Smallholder Tobacco Growing in Indonesia : Costs and Profitability Compared with Other Agricultural Enterprises
This supply-side study compares the financial costs and returns for smallholder tobacco farming with a selected range of smallholder crops that either complement tobacco or offer long-term diversification potential. It is a first step to understand...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2005/02/5702376/smallholder-tobacco-growing-indonesia-costs-profitability-compared-other-agricultural-enterprises http://hdl.handle.net/10986/13769 |
| Summary: | This supply-side study compares the
financial costs and returns for smallholder tobacco farming
with a selected range of smallholder crops that either
complement tobacco or offer long-term diversification
potential. It is a first step to understanding how tobacco
farmers might be affected if the demand for tobacco fell in
Indonesia, and to what extent farmers might be able to
adjust by shifting to other crops, and the implications this
might have for their incomes. The analysis is based on a set
of 24 original per hectare crop budgets estimated specially
for this study to reflect the actual costs and returns for
tobacco and other farm enterprises in upland and lowland
tobacco growing regions of Central Java to the best extent
possible. These original budgets cover eight distinct crop
enterprises including Virginia-kretek tobacco and seven
other crops that either complement tobacco or offer
diversification potential. To provide the broadest possible
indication of relative costs and profitability of different
enterprises, several production levels are considered for
each commodity including low, medium, and high-input
management. The analysis suggests that chilli, potatoes,
nilam, and oranges offer a potential for similar (or better)
net profits and rates of return than tobacco. However, the
markets for these alternative enterprises are generally far
more limited than those for tobacco, and considerable
investments may be needed to help smallholders to succeed
with these crops, such as the development specialized
support services and the expansion of private trading
networks. Especially in the case of perennial crops with a
long maturity period, a shift away from tobacco can be
difficult or risk because of less certain cost structures,
unknown market outlets, high establishment costs, and
limited availability of seasonal and long-term credit.
Considerable efforts will be required to overcome these and
other practical barriers for tobacco farmers to take
advantage of the diversification opportunities this report
suggests are available. |
|---|