establishing associations of tobacco growers, Liuyang City has established an agricultural industrialization company mainly intended for tobacco production, in an effort to increase the efficiency of agriculture and raise the income of farmers in Liuyang. On the basis of ensuring the interests of farmers, Liuyang City plans to spend the next three years exploring the establishment of a new system for sustainable development of tobacco production capable of realizing industrialized, large-scale and intensive tobacco production. Through general adoption of the market principle, specialized division of labor, large-scale production and centralization of the right to the use of land, Liuyang City also plans to further optimize the structure of resources for agricultural production, accelerate the innovation and application of technology and continue to improve the quality of leaf tobacco products, increase the efficiency of tobacco production and raise the income of farmers, in creating even more successful new systems for tobacco production for Liuyang, Hunan Province and even the whole of the national tobacco industry. Enditem