ECONOMY AND RURAL DEVELOPMENT Received for publication: 15 February, 2010. Accepted for publication: 29 June, 2012. 1 Department of Agronomy, Faculty of Agronomy, Universidad Nacional de Colombia. Bogota (Colombia). gaplazat@unal.edu.co 2 Direction of Research, Protabaco. San Gil (Colombia). Agronomía Colombiana 30(2), 289-296, 2012 Comparative analysis of Flue-cured tobacco production costs in Santander and Huila (Colombia) Análisis comparativo de costos de producción de tabaco Virginia entre Santander y Huila (Colombia) Juan Carlos Barrientos F.1, Guido Armando Plaza T.1, and Jesús Rojas2 ABSTRACT RESUMEN Santander and Huila are the largest producers of Flue-cured tobacco in Colombia. They differ in their production systems and, consequently, in their production costs. Costs provide valuable information on the efficiency of resource use, a vari- able that determines the profitability of the crop. The purpose of this study was to determine and analyze the structure of production costs by department, as well as, their differences and possibilities for reduction. Data for the analysis was obtained from the records of Protabaco and surveys of 50 producers (farms) in the municipalities of Campoalegre and Garzon in Huila, and Capitanejo and Enciso in Santander. The results say the costs of the most important factors of production in both departments are: labor, inputs and services. Huila has higher total costs per hectare than Santander, but similar unit costs. Huila has a higher technological level of production, more capital and greater surface area per crop unit than Santander. Production costs can be reduced by increasing the availability of investment capital, and irrigation water, as well as, more efficient management of fertilization, cultural practices and mechanization of land preparation. Los departamentos Santander y Huila son los mayores produc- tores de tabaco Virginia en Colombia. Éstos presentan diferen- cias en sus sistemas de producción y, en consecuencia, en sus costos de producción. Los costos brindan información valiosa sobre la eficiencia del uso de recursos, variable que determina la rentabilidad del cultivo. El propósito del presente trabajo fue determinar y analizar la estructura de costos de producción por departamento, así como sus diferencias y sus posibilidades de reducción. La información para el análisis se obtuvo de los registros de Protabaco y de encuestas hechas a 50 productores (fincas) pertenecientes a los municipios Campoalegre y Garzón en Huila, y a Capitanejo y Enciso en Santander. Los resultados dicen que los costos de los factores de producción más impor- tantes en ambos departamentos son: mano de obra, insumos y servicios. Huila tiene mayores costos totales por hectárea que Santander, pero similares costos unitarios. Huila tiene un mayor nivel tecnológico de producción, mayor capital y mayor superficie por unidad de cultivo que Santander. Los costos de producción se pueden reducir con una mayor disponibilidad de capital de inversión y agua para riego, así como con un manejo más eficiente de la fertilización, de labores culturales y de mecanización de la preparación del terreno. Key words: production factors, area and yields, capital invest- ment, technological level. Palabras clave: factores de producción, superficie y rendimien- tos, capital de inversión, nivel tecnológico. Introduction The production of tobacco is traditional in Colombia, dat- ing from the late eighteenth century. It is labor intensive (240-280 wages/ha per cycle), generating about 15,000 direct jobs per year in production areas (BioGestión, 2008). Demand factors of production inputs, machinery, equip- ment, credit, etc., streamline other branches of the economy such as transport, cardboard processing, advertising, etc. The state also benefits from the industry, domestic trade of tobacco and income taxes (Observatorio de Agrocadenas Colombia, 2000). Tobacco production is done in Huila, Santander, Tolima and the coffee zone with blond tobacco (Flue-cured and Burley) and black tobacco. Production systems have some differences by area, so production costs are also somewhat different. Agricultural production costs are determined by the type of company, the production unit, the quantity, quality and price of the production factors, the production technology, the obtained production, and the physical, social, economic and political environment (Ballestero, 1991; Barrientos, 2008; Bishop and Toussaint, 1991; Dondrup and Rollwage, 1998; Mankiw, 2004; Nicholson, 2004). Production costs 290 Agron. Colomb. 