The Economics of Tobacco Farming in Indonesia: 3rd Wave Tobacco Farmers Survey [Executive Summary]

This Executive Summary was written by Gumilang Aryo Sahadewo, Jeffrey Drope, Firman Witoelar, Qing Li, and Raphael Lencucha. The executive summary compares current and former tobacco farming households in Indonesia over four years using three survey waves. The household survey finds that both tobacco and non-tobacco farmers have income portfolio from agriculture, enterprise, wage, and other income, although tobacco farmers rely more heavily on agricultural income. Tobacco farming typically provides only a small contribution to a typical farmer’s household revenue. A typical non-tobacco farmer generates higher income than a typical current tobacco farmer, partially due to the diverse income portfolio. Further, former tobacco farmers consistently generate positive revenues, while current tobacco farmers did not experience a positive total household income per hectare during the poor farming year. The volatility in prices and volume of tobacco leaf sold results in greater fluctuation in income of tobacco farmers. Poverty rates among tobacco farmers are significantly higher than the nationwide poverty rate, although they were lower in good farming years. Both former and current farmers obtain social assistance in various forms, placing an additional burden on the government. Tobacco farmers spend significantly more on input costs than non-tobacco farmers, and a quarter even took out loans to do so. Tobacco farmers spend 1,363 hours working per hectare, while non-tobacco farmers spent only 197 hours per hectare. Tobacco farming households also spend more resources hiring labor and utilized child labor as a result of such differences. Farmers report that they were willing to shift from tobacco farming due to low leaf price. The executive summary concludes by developing a set of recommendations for the government to improve the policies relating to farming and agriculture. 


A corresponding Report can be found here.

View the Blog on the study here.

November 2021

Location(s): Asia, Indonesia

Content Type: Executive Summary

Topic(s): Crop substitution, Supply-side issues and interventions

Authors(s): Gumilang Aryo Sahadewo, Jeffrey Drope, Ph.D., Firman Witoelar, Qing Li, Raphael Lencucha