Revenue sharing fund of tobacco excise not yet profitable for farmers

It has been almost three months for Surono (42) to wait for the disbursement of revenue sharing funds of tobacco product excise (DBH CHT) from the Central Java Provincial Government.

The tobacco farmer from Magelang previously received the funds in the form of fertilizer and coffee seeds every September. However, a month before the January planting season, a farmer group consisting of 20 farmers, including Surono, has not yet received the assistance. Last year, he said, farmers received 5 tons of fertilizer, along with 5000 coffee seeds. “Now, the process is a bit slow. The tobacco excise revenue-sharing funds cannot be distributed yet,” said Surono to in a telephone interview on Thursday, December 2, 2021.

Referring to the Finance Ministry Regulation No. 230/PMK.07/2020, Magelang received the DBH CHT 2021 amounting Rp 14 billion out of the total fund of Rp 3.47 trillion. The fund will be allocated to 26 provinces and 433 regencies/cities nationwide.

East Java Province received the largest amount of excise revenue-sharing fund of Rp 1.94 trillion or 55.6 percent, around Rp. 200.4 billion of which was given to the Pasuruan Regency.

Central Java region received Rp 743 billion to be disbursed to 36 regencies/cities. Meanwhile, West Nusa Tenggara received a budget of Rp 318 billion, consisting of Rp 95 billion for NTB province and Rp 51 billion for Central Lombok Regency.

This year, half of the DBH CHT allocation must be given to the community welfare sector. This policy is different from the previous year, when the fund was given to the health sector. Of that amount, about 35% is used for direct cash assistance to tobacco farm workers and cigarette factory workers, payment of tobacco production protection insurance contributions for tobacco farmers, and tobacco price subsidies. Meanwhile, the rest is divided for tobacco quality improvement programs, harvest and post-harvest handling, as well as building farming facilities and infrastructure.

“DBH CHT is used to fund programs with priority in the health sector to support the national health insurance program, especially increasing the quantity and quality of health services and economic recovery in the regions,” wrote PMK 206/2020.

In fact, since the beginning of the year, Surono admitted that he had submitted a proposal requesting assistance for fertilizers, tobacco and coffee seeds, along with tractors to cultivate an area of ​​20 hectares. However, he has not received any proposal for assistance until now. Without this assistance, farmers will find it difficult to cultivate the land. “Buying seeds is costly. A subsidy can reduce the burden on farmers. Seeds are a bit expensive at the farm shop,” he said.

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Surono hopes that the fertilizer, seeds and coffee will be disbursed by the end of this year. Because farmers want to use the assistance to create an intercropping farming system or mix tobacco plants with coffee, or vegetables. They use this method since the price of tobacco commodities is currently uncertain. “Cultivating tobacco is less productive. In 3 years, it will be relatively cheap. I hope the fund can be accessed and provide relief to farmers. It is even better if it can be a subsidy, so that a smooth transfer of planting process can produce better plants,” said Surono.

Meanwhile, tobacco farmer from Central Lombok, West Nusa Tenggara, Jopi Hendrayani admitted that he no longer received benefits, either in the form of direct cash assistance or fertilizers, seeds, and agricultural tools since 2015. In fact, as an independent tobacco farmer who does not partner with the company, Jopi really needs this help. “To this day, we still don’t know the exact answer. We hope that the excise revenue-sharing funds will be used for the welfare of farmers,” said Jopi to in a telephone interview on Friday, December 2, 2021.

Head of Agriculture, Department of Agriculture and Plantation of Nusa Tenggara Province, Ahmad Rifai revealed that the fund program for farmers has not been accessible to all farmers in NTB. “We cannot accommodate all of the assistance that we provide to farmers from the tobacco excise revenue-sharing fund in the province. This is because our allocation is small. Considering the amount of the budget, we cannot give it to farmers,” he said. In fact, the land for tobacco farming in NTB is relatively large. He said, each group of farmers can own a land area of ​​20-30 hectares.

