Sustainable tobacco farming can help meet development goals

Sustainable tobacco farming can help meet development goals

by | Nov 21, 2016 | Blog

The production and consumption of tobacco and tobacco products are firmly in the World Health Organization’s (WHO) regulatory crosshairs and with good reason; however, this is not likely to prevent people from smoking. While the WHO is welcome to put forward arguments and provide evidence on the dangers of exposure to tobacco smoke and use of tobacco products, it remains an individual decision to smoke or not to smoke in a free world.

Furthermore, we must concede that tobacco farming is an important industry in many parts of the world, most notably the low income developing states in Sub-Saharan Africa like Malawi, Tanzania, Mozambique, Zambia and Zimbabwe. To weigh the positions in this trade-off between health concerns on the one hand, and liberty and welfare on the other hand, we can refer to the concept of sustainability – a primary objective in the development process. Is tobacco farming contributing to sustainability in the host countries? Is it likely to foster structural change towards other income sources? Or will it cause new forms of dependencies?

The latest action list on development objectives, the UN Sustainable Development Goals (SDGs), targets the end of poverty and hunger, improving health and education, gender equality, clean water and sanitation as well as energy security.

In addition, they call for the promotion of a universal, rules-based, open, nondiscriminatory and equitable multilateral trading system under the World Trade Organization (WTO), which would be endangered by a ban on tobacco trade – advocated by some anti-tobacco lobbyists.

Failure to attain the proposed SDGs has its roots in weak governance, as can be demonstrated with the countries in question. The existence of property rights, a pro-market economic order, laws prohibiting corruption, a low-inflation monetary regime, as well as a functioning administration are critical to achieving these objectives.

Interestingly, these requirements can often be found within the tobacco sector in the countries concerned. For example tobacco production requires a well functioning land register; this supports both a functioning real estate tax system and a financial market where farmers can place mortgages on their land to acquire modern machinery and storage facilities.

Where other crop associations and regulators might fail to keep an up to date accurate land register the tobacco industry and tobacco regulators in some of the select states are responsible for their growers via the crop contracting system, whereby they succeed in keeping a well-functioning land register.

Therefore, the tobacco industry has a role to play as they can offer compensation for the weak institutional environment in some of these states. By providing institutions that enable farmers and workers to receive a fair price and wage respectively, enabling them to send their children to school, to afford access to health services and to supplies of energy and water.

In addition, the sustainable use of natural resources has become a top priority for the tobacco industry; it was recognised by the industry that trees cut to cure tobacco should be replaced by newly planted ones. As a result, several industry initiatives in Malawi and Zimbabwe have generated enough revenue to develop commercial and small scale woodlots to reduce the environmental impact of tobacco cultivation and curing.

There could also be further diversification in the crop rotation mix supported by a well-developed marketing board and various levels of industry support to wean farmers off the dependency on any one crop. In this regard, the contract farming system encourages food production by tobacco farmers, making a substantial contribution to food security – amounting to some 5 to 10{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} of national food crop output in countries like Malawi or Mozambique.

Also, given the relatively high profits generated by tobacco cultivation farmers can fairly quickly improve their means of income generation and quality of life. As a by-product, successful efforts by the tobacco industry could be a trigger for better institutions and enforcement mechanisms in southern Africa.

In short, there is much potential for the tobacco industry to use its upstream economic activities to affect institutions and enable people in Southern Africa to meet the SDGs in the medium and long run.

Currently the industry employs millions of workers in Southern Africa, who themselves support many dependants. However, to really provide sustainability, jobs must enable the employee – or the farmer – to make a living beyond subsistence. For the objectives to be met, the income must not only suffice for survival, but also to save, pay for health care provision, and education for children. Only then can the SDGs be achieved.

In this regard there are interesting initiatives, as the two following examples show.

First, the tobacco industry has introduced a contract system in some countries such as the Integrated Production System (IPS) in Malawi, and this offers farmers a large package: fertilizers, seed, and other input; credit facilities; and personal advice including knowledge about crop rotation, Good Agricultural Practices (GAP) and Agricultural Labour Practices (ALP). Most tobacco farmers not only plant tobacco, but also other crops for self-consumption, and partly for sale. As a result of these contracts, farmers achieve a higher output per hectare as well as higher quality.

Thus, they can earn a higher profit; this is reportedly enhanced by the fact that tobacco firms pass through the lower prices they can negotiate on inputs from upstream industries to the farmers. Given that the return on tobacco in general exceeds the return on most other cash crops, the chances to achieve the SDGs are considerable.

Second, are industry initiatives for preserving forests (SDG 15). The tobacco industry contributes millions of dollars directly to the regeneration of forests, financing initiatives to ensure the survival of forestland including the “one-tree one-child” initiative. This initiative is also meant to encourage children in Malawi to appreciate the value of education as they get to plant trees and nurture them till maturity throughout the child’s school period. In Zimbabwe, a forestry department was established with the aim of effectually forming and managing tobacco energy wood-lots. This initiative has already reduced the overdependence on forest wood for the curing of tobacco leaf.

These examples (out of many more) show the efforts of the tobacco industry in Southern Africa to support sustainability. They indicate the chance for farmers to move up the value chain and leave the state of subsistence. Tobacco cultivation might even afford them the opportunity to move into other crops and master structural change.

