[LINK] "Tobacco economics"

[rfmcdonald]

I blogged in the past--once in 2008 and once in 2010--about the collapse of tobacco farming in southwestern Ontario and the horrible toll it was taking on the erstwhile farmers. (My uncle was lucky enough to get out of tobacco early and start up a successful aquaculture operation.) Spike Japan--happily again active!--has a brief post examining what seems to be the managed shrinkage of Japan's tobacco farming. It may not be a coincidence that Fukushima prefecture, sufferer of first the tsunami then of the nuclear meltdown, is a centree of the industry.

Japan Tobacco lays it out for the curious in its annual report (on p138-p139 here). Domestic tobacco grower numbers fell from 23,000 in 2001 to 12,000 in 2010. The area under tobacco cultivation fell from 24,000ha to 15,000ha. Domestic tobacco production volume fell from 60,000 tonnes to 36,000 tonnes. The value of the domestic tobacco leaf crop fell from Y117bn to Y68bn, even though the price per kilo remained roughly flat, at Y1,800-Y1900 or so. JT has managed to achieve this because, by its own admission, it stuffs the Leaf Tobacco Deliberative Council, the price and acreage setting commission, with members it appoints, as it admits on p59-60 of its annual report with a delicious footnote:

Contracts stipulate the area to be cultivated and the prices of leaf tobacco for the subsequent year, and in this regard JT respects the opinion of the Leaf Tobacco Deliberative Council*

(*Footnote: The Leaf Tobacco Deliberative Council is a council which confers on important matters concerning the cultivation and purchase of domestically grown leaf tobacco in response to inquiries by JT representatives. The council consists of no more than 11 members, appointed by JT with the approval of the Minister of Finance from among domestic leaf tobacco growers and academic appointees.)

[. . .]

It doesn’t take a supersleuth to work out what is happening: JT, faced with a domestic market that is shrinking dramatically, is trying to get rid of the domestic leaf tobacco industry as fast as it can without causing too many political hiccups, or—to be fair—too much domestic grower dislocation, as tobacco farmers are no doubt mostly on the far side of 60. It’s a very orderly arrangement in many ways, but it does nothing to help the economy of Fukushima’s Tamura, which is where we came in.

Go, read the whole thing.