Factors influencing farmers turning into tobacco cultivation in the Khulna division of Bangladesh: an empirical study
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Department of Economics, Lingnan University, Hong Kong
Publication date: 2019-03-26
Tob. Prev. Cessation 2019;5(Supplement):A128
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Farmers of Khulna division of Bangladesh cultivate both tobacco and traditional crops in winter season. Some tobacco companies (TCs) operate there and make formal contracts with farmers. The study attempted to identify factors responsible for turning traditional crop growers (TCGs) into tobacco growers.

The research investigated 285 tobaccos and 174 traditional farmers, chosen randomly from three districts in 2015, and used Logistic regression (with marginal effect) for data analysis.

Limitations of traditional crops in both input and output markets, prudent role of TCs, and distinctive features of tobacco itself were responsible for farmers’ shift towards tobacco cultivation.
Traditional crops experienced insufficient input support, non-guaranteed sale, and price instability. TCs’ counter-incentives in inputs and guaranteed sale encouraged farmers to cultivate tobacco where 76 percent tobacco growers and only 22 percent TCGs received input subsidy. Moreover, 100 percent contractual tobacco farmers enjoyed sales guarantee, even before production, where no TCG enjoyed that. Non-contractual tobacco farmers also enjoyed almost full-sale. About 20 percent TCG and 5 percent TG reported unsold product. Tobacco companies provided full payment immediately after sale, where 83 percent TCGs experienced credit-sale even through intermediary. One-time yield and zero in-house consumption supported tobacco’s 98 percent sale. Despite higher production cost, tobacco had higher profit than TCGs. Neighbours and land-neighbours also influenced to grow tobacco. Statistically significant variables increasing probability of tobacco production over traditional crops were sales guarantee, price stability, input incentives, profit, sales-production ratio, and land neighbours’ crop choice.

The main challenges of traditional crops including unstable price, volatility in sales guarantee and insufficient input incentive should be taken care by the authority to reduce tobacco cultivation.

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