Government to buy domestic tobacco despite surpluses

The Taiwan Tobacco and Liquor Corp (TTL, 台灣菸酒公司) said yesterday it will continue to buy tobacco from domestic growers, despite having surpluses stockpiled in warehouses.

TTL Chairman Morgan Hwang (黃營杉) said the Executive Yuan in a recent meeting made this policy decision. The company's major concern was the difficulties faced by tobacco growers in changing to other crops, Huang added.

The Executive Yuan has instructed the TTL to continue to buy domestic tobacco, although this year's volume will only be half of last year's, or around 274.5 million kilograms.

Next year's volume will be 80 percent of this year's, and purchases the following year will shrink by the same amount.

The Cabinet's decision has angered the TTL's labor union, but Huang said he will do his best to communicate with staff that as a state-controlled enterprise, TTL must follow the instructions of the government.

Amid criticism that the TTL has turned its back on Taiwan products, Huang claimed that the company cares most about local industry.

The company uses Taiwan rice and corn, and also uses Taiwan sorghum to produce liquor, compared with the famous Kinmen kaoliang, which uses imported sorghum.

In addition, tobacco growers can bring in a crop in a very short period of time, fetching up to NT$400,000 per hectare, which he said also causes discontent among farmers who produce other products.

The dispute between the TTL and local tobacco growers can be traced to when the Taiwan Tobacco and Wine Monopoly Bureau (菸酒公賣局) -- the predecessor of the TTL -- after scrapping its monopoly system in anticipation of the nation's entry into the WTO in 2002, terminated its contracts with the tobacco growers and compensated them to the tune of NT$1.05 million (US$30,882) per hectare.

TTL officials said that faced with international competition in view of WTO entry, domestic tobacco could not compete with other nations in terms of either quantity or price. So far, compensation of nearly NT$6.6 billion has been paid to local growers.

The company also commissioned the Council of Agriculture to help the tobacco growers switch to other crops.

The tobacco growers are not content with these measures and have continued to put pressure on the government through various channels, forcing the Legislative Yuan to pass last year a resolution instructing the TTL to continue to buy domestic tobacco.

This resulted in the company being forced to spend NT$1.2 billion on unneeded tobacco every year, incurring censure and correction from the Ministry of Audit.

Despite this, some growers are not satisfied with the decision and said they plan to protest at the Ministry of Finance Sept. 13.

Currently, there are around 2,119 tobacco growers in Taiwan.