APTI The Value Of Excise Policy Threatens The Survival Of Tobacco Farmers

Chairman of the APTI DPN Agus Parmuji. (Photo: Doc. Antara)

JAKARTA - The National Leadership Council of the Indonesian Tobacco Farmers Association (DPN APTI) assesses that the excise policy contained in the 2025 Fiscal Policy Basic Macro Economic Framework (KEM PPKF) threatens the continuity of tobacco farmers.

This was said by the General Chairperson of the APTI DPN Agus Parmuji in response to the 2025 Fiscal Policy Basic Macro Economic Framework (KEM PPKF) submitted by the Minister of Finance, Sri Mulyani at the plenary meeting of the DPR RI on May 20, 2024.

In the document, the government formulates the direction of excise policy, including: tariffs are multi-year; moderate tariff increases; simplifying excise rates; and getting closer to the disparity of inter-layer rates.

"The government in formulating the direction of the excise policy does not pay attention to the survival aspects of tobacco farmers," he said in his statement in Jakarta, quoted from Antara, Thursday, May 30.

According to him, the 10 percent increase in excise that took effect in 2023 and 2024 severely hit tobacco farmers, because it had been 5 years in a row that they were not doing well, even slumped considering that the tobacco harvest had collapsed both at price and was late in absorption.

In the last 5 years, he added, the increase in excise excise duty, which in 2020 excise will increase by 23 percent, in 2021 it will increase by 12.5 percent, in 2022 it will increase by 12 percent, in 2023 and in 2024 it will increase by 10 percent.

The high excise tariff on tobacco products (CHT), he said, would make the company reduce production which indirectly reduce the purchase of raw materials. In fact, 95 percent of tobacco produced by farmers is for cigarette raw materials.

"The purchase of industrial tobacco in farmers from 2020 continues to decline. Because excise duty continues to rise and the legal cigarette market is eroded by illegal cigarettes. The decline in purchases is in the range of 20-30 years," he said.

Agus added, with the increase in prices, simplification of excise, and getting closer to the disparity of inter-layer rates, the price of cigarettes is even more expensive, so smokers have the potential to switch to cheaper cigarettes, and the cheapest price can only be offered by illegal cigarettes.

"When illegal cigarettes are rampant in the market, they will erode official cigarette products, so that the officially turnover production of cigarettes will decrease, automatically producers will also reduce the purchase of raw materials, in this case tobacco," he said.

The decline in tobacco purchases, he continued, also had an impact on the lack of enthusiasm for farmers to plant tobacco.

He said, with simplification, of course, the ones who benefited were cigarette companies with international brands, where the products used very little local tobacco from farmers' harvests.

The APTI DPN hopes that towards the final term of the leadership of the President of the Republic of Indonesia, Jokowi can provide a 'gold gift' in the form of policies that protect the tobacco farmers' ecosystem throughout Indonesia so that it can be the next leadership guidelines.