China Increases Growers’ Earnings While Reducing Output

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By TobaccoChina Online

China’s tobacco industry has managed to increase earnings from leaf production to encourage farmers to continue growing tobacco while taking steps to reduce the output over the past three years, in response to government efforts to cut inventories.

Leaf production serves as a foundation for the survival and development of the tobacco industry, and the stability of the industry largely relies on the stability of production. That stability is directly determined by whether tobacco growers can realize stable growth in earnings.

During a national leaf tobacco teleconference held in Beijing last November, the State Tobacco Monopoly Administration (STMA) – the regulator of China’s tobacco industry – unveiled a target to significantly cut inventories nationwide, which had amounted to an extraordinary high of 138.05 million dan (6.9025 million tons) in October 2016, partially by means of reducing leaf tobacco output.Over the past three years, the tobacco industry has made efforts to control output to cut inventories. However, it should be realized that reducing the total acreage of tobacco and control of output will, to some extent, be contradictory to income growth for farmers, and may negatively impact the stability of manpower.

Under such a situation, guaranteeing income growth for tobacco farmers cannot be neglected. China’s tobacco industry has been making unremitting efforts to increase the income of farmers. All tobacco-growing regions across China have adopted multiple measures to ensure growth in farmer income. The execution of such measures not only means a way of keeping them motivated but also explores shifting modes for leaf tobacco production in China.

Improving Growers’ Income

What is essential when it comes to efforts to increase tobacco farmers’ income is to focus on operating and strengthening its foundation –production – by encouraging the optimization of both manpower and costs, improving the quality and increasing efficiency, which will, in turn, have a positive impact on farmer income.

For the last few years, Qujing City, located in China’s largest tobacco-growing province of Yunnan, has steadily increased the use of new technology in tobacco production in accordance with market demand, successfully improving the quality and significantly raising the industrial output. Irrespective of purchase price adjustments, the average purchase price of tobacco leaf in Qujing in 2016 went up by CNY0.28 (US$0.04) per kilogram year-on-year thanks to technological innovation, with the income growing per mu (0.067 hectare) increasing by CNY38. In 2016, such technology led to a growth of CNY47.9 million (US$6.96 million) in total income from tobacco growing compared to the previous year.

Last year, Qujing City kept promoting both the level and coverage of specialized service provision for tobacco growers, resulting in reducing the input of manpower, with the coverage of tractor-plowing, plant protection, leaf tobacco curing, and leaf tobacco grading by specialized service provision respectively going up 71.8%, 24.3%, 19.8%, and 94.02% respectively year-on-year. Strengthening of specialized service provision for growers in Qujing City led to a growth of CNY104 per mu in income from tobacco leaf year-on-year, and a growth of CNY131 million in total income.

Also in 2016, Qujing City made active use of technological measures to reduce costs and promote income growth. For example, apart from continued application of traditional means of transplantation, the city introduced means of transplanting seedlings under mulching film, which led to a reduction of CNY40 per mu in production costs year-on-year, and a growth of CNY2.28 million in total income from tobacco growing over the year. The city also actively promoted the use of green manure, straw mulching, and stacking of farmyard manure, significantly cutting the cost of fertilizer, and leading to a growth of CNY12.8491 million in total annual income from tobacco. It actively promoted application of specialized tobacco leaf curing, which covered 245,000 mu in acreage, with the rate of loss in curing declining by 1.7% year-on-year, and with the growth in income as a result reaching CNY10.4 million.

Over recent years, Qujing City, in its capacity as the largest tobacco-growing region in China, has actively made use of basic farmland to help income growth. In 2016, in accordance with the principle of “maintaining the basis for leaf tobacco production, ensuring the existence of markets, guaranteeing the receipt of orders, and increasing efficiency in tobacco production”, Qujing City actively followed through constructive trials in planting autumn and winter crops in the wake of leaf tobacco harvest, with the acreage of autumn and winter crops reaching as high as 19,500 mu, with the income reaching CNY60.4 million.

