Ahmad Ibrahim
Many tobacco companies have lost millions in major legal settlements
WHEN the Asean Free Trade Area takes effect in 2010, Malaysia will
have to reduce duties on tobacco imports. Local growers, who are less
competitive, may have to explore alternative crops or seek new uses for the
crop, says Ahmad Ibrahim.
Over the years, the world tobacco industry has had its fair share of
controversies. In the United States, for example, many tobacco companies
have lost millions in major legal settlements. But this has not stopped them
from investing more. This happens despite the advertising ban on cigarettes
and the constant anti-smoking campaigns of lobby groups everywhere. Not to
mention the mandatory health warnings on their packaging.

But such constraints have not deterred the industry's growth. How is
it that in spite of all the scientific evidence of tobacco's negative health
record, the population of smokers worldwide continues to rise? Somehow, the
"kick" from smoking appears to be worth all the associated risks.

In Malaysia for many years now, tobacco farming has been the
bread-and-butter of many rural households, especially in Kelantan and
Terengganu, where tobacco farmers have over the years emerged as a political
force to be reckoned with.

They are known to have influenced the outcome of elections. In 2004,
Malaysia recorded its highest-ever tobacco production at 13 million kg dry.

In 2006, this declined to only six million kg dry. Most is flue- cured
tobacco, of which China is the largest producer in the world. Brazil is a
distant second, with about a quarter of China's production. India, the US
and Greece each produces about 12 per cent of China's output.

In Malaysia, with the advent of the Asean Free Trade Area (Afta),
tobacco farming is expected to decline. Under Afta, Malaysia has to reduce
duties on tobacco imports by 2010. This will negatively impact the
competitiveness of Malaysian tobacco, where the cost of production - about
RM10 per kilo - is almost twice that of Thailand's. Indonesia's cost is even
lower.

The average price of cured tobacco is now RM13-14 per kilo. This is
still profitable. With Afta, the price may come down to RM7-8 per kilo.
Hence, the government's recent decision to maintain the price at RM14 per
kilo at least till 2010 was welcomed by tobacco farmers.

What happens after 2010 concerns not only farmers but the government.
That will be when the full effects of Afta will be felt. The government has
in recent years put in place programmes to wean farmers away from tobacco
and into alternative commercial crops. Kenaf is one option. Under the
recently launched East Coast Economic Region (ECER), the target area for
kenaf is about 10,000ha.

This is expected to increase the income of 10,000 marginal tobacco
farmers and create more jobs. But the market for kenaf is still uncertain.
One potential product outlet is natural fibre for insulation. Another is as
composite material for the automotive industry. The question is, will
farmers enjoy the same if not a better income than from growing tobacco?

Another possible crop is jatropha. Unlike kenaf, where the market
prospects are still uncertain, jatropha has potential as biofuel. Jatropha,
being a non-edible oil, is a viable candidate to replace palm oil as a base
material for biodiesel. However, much research is still needed if jatropha
is to match the consistency and yield of oil palm.

Lately, yet another option has emerged: "molecular farming".
Essentially, this involves producing new compounds from tobacco through the
genetic engineering of the tobacco plant.

The new compounds can include pharmaceutical products such medical
drugs, vaccines or antibodies. This is starting to enter the commercial
phase in the West. As tobacco is among the easiest plants to transform
genetically, it is emerging as a popular commercial crop to achieve what
some call "molecular pharming".

Unlike kenaf and jatropha, the market for pharmaceuticals is more or
less assured. This is because the tobacco plant is genetically engineered to
produce medicines and vaccines that are already being used in the
marketplace.

What is needed is to develop an economically high-yielding transformed
tobacco plant designed to produce vaccines for the regional market. This is
not difficult. In the European Union, molecular pharming through tobacco is
on the verge of commercial reality.

There are many reasons for this sudden interest in plant-based
pharmaceuticals. So far, commercial production of clinical-grade
pharmaceuticals has relied on two major production routes: microbial cells
or animal cells. Both use fermentation and are, therefore, expensive to
build and operate. There is also concern that animal cells can harbour human
disease-carrying microbes.

Factor in the growing demand for halal vaccines, and a plant- based
production system immediately becomes attractive. This is also the reason
why the plant-based production platform has attracted strong corporate
interest from companies involved in pharmaceuticals as well as
agrotechnology.

Tobacco is a prime contender in this field. Tobacco has a well-
established technology for gene transfer and expression, and offers
potentially high biomass yield per hectare. There is available large- scale
infrastructure for processing that does not come into contact with the human
and animal food chains.

Most of all, tobacco farmers can continue to grow the crop for which
they have amassed many years of experience and expertise.

Malaysia should seriously consider investing in molecular pharming
with tobacco. It fits with the expansion of the knowledge and innovation
economy, and with the ECER's high-impact agrotech projects.


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