Early assessment of tobacco excise sharing fund as policy for farmers’ viable alternatives in Indonesia: case study of four municipalities in Indonesia

Abstract

Indonesia’s Tobacco Excise Sharing Fund (DBHCHT) policy mandates that part of the fund be allocated for tobacco crop diversification – reducing the farmers’ reliance on the tobacco industry as well as implementing Article 17 of the Framework Convention on Tobacco Control (FCTC). We collected primary data from key stakeholders in four main tobacco-producing municipalities. A number of challenges related to DBHCHT utilization remained at subnational levels. The suboptimal use of DBHCHT could be explained in part by (i) constantly changing central government regulations, (ii) farmers’ unawareness of DBHCHT regulations, (iii) delays in DBHCHT allocation, and (iv) supply and demand mismatches. Although Indonesia has not been a part of the FCTC ratification, the DBHCHT mandate is in line with the FCTC article 17, i.e., promoting economically viable alternatives for tobacco farmers. This study concluded that DBHCHT utilization needs to go further to void this mandate given the challenges at the subnational level. Therefore, this study recommends additional technical and practical regulations involving multisectoral stakeholders and the use of DBHCHT to meet the financial needs of crop diversification.