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Nothing positive about Malaysia's tobacco farming
Publication Date : 04-09-2012
Each year Malaysia spends an average 20 billion ringgit (US$6.44 billion) to treat tobacco-related illnesses, with an estimated 4 billion ringgit channelled for lung cancer, heart and chronic obstructive airway disease treatment.
The staggering figure represents almost 10-fold compared with a mere 2.5 billion ringgit tax revenue collected from the local tobacco industry itself.
The revenue gap is far too wide especially when the healthcare cost outstrips any economic gain from tobacco corporate taxes. It is indeed ironic that this is happening when Malaysia has never been a large tobacco leaf producer by world standard and tobacco has never been a major contributor to the country's economy.
Therefore, recent moves by the government to phase out such a disadvantaged tobacco farming sector in Malaysia seems to be the right path to take.
Back in 2010, the three-decade-old Malaysia Tobacco Board was dissolved and replaced with Malaysia Kenaf and Tobacco Board with the focus on kenaf to be the alternative cash crop for tobacco growers.
Also, with the Asean Free Trade Area (AFTA) taking effect the same year, domestic tobacco growers were finding it less viable and uncompetitive compared with their lower-cost peers from Thailand, Indonesia, Vietnam and the Philippines.
Conditions took a turn for the worse among local tobacco farmers, especially in major growing areas in Kelantan, Terengganu, Kedah and Perlis when the Government decided to terminate subsidies on tobacco farming to comply with AFTA and the World Health Organisation regulations.
In the late 1990s, Kelantan as the main tobacco growing state produced an estimated nine million kg of tobacco, followed by Terengganu with about 3.2 million kilogramme, Kedah 1.1 million kg and Perlis 1 million kg.
At the same time, the estimated 6.4 billion ringgit tobacco industry in Malaysia is also seeing a decline in business mainly due to contraband cigarettes, including smuggled “kretek', duty-unpaid and “counterfeit” cigarettes.
Hence, given such negative developments engulfing the traditional tobacco growers, the government is now urging them to switch to food-based crops that may support the country's food production in the advent of a global food crisis.
But this time round, there needs to be a stricter enforcement unlike the previous futile attempts to swap tobacco with other cash crops, which do not really have high commercial gains.
Towards this, the Malaysian Agriculture and Research Development Institute (Mardi), which previously is closely associated with rubber, had started introducing new high-yielding and good-quality agriculture cash crops such as sweet potato, groundnuts, sweet corn, roselle, watermelon and sweet pumpkin to become the alternative lucrative crops to replace tobacco.
For example, Vitato which is a new variety sweet potato developed by Mardi has managed to attract the interests among many tobacco farmers in Kelantan and Terengganu given its high yield of about 40 tonnes per ha, good commercial value and versatility to be processed into flour as well as beauty products.
In fact, a 5 million ringgit Vitato processing plant in Besut, Terengganu, will commence production next year and plans are afoot for the plant to source raw materials from farmers in the surrounding areas to ensure no disruption in supply.
(US$1= 3.1 ringgit)