The tobacco small farmers and impact of restrictive credit policies on the planted area in Brazil: assessment of tobacco control policies

Abstract

Brazil is one of the greatest tobacco producers, just behind China, and the largest tobacco exporter in the world. On  the consumer side, the harmful effects of smoking on human health have led to a debate on control policies. In addition, the initiative to become a member of the Framework Convention Tobacco Control (FCTC) and the creation of the Brazilian Tobacco Control Policies (PNCT in Portuguese), both in 2005, has contributed to the implementation of various measures to reduce the demand for tobacco in the country. Furthermore, to promote agricultural diversification, the Brazilian Central Bank has gradually restricted credit to small tobacco farmers in the National Program for Strengthening Family Farming (PRONAF in Portuguese). In this context, this paper aims to estimate the impact of credit restriction on tobacco production according to the productive structure of family farming. The results of the study show that the greater the rural credit restrictions imposed in alternative scenarios, the more significant the reductions in tobacco areas and income. Also, the increase in revenue from other agricultural activities mainly affects the group of farmers with 5 to 100 hectares, which shows the potential of this policy as an alternative to reduce tobacco dependence.