Beyond a tobacco economy 

A study conducted by WHO shows that for every $1 a country gains from tobacco taxes today, it may have to spend $2.8 20 years from now to pay for the health consequences brought about by smoking.

Hu Dewei, professor on health economics at University of California, Berkeley in the United States, found in his China case study that the country's economic losses caused by tobacco usage are an estimated 41 billion yuan ($6.03 billion) per year, of which 14 billion yuan ($2.06 billion) is medical expenditure, and 27 billion yuan ($3.97 billion) are losses from reduced productivity, including lost work time and sick leave.

With such ominous signs that the tobacco industry faces decline, authorities are planning for the future. In China where the tobacco industry provides a living for more than 20 million growers and 10 million salespeople, alternative agriculture has been promoted.

Research conducted in 2004 in Yunnan Province (southwest China), a major tobacco region, found that in terms of the profit-cost ratio per hectare, tobacco had the lowest score (0.99) on a list of selected agricultural products. It came in behind mulberry silk (4.0), fruits (2.0), rapeseed (1.7) and rice and wheat (both 1.0).

In some African tobacco economies, efforts have been made toward agricultural diversification. FAO's 2003 report on global tobacco issues points out that in Malawi, the government has devoted many studies to search for alternative crops with potential comparative advantage and better market prospects. With donor support, the Malawian Government established crop authorities for tea, coffee, sugar and tree nuts to promote smallholder production of those cash crops.

However, "these efforts have not had any significant success. And there is still a heavy reliance on tobacco and maize," emphasized the report.

Regardless of any measures taken, there appears to be a sense of inevitability about the future of this age-old sector. "The [tobacco] industry will not die out in one day. It takes time," predicted Yang Gonghuan, Director of China's National Tobacco Control Office.

"Tobacco destroys people's health, so we cannot develop such an industry simply because it brings money. Our future must be found in an environmentally friendly and health-conscious economy. That's the trend," she said.

 Malawi average tobacco production cost estimates for 2000/1

Data shows that due to the high cost of labor and low profits from farming the product, tobacco growers in Africa barely make any money from tobacco crops. For instance, in Malawi, labor, fertilizer and transport account for more than 60 percent of the total production cost in 2000.

Source: FAO (1Kwacha=$0.006802)