The Economics of Tobacco Farming in North Macedonia [Policy Note]

This Policy Note was written by Analytica in North Macedonia. The policy note presents the findings from a survey of 806 farming households in the country. The survey assesses the economics of tobacco farming relative to other crops. The results suggest that tobacco is not a very profitable crop for farmers, and requires very high input costs and large amounts of unpaid family labor. Farmers who grow other crops earn higher incomes, and current tobacco farmers have the highest incidence of poverty (22.59%), while never tobacco farmers have the lowest (10.81%). Tobacco farmer income further decreases when the opportunity costs of unpaid family labor are considered. Children are also 2.3x more likely to harvest tobacco than other crops. Despite the challenges associated with tobacco cultivation, many farmers continue to grow tobacco due to the long tradition of tobacco farming in North Macedonia, generous government subsidies, and a lack of information regarding alternatives. 77% of the current tobacco farmers state that they would not continue growing tobacco if the subsidies ended. The survey results also suggest that former and never tobacco farmers have a more diversified economic profile and tend to be better off economically than current tobacco farmers. The policy note concludes with recommendations for policy makers to help current tobacco farmers transition to more profitable endeavors and improve agricultural subsidies to grow other crops especially food in the long-term. 

The corresponding Report and Policy Brief can be found here and here, respectively.