Tobacco deal leaves farmers out
It has been more than six months since Vietnam agreed to waive duties on 3,000 tonnes of Cambodian dried tobacco exports per year, yet local smallholder tobacco farmers claim the agreement has done little to improve their incomes, with some accusing large tobacco companies of hoarding all the profits.
The duty-free exemption on tobacco came as part of a bilateral trade enhancement agreement signed last October that gave special preferential treatment to 39 export items from Cambodia and 29 items from Vietnam. Under the deal, Cambodian tobacco producers could apply for licences to export up to 3,000 tonnes of dried tobacco per year to Vietnam duty-free in 2016 and 2017.
The agreement was widely expected to stimulate exports, with smallholder farmers benefitting from higher prices and demand from traders looking to fill the quota.
However, Som Ra, head of the Krouch Chhmar district agricultural office in Tbong Khmum province, said tobacco prices have remained stable since the quota deal and he questioned whether anybody had actually benefitted from it.
“If a deal for 3,000 tonnes [duty-free] to Vietnam existed, I would expect prices to rise and more competition in the market, but so far nothing has changed from the Vietnamese side,” he said.
He added that most tobacco farmers in his district were selling their leaves to British American Tobacco (BAT) or Chinese dealers.
Chhin Buntheourn, a smallholder tobacco farmer in the Kong Meas district of Kampong Cham province, said he was disappointed that the quota deal had done little to improve his income.
“I initially expected that the price of tobacco would increase, but until now we continue to struggle with the same low price,” he said, adding that the market rate on fresh tobacco leaves has remained unchanged at between 300 and 400 riel per kilogram.
Buntheourn said he suspected that large tobacco firms had obtained the export permits but were not passing along any of the profits to smallholder farmers.
“The bilateral agreement only benefits the big companies and has not offered any better price for us,” he said.
Chhay Sokhon, who cultivates tobacco on his 2.5 hectare farm in Krouch Chhmar district in Tbong Khmum province, expressed similar sentiment, adding that market prices were dictated by smooth-talking traders.
“When I heard the news I expected that I would receive a good price this year for my crop, but nothing has changed,” he said. “Any fluctuation in the price is the result of bargaining.”
Kim Sarourn, director of Kampong Cham’s Provincial Agriculture Department, said farmers saw better yields this year, but the agreement has done little to open new markets.
“I haven’t heard of any new markets,” he said. “Demand from the Vietnamese side remains the same and there is really only BAT contracting with farmers.”
Almost all tobacco grown in Cambodia is cultivated in the adjacent provinces of Kampong Cham and Tbong Khmum. The provinces have about 5,000 and 1,000 hectares of tobacco under cultivation, respectively, yielding on average 1.5 tonnes per hectare.