Costs, revenues and profits: an economic analysis of smallholder tobacco farmer livelihoods in Malawi

Abstract

Background The preservation of the economic livelihood of tobacco farmers is a common argument used to oppose tobacco control measures. However, little empirical evidence exists about these livelihoods. We seek to evaluate the economic livelihoods of individual tobacco farmers in Malawi, including how much money they earn from selling tobacco, and the costs they incur to produce the crop, including labour inputs. We also evaluate farmers’ decisions to contract directly with firms that buy their crops. Methods We designed and implemented an economic survey of 685 tobacco farmers, including both independent and contract farmers, across the six main tobacco-growing districts. We augmented the survey with focus group discussions with sub-sets of respondents from each region to refine our inquiries. Results Contract farmers cultivating tobacco in Malawi as their main economic livelihoods are typically operating at margins that place their households well below national poverty thresholds, while independent farmers are typically operating at a loss. Even when labour is excluded from the calculation of income less costs, farmers’ gross margins place most households in the bottom income decile of the overall population. Tobacco farmers appear to contract principally as a means to obtain credit, which is consistently reported to be difficult to obtain. Conclusions The tobacco industry narrative that tobacco farming is a lucrative economic endeavour for smallholder farmers is demonstrably inaccurate in the context of Malawi. From the perspective of these farmers, tobacco farming is an economically challenging livelihood for most.

Government policy and agricultural production: a scoping review to inform research and policy on healthy agricultural commodities

“…First, we found that input supports, such as subsidies on fertilizers, seeds or farm equipment, generally resulted in positive changes in production and farm income. This finding corresponds with research in the tobacco control literature that finds that inputs are a key factor in farmers' decision to enter into contract with leaf buying companies [22,23]. Second, these findings also point consistently to the high level of importance of education and support for farmers, most often in the form of extension services.…”

“…For example, Natarajan points out that tobacco farmers in South India grow the crop due to its amenability to the environment and the lack of profitable alternatives [87]. Similarly, studies in Malawi and Kenya also find that farmers continue to grow tobacco, despite limited income, due to a perceived lack of alternatives [22,23]. This review provides important direction for research on alternatives.…”

“…Governments have committed, in Articles 17 and 18 of the Framework Convention on Tobacco Control, to actively pursue a policy agenda that supports alternative livelihoods for tobacco farmers, directly and indirectly reducing tobacco supply. Other reasons to reduce tobacco production include the harmful consequences of growing tobacco leaf for the health and economic livelihoods of farmers, as well as for the environment [20][21][22][23]. Despite the compelling rationale, implementation of interventions to promote alternative livelihoods has proved challenging.…”

The impact and relevance of tobacco control research in low-and middle-income countries globally and to the US

“…However, rigorous empirical findings across multiple and varied contexts has helped to generate evidence that small-scale tobacco farmers are rarely economically prosperous and that tobacco control has very little short-term effect on them, in countries such as Kenya, (Magati, Li, Drope, Lencucha, & Labonté, 2016). Malawi, (Makoka, Drope, Appau, et al, 2016) and Zambia. (Goma, Drope, Zulu, Li, & Banda, 2017).…”

Tobacco growing and the sustainable development goals, Malawi

“…In a study of such tenants in Malawi in 2000, more than one quarter had no education, 40% reported they could not read, 40% reported they could not write and over 40% said they could not work with numbers 25 . Since 2005, contract farming – in which farmers sell directly to leaf buyers who also offer credit and technical support – has become more common in Malawi 27 . As farmers who enter into contracts with industry tend to become indebted quickly, it is worrying that, by 2010, an estimated 10% of the burley tobacco farmers in Malawi had become contract farmers 17 , 26 …”