Shift of the Mode of Production to Promote Income Growth

Within the context of shrinking the total acreage of tobacco farmland in China, a shift of the mode of tobacco leaf production has become increasingly important if the industry plans to guarantee sustained growth in income for growers and generate higher efficiency.

Bijie City – another major tobacco-growing region located in China’s Guizhou Province – has over the recent years adhered to the principle of division of jobs on the basis of specialization and operation in compliance with the required procedures, with a focus on developing the system of specialized services for production with tobacco cooperatives as the platform, and tapping potential for reducing labor in all processes so that tobacco growers would be able to save CNY100 on hiring one fewer worker per day. The city has supported intensive production and implemented a number of reforms. The city has focused its energy on developing a tobacco-producing zone that gives priority to environmental aspects and highlights unique characteristics, with all-around realization of intensification of resources, technology, management and service provision. It has also adhered to mechanized tobacco production.

Meanwhile, Bijie City has also quickened the pace of land swaps to promote growing on a moderate scale in exclusive production areas within the city, and in implementing mechanization in the processes of farmland cultivation, fertilizer application, ridge forming, mulching film covering, inter-tillage cultivation, etc, raising the efficiency of work. The city has promoted innovation on a regular basis, and has launched research and development as priority projects, with the focus on good management, selection of varieties with distinctive characteristics, and innovation and research of key technologies for “green” prevention and control, energy conservation and emission reduction, soil conservation, leaf tobacco quality and safety control, etc, to guarantee the quality of its superior leaf tobacco products with local characteristics.

Business Diversification Spurs Growth

Strict control of leaf tobacco production planning means that income-growing efforts need to be integrated into the development of modern agriculture.

Apart from adopting multiple measures to raise the efficiency, business diversification is also an important approach for increasing growers’ income across China. In particular, with the existence of cooperatives, the adoption of such an approach is highly valuable and has won increasing recognition by growers.

In 2016, Zunyi City – yet another major tobacco production area in Guizhou Province – introduced the system of “cooperatives of tobacco growers +”, to lead local cooperatives and growers into making use of their existing seedlings development greenhouses, idle intensive curing barns, tobacco fields that are not in use during the winter season and that are up for rotation of crops, to grow fruits, vegetables, flowers, rice, edible mushrooms, and other crops with local characteristics, with the output value from non-tobacco operations reaching a high of RMB52.88 million. That year, the city expanded tractor-plowing and centralized organic fertilizer making onto operations other than tobacco production, gaining considerable returns.

Recently, the Chinese Communist Party Guizhou Provincial Committee and the provincial government of Guizhou has unveiled a strategic plan for the “prevalence of green farm produce of Guizhou everywhere”, while the municipal government of Zunyi has set a target for strengthening the capacity of the city by means of developing pest-free and green farm produce, which has provided favorable opportunities for local cooperatives of tobacco growers to make use of existing tobacco fields and support facilities.

Back in Yunnan, Qujing City has also intensified efforts to tap into the potential for increasing tobacco growers’ income by means of creating and supporting cooperatives. The city has managed to improve the mechanism of the joint stock partnership for the industry’s cooperatives and lead growers to acquire shares in cooperatives to increase their income through dividends. It has advised local growers to make a comprehensive use of existing seedlings development greenhouses to grow cabbage, pepper, tomato, and other vegetables; make comprehensive use of existing curing barns to grow and cure shiitake mushrooms, corn, pepper, pseudo-ginseng, erigeron breviscapus, etc.; and make comprehensive use of idle farm machinery to grow other crops including rice, rape, barley, pea, etc. By adopting these approaches, Qujing succeeded in increasing grower income.

Better income for tobacco growers not only requires the use of more resources for widening the scale of production in each farm household and raising the average value of an output unit, but it also means conservation of resources and manpower and cutting production costs. Likewise, it not only requires reliance on tobacco production but also needs business diversification. It is by adopting such approaches that the tobacco industry of China has made significant advances in recent years and kept the tobacco growers’ enthusiasm. Within the context of an increasingly harsh business environment faced by the global tobacco industry, the Chinese tobacco industry could probably offer valuable experience.