30(2) 2012 allow one to view the structure, efficiency of resource use in the production process, product competitiveness in the market, the projection of the investment and, above all, the profitability of the business (Baye, 2006; BLV Verlagsgesellschaft mbH - Landwirtschaftsverlag GMBH, 2004; Frank, 2009; Heinhold, 2007; Méndez, 2007; Miller and Meiners, 1996; Mochón, 2005; USAID, 2008). Unit production costs, due to economies of scale (and scope), will decrease with the increasing size of the production unit. This fact as shown by CCI and MADR (2007) ex- poses the difference in production costs between a small Santander tobacco farm (less than 5 ha ($3.252/kg)) (all prices are in Colombian pesos) and a medium farm (5-10 ha ($2.964/kg)). The production cost structure depends on the criteria that divide and/or group it: in stages, factors, activities, involvement in the production and use of cash (Herrera, 1998). In Colombia, the cost structure of tobacco production (Tab. 1) is determined by the type of crop, the geographical location and the size of the production unit (CCI, 2001; CCI et al., 2007 y 2009). Santander (50.30%) and Huila (31.04%) are, according to Agronet (2009), the biggest producers of blond tobacco in Colombia (14,516 t in 2008). Due to their unique geographi- cal (Agro-environmental resources), socio-cultural (hu- man resources), economic (capital and financial resources) and technological factors, these departments have differ- ences in production systems, volume and quality of supply, and production costs of blond tobacco. This last economic variable provides valuable information on the use and efficiency of production, which is of interest to producers of raw material for the industry. However, information about this economic indicator is highly variable and in- complete in some cases; it is not a reliable decision-making tool. This gives rise to the present research, whose guiding questions are: What is the structure of production costs in each department? Is there a difference in cost between the departments? What is the difference? Why is there a difference? Can it be reduced? The overall objective of this paper is a comparative analysis of the production costs in Flue-cured tobacco in Santander and Huila. To achieve the overall objective, one sets the fol- lowing specific objectives: 1) to analyze the cost structure of production in each municipality and department, 2) identify and analyze the difference in costs between mu- nicipalities and departments, 3) identify and analyze the factors responsible for the difference in production costs and 4) explore the possibility of reducing costs. Materials and methods Study area For this study, representative municipalities for tobacco production from each department were used: in Huila, Garzón and Campoalegre, and in Santander, Capitanejo and Enciso. Tab. 2 shows some differentiation factors in the production of tobacco between the departments and municipalities under the present study. TABLE 1. Cost structure of production in Colombia of blond tobacco according to authors and years ($/ha). Production factors Blond tobacco (2003) – average Santander and Huila [1] Blond tobacco (2003) - Santander [2] Blond tobacco Virginia (2006) – Huila [3] Blond tobacco (2007) – Santander [4] Blond tobacco (2009) – Tolima [5] Blond tobacco burley (2009) – Santander [6] Land 409,474 750,000 280,000 774,500 2,014,000 Labor 1,610,237 4,970,543 2,889,000 2,715,060 2,773,794 2,980,000 Inputs 956,900 150,870 3,102,000 1,744,040 3,251,214 1,912,000 Materials 51,606 150,870 1,027,500 169,633 Machinery, equipment, tools 83,986 150,870 83,500 Services 131,207 897,000 2,232,000 284,050 2,546,848 1,060,000 Capital (interest) 385,000 294,554 Tobacco fund tax 215,000 201,400 Withholding tax 40,280 Administration 129,521 322,500 140,524 243,803 15,438 Insurance 120,000 *Contingencies 234,207 406,338 **Indirect costs 1,861,519 Cost per hectare 3,372,931 8,181,672 10,923,000 5,397,881 9,996,497 8,890,805 * Item in projected costs **Sum of indirect costs of factors (land, administration, etc.). [1] Observatorio Agrocadenas Colombia – Ministerio de Agricultura y Desarrollo Rural, 2004. [2] Ministerio de Agricultura y Desarrollo Rural - Observatorio Agrocadenas Colombia, 2005. [3] Gobernación del Huila - Secretaria de Agricultura y Minería - Cadena Productiva de Tabaco, 2007. [4] Corporación Colombia Internacional (CCI) - Ministerio de Agricultura y Desarrollo Rural (MADR) – Sistema de Información Agropecuaria (SIA), 2007. [5] Corporación Colombia Internacional (CCI) - Ministerio de Agricultura y Desarrollo Rural (MADR) – Sistema de Información Agropecuaria (SIA), 2009. [6] Protabaco – Bages Fernando, 2009. 