Abstract:
The main objective of this study was to analyse how the global tobacco value chain is associated with local economic development dynamics among tobacco farming communities in Urambo District. The study is based on the global value chain (GVC) approach with its four analytical dimensions namely input-output structures, territoriality, governance structures and institutions. It also applied strategic coupling and the role of institutions and value sequence (representing a broader understanding of upgrading and more nuanced understanding of local economic development) as advocated by the Global Production Network framework (GPN). The research designd employed is case study in which a survey of 228 household heads was conducted followed by qualitative interviews from three tobacco processing-companies, primary cooperative society leaders, and six focus group discussions.
Quantitative data were analysed through a multinomial probit model whereby investments were used as a proxy for local economic development. Explanation building techniques were used to analyse qualitative data. Findings indicate that global requirements by lead firms, communicated through processing companies and PCSs, are transmitted and responded to, through adoption and adaptations by local farmers. Moreover, PCSs mediate relationships between farmers and tobacco processing-companies by ensuring overall value creation, capture and distribution among farmers. In general, local economic development occurs in three ways namely investments at the household level, collective investments at the PCS level and Corporate Social Responsibility programs offered by tobacco processing-companies.
However, contract farming system has also created social tensions and conflicts among farmers that have resulted into value chain struggles – something that has made many (68%) farmers dissatisfied with the arrangement. The findings have several policy implications. For example, due to the unique role of PCSs, there is need for capacity building to PCS leaders in terms of increasing their managerial skills. There is also need to review the PCS registration criteria as well as the inputs supply system.