“There are so many people who need help. Firstly in terms of cultivation, they need assistance in the form of fertilizer. But because of the budget constraints, we can’t afford it. We only have a small amount of funds for fertilizer, and chopper tools are limited, but   farmers need a lot of it,” he explained.

Instead, Ahmad added, the local government has prepared several programs to improve the welfare of farmers. Among others, through the provision of fertilizers, virginia tobacco seeds and the transfer program. “We also have the construction of reservoirs, and we also have assistance from chopped tobacco. The implementation is in accordance with the Regulation of the Minister of Finance,” he claimed. The location for the construction of the reservoir is located in dry areas, such as East Praya, Central and Waru. “They plant more when it rains,” he added.

He hopes that the plan to build the reservoir will provide tobacco farmers with more choices of commodities. “Our department is always trying to change the planting. The south area is a bit dry. So, the reservoir can later be used to grow other commodities besides tobacco. We hope that it will indirectly provide over planting. As soon as water is available, we will plant other commodities,” he said.

Unlike Surono and Jopi, a farmer in Temanggung, Central Java, Yamidi, said that he had received fertilizer assistance from tobacco excise revenue-sharing funds. The Central Java government provides fertilizer for tobacco weighing 500 kilograms. However, according to him, fertilizer assistance is not sufficient to meet the needs of farmers. This is because for one hectare of land, farmers need at least 45 kilograms of fertilizer. “We have 20 hectares of land. Each plot of land needs hundreds of kilograms of fertilizers. Therefore, it will not be enough,” said Yamidi, Friday, December 3, 2021.

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Moreover, according to the tobacco farmer from  Tlahap Village, not all farmer groups receive the benefits of the excise revenue-sharing fund. Of the 10 farmer groups, only 2-3 groups receive assistance per year. This is because the local government will select proposals for requests for assistance submitted by farmer groups. “That is only fertilizer assistance. The distribution to farmers and farmer groups is not sufficient,” said Yamidi.

In fact, according to Yamidi, the main problem for farmers in Tlahap Village is the availability of water. So far, the farmers who work on tobacco fields at an altitude of 1200-1700 meters above sea level (MDPL) rely on rain-fed water. “But farmers cannot irrigate in the dry season. Our lands are located on the slopes of the mountains. There is no water spring,” he said.

Therefore, he admitted that he had proposed to the local government to build a water reservoir located not far from the residents’ agricultural land. “We just need a water reservoir. During the dry season and want to plant other crops, we can water the crops at no additional cost. That’s what we exactly need right now,” he said. However, this proposal was never realized. The provincial government, said Yamidi, actually built a dam that was located far below the agricultural land. In fact, the agricultural land in Tlahap Village is spread on the slopes of the mountain. “That’s not what the community needs. We just need a water reservoir,” he added.

Results of the research from the Center for the Study of Social Security (PKJS) at the University of Indonesia conducted in June-November 2021 revealed that this year’s tobacco excise revenue-sharing funds provides the opportunity to help farmers who want to switch crops.

However, according to PKJS UI researcher, Suci Puspita Ratih, the results of a study conducted by PKJS in Central Java, East Java and NTB revealed a number of problems that resulted in the ineffective use of the funds. The problems include, among others, the dissemination and transparency of the use of the funds for independent smallholders. In fact, close cooperation is needed between the local government and the beneficiaries, namely farmers.

“This research wants tobacco farmers to not always depend on the industry, one of which is by changing crops. In the Finance Ministry Regulation on the revenue-sharing funds of tobacco product excise (PMK DBH CHT), the fund can be used to help farm workers and cigarette factories who want to change their business,” Suci told on Thursday, December 8, 2021.

