Trade deal to provide tobacco boost

Agriculture officials and smallholder tobacco farmers in Cambodia are cautiously hopeful that tariff exemptions granted under a new trade agreement with Vietnam will lift sagging demand for leaf tobacco, according to a story in The Phnom Penh Post.

Khann Samban, director of industrial crops at the Ministry of Agriculture, was quoted as saying that the market for tobacco had dried up in recent years.

Tobacco volume had decreased because farmers were giving up growing tobacco in favor of other crops with higher market demand

Last season, production volume fell to about 2,000 tons, about a fifth of the previous season’s volume, according to Ministry of Agriculture data. At the same time, the area planted to tobacco was said to have fallen to 10,000 ha from 14,000 ha. It was not clear from the story why volume had fallen so much more steeply than had plantings.

Much of the tobacco grown in Cambodia is said to be grown under a contract farming system, processed and then sold to British American Tobacco Cambodia (BAT). There are apparently few options for farmers not part of this system.

“For now, the farmers are producing tobacco for just one cigarette company here, and the rest is smuggled into Vietnam,” said Samban.

However, he said that a memorandum of understanding signed by Cambodia and Vietnam on October 26 was poised to boost demand for locally grown tobacco.

According to Soeng Sophary, spokesperson of the Ministry of Commerce, Vietnam intends to exercise its option and has already agreed to purchase 3,000 tons of tobacco from Cambodian farmers this year.