The Economics of Tobacco Farming in Indonesia: 4th Wave Tobacco Farmers Survey

This Report was written by Gumilang Aryo Sahadewo, Jeffrey Drope, Firman Witoelar, Qing Li, and Raphael Lencucha. The report presents findings from the fourth wave of the Tobacco Farmers’ Study, which analyzes tobacco and former tobacco farmers’ livelihoods in Indonesia. The four waves of survey data provide insights on favorable and unfavorable weather, as well as the COVID-19 context in the latest fourth wave. The findings suggest that farmers continue to grow tobacco largely due to familiarity and existing experience, rather than economics. In fact, former tobacco farmers reported higher total incomes than current tobacco farmers across all waves, with an average of IDR 18.4M and IDR 10.8M in Wave 4, respectively. Tobacco profits tend to be volatile and weather-dependent, and a higher share of land devoted to tobacco is associated with lower total income. Current tobacco farmers also face input costs and household labor costs that are nearly five times and around three times higher than those of former tobacco farmers, respectively. In Wave 4, poverty rates among tobacco and former tobacco farmers increased relative to Wave 3, with higher rates among tobacco farmer. Current tobacco farmers were more likely to receive Family Welfare Cards, relying on social protection programs. 24% of current tobacco farmers reported needing loans to meet daily needs, in addition to the loans they needed for farming input. The report concludes with policy recommendations to support the transition of tobacco farmers to more lucrative, beneficial crops. 

A Policy Brief based on this report can be found here.