Indonesia Investments wishes all Muslims a happy & generous Ramadan
25 May 2018 (closed)
USD/IDR (14,166) -39.00 -0.27%
EUR/IDR (16,582) -47.80 -0.29%
Jakarta Composite Index (5,975.74) +29.20 +0.49%
Indonesia's tobacco production, prepared from the leaves of the tobacco plant, heavily depends on weather conditions. If weather conditions are normal in 2018, then Indonesia should be able to produce up to 200,000 tons of tobacco. However, if there occurs unconducive weather (a prolonged rainy season or short dry season), then it is difficult to predict Indonesia's 2018 tobacco production.
Soeseno, Chairman of the Indonesian Tobacco Farmers Association (APTI), said the tobacco planting season in Indonesia will start in May. Provided the rainy season will end in April or early May, Indonesian tobacco farmers will be able to plant plenty of tobacco trees. However, if the dry season is shorter than expected, then the harvest will disappoint. Hence, Indonesia's tobacco output in 2018 is - as usual - highly dependent on weather conditions.
In 2017 Indonesia is estimated to have produced 160,000 tons of tobacco, up a whopping 129 percent year-on-year (y/y) from 70,000 tons in the preceding year when Indonesia was plagued by unusually wet weather conditions during the dry season. The 129 percent increase came on the back of better weather conditions in 2017.
Soeseno also explained that Indonesian tobacco production is fully absorbed by the domestic market, primarily the domestic cigarette industry. It is estimated that Indonesian cigarette industries require about 300,000 tons of tobacco per year, implying there is a big need for imports as local tobacco production cannot meet demand that originates from local cigarette industries. Moreover, certain types of tobacco (for example white burley) cannot be produced at home (or only in very moderate quantities) and therefore need to arrive from abroad.
Meanwhile, Budidoyo Siswoyo, Chairman of the Indonesian Tobacco Community Alliance (AMTI), urges the government to encourage partnerships between local tobacco farmers and the cigarette industry. This would impact positively on the quality and quantity of tobacco production, while it would also enhance the welfare of the farmers. Siswoyo added that one of the problems in the tobacco industry is that there exists a long line of middlemen between the small local farmer and the cigarette industry. In this line, the farmer receives the smallest price for his tobacco.