291Barrientos F., Plaza T., and Rojas: Comparative analysis of Flue-cured tobacco production costs in Santander and Huila (Colombia) made between the survey information from the producers and the company information to obtain partial costs for the stages and factors and the total cost per hectare per munici- pality and per department. Subsequently, the percentage of participation for each factor and stage in the total cost per hectare was calculated, which constituted the basis of the analysis of part of the study. The other benchmark is the unit cost analysis, which is obtained by dividing the total costs by total production. This data was used to analyze the efficiency of resource use (production technology and management) and its relation to the size of the crop area. As a benchmark for profitability comparison of the crop, the average sale price of $5,500/kg was used. For the analysis of the potential cost reduction, the characteristics of farms with lower unit costs were used as a base. Results and discussion Structure of production costs Costs by stages According to Tab. 4, the culturing step, on average, accoun- ted for approximately 59% of the production costs, followed by the post-harvest stage with approximately 32% and the nursery stage with about 9%. In general, Huila spent 8% Required information and its acquisition Production costs of Flue-cured tobacco in the four mu- nicipalities in the present study came from a sample of randomly selected tobacco producers (Tab. 3), who worked with the company Protabaco in semester I-2008. They completed a structured questionnaire with open and closed questions, called “tobacco production systems in Colom- bia” in the second half of 2008, for which production costs only constituted a part. Regional cost tables of the company were also used, as well as, the production records of its creditors to supplement the information gathered in the surveys. From this information, which is newer than the survey, inflation was subtracted for 2009 and part of 2008 to make the calculations. TABLE 3. Tobacco producer sample for the survey. Municipality / department Population Sample Campoalegre 15 10 Garzón 17 11 Huila 32 21 Capitanejo 18 11 Enciso 49 18 Santander 67 29 Total 99 50 Systematization and analysis of information Initially, a matrix of production factors was built for the costs and the stages with Excel. Then, an adjustment was TABLE 2. Comparison Factors for Flue-cured tobacco production: Huila and Santander. Comparison Factors Huila Santander Campoalegre Garzón Capitanejo Enciso Altitude (m a.s.l.) 525 828 1,090 1,554 Temperature (°C) 27 24 21 19 Precipitation (mm/year) 1,254 1,210 950 950 Average cultivated area (ha) 7.38 7.59 1.49 1.53 Average yield (kg ha-1) 2,746 2,904 2,328 2,823 Type of land use right (in order of importance) Renter, owner Owner, sharecropping, renter Availability of labor Permanent and temporary workers Family, wage workers and permanent and temporary workers Source: Historical data from Protabaco, 2005-2008. TABLE 4. Structured summary of Flue-cured tobacco production costs by stage and factor in two municipalities of Huila and two municipalities of Santander. Production costs Municipalities Departments Campoalegre Garzón Capitanejo Enciso Huila Santander $/ha (%) $/ha (%) $/ha (%) $/ha (%) $/ha (%) $/ha (%) Stage Nursery 1,167,298 9.52 1,193,587 9.72 958,982 8.23 911,482 8.27 1,180,443 9.62 935,233 8.26 Culturing 7,115,007 58.03 6,971,793 56.73 7,115,658 61.16 6,503,297 59.01 7,043,402 57.38 6,809,479 60.08 Post-harvest 3,977,986 32.45 4,124,159 33.56 3,560,493 30.61 3,605,109 32.72 4,051,073 33.01 3,582,801 31.67 Factors 1. Land 931,432 7.6 990,909 8.06 537,413 4.62 503,704 4.57 961,171 7.83 520,559 4.59 2. Labor 4,421,588 36.06 4,501,949 36.63 4,717,281 40.54 4,292,416 38.95 4,461,769 36.35 4,504,849 39.75 3. Inputs 3,580,330 29.2 3,359,851 27.34 3,064,653 26.34 2,662,478 24.16 3,470,091 28.27 2,863,566 25.25 4. Services 1,895,879 15.46 1,976,595 16.08 2,113,852 18.17 2,319,255 21.05 1,936,237 15.77 2,216,554 19.61 5. Equipment-tools-materials 441,106 3.6 441,106 3.59 296,046 2.54 296,046 2.69 441,106 3.59 296,046 2.62 6. Administration-Insurance-Taxes 989,956 8.07 1,019,129 8.29 905,888 7.79 945,989 8.58 1,004,543 8.18 925,939 8.19 Total production costs 12,260,291 100 12,289,539 100 11,635,133 100 11,019,888 100 12,274,915 100 11,327,511 100 292 Agron. Colomb. 30(2) 2012 more than Santander. This difference is apparently not very relevant, but nevertheless, becomes more noticeable at the nursery (26%) and post-harvest (12%) stages. Costs by factors The cost structure is made up of six groups of production factors, which have a share percentage of the total direct costs. From Tab. 4, the major factors in costs are: labor (36 - 40%), materials (25- 28%) and services (16 - 20%). Huila spends 85% more on land, 21% more on inputs (23% more on solid fertilizers, 1800% more on herbicides, 33% more on coal) and 49% more on equipment, materials, tools than Santander, meanwhile Santander spends 10% more on labor (with a 56% increase in land preparation, 44% in irrigation and drainage and 30% in weeding and hoeing) and 15% more on services (100% more in preparation of the land with oxen and 66% in transport) than Huila. Production cost difference between municipalities and departments Costs per hectare ($/ha) There are