Shortage of workers, high costs, and drought: Tobacco farmers in trouble

Croatian tobacco producers face mounting financial pressure this year due to a combination of prolonged drought, rising energy costs, and a severe shortage of labor. While current purchase prices allow for continued production, industry representatives warn that these factors threaten the sector's profitability. Stjepan Komar, a farmer from Vukosavljevica, described the situation as increasingly difficult each year. He has cultivated the crop for four years on approximately 17 hectares within the municipality of Spic Bukovica. For his family business, the lack of workers, higher costs for fuel and agricultural inputs, and persistent dry conditions have become major burdens. The primary operational challenge for many growers is securing sufficient manpower. Although some farmers have transitioned to mechanical harvesting to mitigate labor shortages, this shift introduces new expenses and requires staff capable of maintaining complex machinery. Komar stated that hourly wages during harvest currently stand at around seven euros, including a meal. When pay is calculated based on filling a drying unit, daily rates range from 40 to 60 euros, averaging roughly 55 euros. Filling one dryer manually typically requires ten workers operating six days a week. Despite these offers, finding personnel remains difficult. Komar considered hiring foreign workers but currently employs domestic staff, noting that while he understands their wage expectations, producers have limited room to increase salaries further. Water availability has also become a critical determinant of production success. Komar reported that his area received almost no rain for nearly three months. To compensate, he irrigates the crops using water pumped from deep wells. Operating the pumps consumes significant amounts of fuel, which drives up costs. Consequently, he hopes for the electrification of agricultural land and county-level support for such infrastructure projects. High utility bills persist even after the harvest. The farm operates seven drying units. Komar replaced traditional wood-fired drying with gas systems, a change made because firing wood required round-the-clock work and large quantities of timber. However, he noted that gas costs have also risen, making the modern solution expensive. The purchase price agreed upon earlier in the year is now under scrutiny. Komar warned that while the current rate allows operations to continue, further cost increases could render the calculation unviable. He observed that the price for third-class tobacco, into which his average yield falls, is slightly lower than last year. He cautioned that if energy and input costs continue their upward trajectory, the current compensation will become insufficient. Mihael Colak, president of the Tabacum association, publicly highlighted the issue, stating that this year’s drought and cost hikes seriously jeopardize viability. He specifically pointed to the purchase price of 2.5 euros, which was contracted in spring before energy and input costs surged. Colak argued that had producers known the extent of the cost inflation in spring, they would likely have protested, as the sector approaches a point of non-viability. Hrvatski Duhani, the national buyer, responded that the average purchase price is not yet finalized because the buying process is still ongoing. According to the company, current indications suggest the final average price will exceed three euros. Aleksandra Grigic, chairwoman of the management board of Hrvatski Duhani, stated that purchase prices have increased by 75 percent since 2020. She explained that adjustments are made according to market possibilities. Grigic identified secure placement of the product as a key reason why tobacco cultivation continues to attract younger farmers. She added that the crop thrives on sandy soils where other plants struggle, giving it an advantage in crop selection decisions. The company purchases all contracted production. During the production cycle, Hrvatski Duhani assists producers with low-interest short-term loans, which can finance both agricultural inputs and labor costs. Grigic emphasized that the sustainability of production depends increasingly on adaptation to weather irregularities. Currently, irrigation covers 43 percent of the areas managed by their producers. In regions with simpler growing conditions, irrigation is largely established, while implementation on other parts of the land is ongoing. The company maintains that despite the challenges, the structural advantages of the crop remain intact.