More is needed to meet the SDGs and solve health issues, but it is fair to conclude that the industry has tried to respond to criticism. As long as people smoke, tobacco farming will be in demand. The better the conditions for the farmers, the higher the chances to reconcile health and sustainable development.

This article was previously published in the Weekend Argus Sunday edition, 20 November 2016

FCTC threatens tobacco growing nations

FCTC threatens tobacco growing nations

by | Nov 11, 2016 | Blog

The adoption of the World Health Organisation’s ( WHO’s) Framework Convention on Tobacco Control (FCTC) is regarded as a significant step in setting up an international regulatory framework aimed at protecting present and future generations from adverse effects of tobacco consumption and exposure to tobacco smoke.

However, while the FCTC was not originally aimed at banning or prohibiting tobacco consumption or production, its provisions could be implemented in a way that imperils the tobacco growing and tobacco dependent economies of Africa with dire implications for the livelihoods of millions of people who depend on this crop.

The importance of the tobacco industry in southern Africa, for instance, can hardly be overemphasised.

Zimbabwe has about 75 000 tobacco growers or farmers and is the largest employer in the agricultural sector with about 415 000 people employed on the farms and in the industry side (leaf companies, auction floors etc.) and a minimum of about 2 million people are directly dependent on tobacco.

Tobacco contributes about 12 percent of the country’s gross domestic product and 27 percent of foreign currency earnings. Malawi has about 350 000 tobacco growers with about 800 000 people employed and more than 2 million people directly dependant on tobacco. The tobacco industry contributes about 60 percent of foreign exchange earnings in Malawi.

Importantly, more than 95 percent of tobacco grown in African countries such as Malawi and Zimbabwe is for export, only an insignificant amount is consumed locally. Therefore, any radical demand reduction measures would have a direct negative impact on the prices fetched by tobacco growers and ultimately deal a potential death blow to tobacco growing.

For an undeveloped, poverty-stricken country like Malawi whose economy is heavily reliant on tobacco growing and export, this would be a disaster of gargantuan proportions. It could also have destabilising regional implications should radical demand reductions result in a downward economic spiral in the country.

While it seems theoretically possible for alternatives to tobacco growing to be found and promote a move away from dependence on tobacco growing and trade, in practice, tobacco growing in some countries such as Malawi is so important to the economy such that even policymakers, based on sound research, have simply concluded that there are no viable alternative crops to tobacco growing.

In Malawi, while the government is considering other crops (such as soya beans) to lessen dependence on tobacco growing, such crops are simply regarded as potentially “complementary” crops and not as alternatives.

The same goes for Zimbabwe, where the several stakeholders are unanimous that at present, there are simply no alternatives to tobacco.

It is worth noting that the FCTC provisions are not inherently antithetical to the interests of tobacco growing and tobacco products’ exporting countries, per se. Indeed, there are significant issues where there is apparent common ground between the objectives of the FCTC and the interests of the tobacco growing countries in Africa, such as the need to eliminate illicit trade in tobacco products (ITTP) by securing the tobacco supply chain; and ensuring that non-smokers are not exposed to tobacco smoke; among others.

Should the WHO, through the FCTC, adopt measures as currently being proposed, to promote “carve outs” of tobacco products from trade liberalisation and investment protection agreements, the impact thereof could be disastrous for many tobacco growers in southern Africa whose income depends on successful exports to international markets.

In respect of tobacco “carve outs” from trade and investment agreements, apart from the legalities or political economic implications, it is debatable whether such an approach is necessary at all.

At a multilateral level, the WHO allows its member states to impose measures to promote human health provided such measures are non-discriminatory and necessary to achieve the stated objectives. Where bilateral investment treaties are concerned, two recent cases where Phillip Morris lost investment disputes regarding government measures to promote public health indicate that arbitration tribunals do recognise the host state’s right to regulate in the public interest (Phillip Morris v Uruguay and Phillip Morris v Australia).

The findings in the two disputes suggest that legitimate regulations to promote public health in respect of tobacco products are not so threatened so as to require the implementation of radical proposals in order to give effect to them.

While it is trite that tobacco use is a public health challenge, it must also be borne in mind that the tobacco industry does make important positive contributions to certain tobacco growing countries.

Therefore, measures to discourage consumption in export markets must be taken with proper consideration of potentially bigger socio-economic challenges in certain countries that depend on growing tobacco primarily for export, presumably to informed consumers in high income and some middle-income countries.

Measures to “clean up” the tobacco industry or tobacco value chain such as the elimination of ITTP, appropriate health warnings on cigarette packs; age limits on who can purchase tobacco products; among others, are laudable.

However, a balance is required and the FCTC member states must ensure that in their noble zeal to promote public health they do not adopt measures that are tantamount to throwing away the baby with the bath water, resulting in disproportionate impacts on poor countries with very few alternatives to tobacco production. Nkululeko Khumalo, a senior associate at Tutwa Consulting, is one of the authors of the forthcoming paper by the Tutwa Consulting group which inter alia examines the socioeconomic impact of tobacco growing and implications of the emerging global regulatory environment on the tobacco economies of southern Africa.