Myths and realities of profitability of tobacco cultivation in Bangladesh
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Department of Economics, Dhaka University, Dhaka, Bangladesh
AKM Ghulam Hussain   

Department of Economics, Dhaka University, Dhaka, Bangladesh
Publication date: 2021-09-02
Tob. Induc. Dis. 2021;19(Suppl 1):A97
The cultivation of tobacco is increasing alarmingly in Bangladesh. Farmers are encouraged by the industry to continue and expand tobacco cultivation by offering various incentives including loans and buyback guarantees. On the other hand, farmers consider tobacco farming profitable in an accounting sense without considering unpaid private cost, social costs, and global warming costs due to deforestation and carbon emissions from wood-burning and carbon sequestration.

The objective of this study is to estimate the economic cost of tobacco farming in Bangladesh.

1549 primary data points were collected from 32 unions in 8 districts. We included five types of farmers: contract and independent current tobacco farmers, former tobacco farmers, never tobacco farmers from tobacco and non-tobacco districts. Secondary data were collected from the scientific literature and government survey data. 320 primary samples of soil and water were collected and tested. Data analysis used descriptive, multivariate and multinomial logistic regression methods for estimating absolute and relative benefit-cost ratios of tobacco cultivation.

Tobacco farming is less profitable when the opportunity cost of family labor, land and environmental costs are included. Farmers lose more than 45 thousand Taka per acre by tobacco cultivation. If we include environmental net social benefit, the loss shoots to BDT -77,411 per acre. Based on socio-economic status, tobacco farmers also lagged behind. Child labour use is inescapable in tobacco cultivation. Multivariate and multinomial logistic regression analysis also shows that indebted farmers, and farmers with higher dependency ratios are more likely to participate in tobacco farming.

Tobacco cultivation is not as beneficial as popularly perceived. Availability of underemployed family labor; options of advanced credit, and buyback guarantees from tobacco companies attract farmers for tobacco cultivation. Supply-side interventions to curb the tobacco epidemic in Bangladesh need to address these factors to correct illusory incentives and to motivate tobacco farmers to switch to alternative livelihood options.