However, until this research was completed, according to Suci, the three areas that were the object of the study had not yet implemented the planting transfer and diversification assistance program. It is also known that farmers do not understand the flow of applying for assistance and have never received assistance from the local government. Independent smallholders also admitted that they could not make proposals for submitting funds. “Through the active role of the Agricultural and Plantation Agency (Distanbun), the local government can maximize two-way communication efforts with farmers and carry out needs assessments in the field, especially in accommodating farmers’ aspirations,” she said in a release received by

Therefore, PJKS UI recommends that the local government immediately disseminate about the benefits of DBH CHT, involve farmers in program preparation and build irrigation infrastructure. “The excise revenue-sharing funds should be used to build irrigation, so that farmers can have more options in planting their crops,” Suci said.

In addition, he said, excise revenue-sharing funds could also be used to procure market information, as well as provide assistance, so that farmers can access alternative crop markets on the digital marketplace.

“Improving farmers’ skills to emerge in the digital world. In our opinion, this is the proper implementation of the regulation, which proves that DBH CHT can be used to improve the welfare of farmers. It begins with selling, and ensuring that there are buyers of the products,” she said. has contacted and sent a letter of request for an interview with the Agriculture and Plantation Agency of Central Java Province. However, as of the publication of this writing, the local government has not yet responded.

Meanwhile, the Director General of Fiscal Balance, Ministry of Finance, Astera Primanto Bhakti, is not yet willing to confirm the realization of this year’s cigarette excise revenue-sharing funds. “Regarding the request for an interview, we apologize in advance that we cannot fulfill the request, due to lack of time amid the busy activities and assignments at the end of the year,” said Public Relations of the Ministry of Finance, Alit on Tuesday, December 14, 2021.

In a PKJS release received by on Friday, November 19, 2021, Head of Sub-Directorate of Revenue Sharing Funds, Directorate General of Fiscal Balance, Ministry of Finance, Mariana Dyah Savitri, confirmed about the financing of planting transfers through tobacco excise revenue-sharing funds. This policy has been started since 2018 where the government provided assistance in the form of seeds or other plantation seeds. “The Finance Ministry Regulation provides a legal basis for the use of the revenue sharing funds,” she explained.

Even so, the use of the fund for transfer of planting is still relatively small. Based on the 2021 realization report, it is only 2.66%. For the first semester of this year, the realization was only 1.15%. “Of course, there are many factors in the area. Maybe because the need is low, or actually there is a need, but it hasn’t been detected yet,” she said.

Deputy for Coordination of Health Improvement at the Coordinating Ministry for Human Development and Culture, Agus Suprapto, stated that excise revenue-sharing funds should be accessible to all farmers. “I encourage farmers to access excise revenue-sharing funds,” Agus told by telephone on Thursday, December 9, 2021.

This year, most of the DBH CHT fund was allocated for farmer welfare (50%), while the remaining was used for health and law enforcement. In the field of community welfare, he explained, there are three programs that must be carried out by regional and provincial governments, namely improving the quality of raw materials, fostering the social environment, and improving work skills, one of which is through planting transfers.

“This revenue sharing fund for tobacco products is important for farmers. They should have the courage to switch their crops, they need help to plant other crops, so that their lives will be better,” said Agus.

The chairman of the budget agency of the House of Representatives (DPR), Said Abdullah, assessed that the distribution of excise revenue-sharing funds this year was not effective in promoting the welfare of farmers. According to him, the welfare of farmers should be the burden of the industry, and the DBH CHT is directed entirely to the health of farmers. “The excise income should only be for health. All manufacturers provide direct guidance to farmers. We should just focus on the health aspect,” Said explained on Tuesday, December 14, 2021.

Therefore, he urged the government to put more emphasis on the welfare of farmers. One of them is through import policy and irrigation development. “The evaluation has been done. The budget agency has recommended that imports should be less than 20 percent, building canals or irrigation for farmers’ land. It must be carried out by the local government,” he said.

The House of Representatives also encourages the government to provide health insurance and education to tobacco farming families. This proposal, he said, has been approved by the Ministry of Finance and will be realized in 2022. “In addition to using excise funds, it will also be taken again through the health insurance (BPJS) mechanism,” Said explained. (Abdus Somad)

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