The economics of tobacco farming in North Macedonia
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Analytica think tank, Skopje, North Macedonia
Publication date: 2023-10-08
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Bojana Mijovic Hristovska   

Analytica think tank, Skopje, North Macedonia
Tob. Prev. Cessation 2023;9(Supplement 2):A42
Tobacco leaf cultivation occupies around 3.2 percent of total arable land in North Macedonia. North Macedonia is the second largest producer of oriental-type tobacco leaf after Turkey. In 2021, the total production of tobacco was 24,329 tons from 15,457 hectares of land, with an average yield per hectare of 1,574 kilograms. North Macedonia ratified the Framework Convention on Tobacco Control (FCTC) in 2006, which introduced a legal commitment for the reduction of tobacco production and consumption as well as to help those who are employed in the tobacco sector to find alternative viable livelihoods. The process of EU integration will require the reduction of crop-specific subsidies, likely leading to less income to tobacco farmers and an eventual reduction in the area harvested. The Government adopted a new Strategy for Tobacco Production (2021–2027) in which there is envisaged indirect support for tobacco farmers, but preparations will be made with education and counseling for future change to other crops. Tobacco farming traditionally has been supported by the Government of the Republic of North Macedonia. However, there is not enough research on the economic livelihood of tobacco farmers. Тo fill this gap and to provide results to support evidence-based policy and decision-making, a survey with a nationally representative sample was conducted. The survey comprises 806 farming households from 14 municipalities (urban and rural) in the top tobacco- producing regions in North Macedonia. Target groups (categories of respondents) for the survey are the following: 1. tobacco farmer (the respondent is a farmer who grew tobacco in 2021); 2. former tobacco farmer (the respondent is a farmer who grew tobacco in any year before 2021 and now cultivates other agricultural crops); and 3. never tobacco farmer (the respondent is a farmer who cultivates any agricultural crop other than tobacco and never cultivated tobacco previously). Survey results: - Around half of tobacco farmers are not turning a real profit. While most tobacco farmers believe they achieve positive “perceived” profits (excluding the value of household labor), with only a few households perceiving negative profits, around half of the households actually achieved negative “real” profits. - Most farmers struggle financially, living with an average monthly income below the average net monthly wage and below the value of the minimum household consumer basket. - Pensions and remittances are one of the most important components for maintaining an adequate level of income and standard of living for tobacco farmers’ families. Although they spend the most time in the field, current tobacco farmers have a higher incidence of poverty compared to former and never tobacco farmers. - Compared to former tobacco workers or never tobacco workers, the median current tobacco farmer devotes more time to growing crops. The median male farmer worked 1400 hours on tobacco cultivation, while the median male former and never tobacco farmers worked 1000 hours and 1260 hours, respectively. - Тhe children of tobacco farmers are more involved in farming relative to other farmers’ children. Children’s help in the harvesting of tobacco is 2.3 times more common compared to children’s help in harvesting other crops; however, no farmer reported hiring children to help with tobacco cultivation and children do not appear to be engaged in potentially harmful activities related to pesticide/ herbicide application. - Compared to other crop activities, tobacco cultivation typically requires significantly more pesticide. Pesticides are related to persistent health challenges for farmers and damage the environment through contamination of groundwater and watersheds. - Tobacco farmers show signs of green tobacco sickness, a form of acute nicotine poisoning. - Current tobacco farmers are more likely to rent land for farming compared to former and never tobacco farmers. In the survey, 22.2 percent of current tobacco farmers and 13.7 percent of former tobacco farmers stated that they rent land from others. - The vast majority of farmers reported having a contract with a leaf buyer. Survey results shows that almost all tobacco farmers (94 percent) in all major tobacco-growing regions have signed contracts with tobacco leaf buyers. More than half (57 percent) of the tobacco farmers say they are satisfied with the concluded tobacco agreement, while 36 percent are not. Tobacco cultivation is not as profitable as the government suggests. Thus, highlighting tobacco as a highly profitable crop is unfounded. This research indicates it would be much better for tobacco farmers, in terms of labor and economic efficiency, to reorient and grow another crop or pursue other economic activities in their local economy (such as wage work or small business). Around half of tobacco farmers are not turning a real profit. The opportunity cost for unpaid family labor makes growing tobacco unprofitable. Revenues of tobacco farmers decrease significantly when the opportunity costs are calculated. Household members could better allocate their labor to other tasks that earn money; not doing so results in significant economic loss for those tobacco families. Poverty rates among tobacco farmers are slightly higher than the nationwide poverty rate. Current tobacco farmers have the highest incidence of poverty when considering per capita income. Despite their high poverty rate, only a small share of tobacco farmers use some form of social assistance. Input costs for growing tobacco are typically very high, particularly compared to most other crops.
The authors have no conflicts of interest to disclose.
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