Assessing the Level of Poverty and Utilization of Government Social Programs Among Tobacco Farmers in Indonesia

Abstract

Abstract Introduction Studies examining profit suggest that former tobacco farmers do as well or better than current tobacco farmers. Research has yet to examine the relationship among current and former tobacco farmers, poverty, and receipt of government social assistance. This type of research is critical to understanding the direct and indirect subsidization of tobacco growing. This study analyzed tobacco farmers’ poverty levels and receipt of government social assistance programs. Aims and Methods We designed and conducted an original four-wave economic survey of current and former tobacco farming households in Indonesia between 2016 and 2022. We then used descriptive analysis and probit regression for panel data to estimate the relationship between tobacco farming and poverty status. Results Tobacco farmers’ per capita income and poverty rates vary across years. The poverty rate was significantly higher in the year with a higher-than-normal rainfall as it negatively affected farming outcomes. During this year, the poverty rate among current tobacco farmers was also higher than that of former tobacco farmers. Regression estimates from the panel data confirm the association between tobacco farming and the likelihood of being poor. We also found a high share of current tobacco farmers who receive government social assistance programs, such as cash transfer programs and a universal healthcare program. Conclusions Our findings show high poverty rates—particularly during bad farming years—and high rates of government social assistance among tobacco farmers. The high rates of government assistance among tobacco farmers living in poverty show that the government is indirectly subsidizing the tobacco industry.