Low Pricing Dampens Chinese Farmers' Enthusiasm for Growing Tobacco

Source from:  First Financial Newspaper 03/21/2005

Chinese farmers are today less enthusiastic for growing tobacco than they did a few years ago, because of the government's adoption of a new policy to raise grain prices that has made tobacco prices in China comparatively low. Of the 22 tobacco-growing provinces or provincial-level regions in China, Guangdong Province in south China may have been the first to fulfill its target of signing contracts with farmers for the growing and supply of leaf tobacco for the current agricultural year issued by the State Tobacco Monopoly Administration (STMA). [img border=0 hspace="4" vspace="4" align="left" src=http://www.tobaccochina.com/english/picture/050315gw.jpg] March 15 was the last day set by the STMA for all the tobacco-producing regions to fulfill their targets of signing contracts with farmers for the growing and supply of leaf tobacco for the current agricultural year. But sources with the tobacco industry of China estimated that Guangdong might have been among the few tobacco-producing regions that have fulfilled their targets by the deadline. Statistics from China National Leaf Tobacco Corporation show that by March 10, the tobacco monopoly administrative authorities in all the tobacco-producing regions in China had signed over 2.33 million contracts with farmers for the growing and supply of leaf tobacco, accounting for 65.7 percent of the expected number of contracts. Under the contracts signed, the farmers concerned are obliged to grow 10.168 million mu (677,867 hectares) of tobacco in 2005. Guangdong Province, Shaanxi Province in northwest China and Sichuan Province and Chongqing City in southwest China are relatively swift in fulfilling their targets of signing contracts with farmers for the growing and supply of leaf tobacco in 2005, having completed the signing of over 85 percent of the expected contracts. Liaoning Province in northeast China, Fujian Province in southeast China, Guangxi Region, Guizhou Province and Yunnan Province in southwest China, Hunan Province in south central China, Shanxi Province in north China and Hubei Province in central China have completed the signing of over 60 percent. The provinces of Shandong in east China and Gansu in northwest China have done less than half. The other eight tobacco-producing regions in China have not reported the signing of contracts for the year. In a recent interview with Chinese news media, Chen Jianjun, director of Tobacco Research Institute of South China University of Agriculture, said that the fulfillment of the targets of signing contracts with farmers for the growing and supply of leaf tobacco over the recent two years has been worse than previous years. The most importance cause for this is the increase of grain prices that has made tobacco growing less lucrative, which has contributed to dampening the enthusiasm of farmers for growing tobacco, according to Chen. As a result, some farmers have shifted to growing grain, making the fulfillment of targets for signing contracts for tobacco growing more difficult, he said. Even a top leader with Guangdong Provincial China Tobacco Industry Corporation, which has well fulfilled its target of signing contracts with farmers for the growing and supply of leaf tobacco by the March 15 deadline, told Chinese news media: "Over the recent two years, tobacco growers in Chinese, like those elsewhere in China, have been less enthusiastic for growing tobacco. Now, we have to extend tobacco growers subsidies to the sum of 300 yuan (36 U.S. dollars) for purchasing fertilizer, mulching film and other means of production per mu (per 0.067 hectare)." According to him, the output value of tobacco growing is between 1,300 yuan (156.6 U.S. dollars) and 1,500 yuan (180.7 U.S. dollars) per mu (per 0.067 hectare) in Guangdong while the output value of grain growing stands at 800 yuan (96.3 U.S. dollars) per mu (per 0.067 hectare) in the province. But tobacco growing is much more complicated and involves much more manual labor. At a time when grain prices go up, farmers will be less enthusiastic for growing tobacco, he explained. So far this year, weather conditions in Guangdong have been unstable, creating difficulty for tobacco growing in the province. "The weather has been cold in Guangdong so far this year, with low temperatures. Part of the tobacco seedlings in Guangdong has died from coldness. While taking steps to prevent freezing, we have managed to substitute fresh seedlings for the dead ones. The work of transplantation is still underway. Therefore, the harvest season of tobacco in Guangdong this year will be late by one or two weeks," the leader said. Because of the low pricing of tobacco and unfavorable weather conditions so far this year, tobacco growing seems to have entered a period of stagnation in China. Yet, the tobacco industry is still playing a major role in the economic development of China. In 2004, the tobacco industry of China generated 210 billion yuan (25.3 billion U.S. dollars) in manufacturing and commercial taxes and profits. In late February, the STMA instructed the tobacco monopoly administrative authorities in all the tobacco-producing regions to regulate investment in tobacco growing, implement the government policy of supporting production on the part of tobacco growers, improve their services for tobacco growers and take concrete steps to alleviate the intensity of labor in tobacco growing and make tobacco growing less complicated. According to Chen, a best approach to improve the current situation is to increase subsidiaries for tobacco growers. Enditem