The study aims to examine the economic impact of tobacco vis-a-vis rice farming and identify what its continued production entails for farming households and LGUs. It reviews related legislations, policies and programs to understand the legal framework that governs agriculture in general, and tobacco farming in particular. In addition, the study also looks into the contribution of the tobacco excise revenues to see whether it benefitted the tobacco farming communities as recipients, especially the farming households in Candon City, Ilocos Sur. The study compares the profitability of tobacco vis-a-vis rice by subjecting the household incomes derived from these crops to cost and returns analysis. Finally, the study measures the household-level food security by using the subsistence level carrying capacity analysis.
The study concludes that tobacco farming as an agricultural activity has many economic impacts. While it is not consumed for food, it is a contributor to household income and employment generation, but income from tobacco farming alone cannot contribute in the attainment of household food security. In comparing the net income from farming rice and tobacco, the study shows that tobacco-farming households are almost on the same footing as rice farmers. The average cost of production in farming tobacco is significantly high that evens out the average farm income derived from the crop. All in all, tobacco farmers are not better off than rice farmers.
Furthermore, the study shows that tobacco production seems to be in a relative decline. Both the volume of tobacco leaf production and land areas devoted to tobacco are declining which could be attributed to the decreasing productivity of farms where tobacco are planted; the change in the land uses of these agricultural lands; and/or the shifting of farmers from planting tobacco to other crops.