Trade-offs and economic impacts of replacing Tobacco with alternative crops in smallholder cropping systems in Hoima District, Uganda

Abstract

Tobacco has been among Uganda’s export crops contributing an average of 3.52% to national formal traditional export earnings and a key source of income for rural households in tobacco producing areas. By 2020 however, less than 10,000 tons of tobacco leaf were produced across the country, and annual revenue from exports had fallen from $120 million in 2013 to $49.7 million. Tobacco is known to have irreversible negative health impacts on growers and consumers. Previous efforts to control Tobacco have largely been re-oriented towards on tax legislation to reduce its impacts with significant but not complete success. As a result, interventions are toward promoting alternative crops to tobacco. This study examines whether farmers are seeking for alternative crops and determines factors that influence farmers’ preferences for alternative crops to tobacco. The study further assesses trade-offs and impacts including income-based poverty rate associated with replacing tobacco with alternative candidate crops using Minimum Data-Tradeoff Analysis (MD-TOA) model. The data used was collected from 384 households randomly sampled from four Sub Counties of Hoima District in 2017. Results showed that majority tobacco farmers (73%) are seeking for alternative crops to tobacco. Being female, land size under tobacco growing and tobacco labor person-days have a significant and positive influence on farmers’ preference for alternative crops while age of farmer, household size and distance to tobacco market had a significant and negative relationship.in addition, the choice of each crop for an alternative to Tobacco was significantly influenced by different crop attributes. Results showed that Cassava is best economically feasible alternative to Tobacco followed by Maize, Rice and Beans within smallholder cropping systems. The switch to Cassava is substantially, more efficient on large farms; and its predicted to have highest returns with the highest proportion of switching farms above the poverty line for both small (10%) and large (45%) farms. Overall, economic returns earned from the tobacco cropping system are lower compared to any of the four alternative systems. This implies that farmers are better off cultivating alternative crops especially with better access to stable markets that offer attractive prices; and scaled-up farm operations to larger proportions of land while taking advantage of production scale economies. Developing agro-processing infrastructure and farmer skills in value addition should be prioritized to support stabilization, structuring and competitiveness of alternative commodity markets as an incentive and motivation for tobacco farmers to shift to non-tobacco cropping systems. We recommend future research to assess feasibility of switching to less land-intensive enterprises such as poultry, piggery, and diary as well as agricultural intensification crop enterprises with associated economic impacts among small land size farms.