differences in production costs between de- partments and between municipalities, but they are only about 10% (Tab. 5). The production of one hectare of blond tobacco in Huila costs 8% more than in Santander. In Campoalegre, the municipality with the highest costs, the production of blond tobacco by cost per hectare is 11% more than in Capitanejo, the municipality with the lowest costs in the studied areas. Differences between municipalities and departments became more noticeable in the cost ran- ges. Campoalegre was the municipality with the smallest cost range (max - min = $1,682,897/ha) and Garzón had the largest (max - min = $3,926,322/ha). The average range in Huila for cost is approximately $3.5 million/ha, 11% above the average and 19% below, and Santander has an average range of around $3.2 million/ha, 13% above the average and 18 % below. Ranges from 3.2 to 3.5 million pesos per hectare indicate marked differences between production units. These differences are due to two main aspects: agri-supply (soil and climate) and management of the production unit (technology and resource management). There is no exact knowledge about the proportionality of each factor’s effect. Unit costs ($/kg) The unit cost differences both between the municipalities and between the departments have characteristics so- mewhat different from the costs per hectare (Tab. 5). Pro- ducing one kilogram of tobacco in Huila is, on average, 2% more expensive than in Santander. But between Capitanejo, the municipality with the highest unit costs, and Enciso, the municipality with the lowest unit costs, this difference increases to about 35%. The most striking differences are in the range (max - min). At the departmental level, Santander has a range of $9,688/kg, 176% above the average and 40% below, while Huila shows a slightly lower range, $4,796/ha, 76% above the average and 29% below. Among the muni- cipalities, the highest range ($8,835/kg) is in Capitanejo, and the lowest ($3,267/ha) is in Campoalegre. This range is somewhat “exaggerated” in Santander due to farms that have low yields, as in the case of Capitanejo with 844 kg/ ha and in Garzón with 1,618 kg/ha (Tab. 5) . This shows that one can find this kind of yield in both Santander and Huila. The factors determining the magnitude of the ran- ges are, as noted above, crop management, which includes production technology, and the influence of geography, including climate. On the other hand, unit costs above the sale price have been found in all studied municipalities, which in this case is $5,500/kg, mainly due to low yields. This means that the probability of risk in Huila is 19% (4 of 21 cases) and 10% in Santander (3 of 29 cases). TABLE 5. Production costs, yields and growing area of Flue-cured tobacco in two municipalities of Huila and two municipalities of Santander. Economic factors Municipalities Departments Campoalegre Garzón Capitanejo Enciso Huila Santander Cultivation area (ha) Average 7.38 7.59 1.49 1.53 7.49 1.51 Maximum 20.00 15.00 2.00 4.00 20.00 4.00 Minimum 3.30 3.00 0.60 0.50 3.00 0.50 Yield (kg ha-1) Average 2,746 2,904 2,328 2,823 2,829 2,635 Maximum 3,647 4,067 3,510 4,140 4,067 4,140 Minimum 2,000 1,618 844 1553 1.618 844 Cost per hectare ($/ha) Average 12,260,291 12,289,539 11,635,133 11,019,888 12,274,915 11,327,511 Maximum 13,273,435 14,168,686 12,984,200 12,634,382 13,721,061 12,809,291 Minimum 11,590,538 10,242,364 10,331,714 8,851,565 10,242,364 9,591,640 Unit cost ($/kg) Average 4,651 4,524 5,361 3,962 4,585 4,493 Maximum 6,564 8,050 12,404 6,401 8,050 12,404 Minimum 3,297 3,254 3,569 2,716 3,254 2,716 293Barrientos F., Plaza T., and Rojas: Comparative analysis of Flue-cured tobacco production costs in Santander and Huila (Colombia) Determining factors of production costs Using the type of labor and land Santander uses 27% family labor and 27% wage earners, and 55% is grown on the owner’s land and 19% by share- cropping, while in Huila over 95% of the production units use contracted labor and rented land (Tab. 6). In Huila, 85% more is paid for land and 5% more for labor than in Santander, while the latter spent 6% more in wages than Huila (Tab. 7). The availability of family labor, wage earners, and land use by owners and sharecropping allow producers to reduce their explicit costs. However, since money is not required to pay for these resources, their use may not be efficient, thereby actually raising costs, as may be the case in Santander. Agro-environmental offering of the growing areas In Santander, there is less availability of water than in Huila, many of the soils are shallow, stony, and located in hilly country with medium fertility (Observatorio de Agrocade- nas Colombia, 2000). These conditions make certain tasks such as land preparation, cultivation, hoeing, transport and irrigation (Tab. 2) a bit more expensive than in Huila. Meanwhile, Huila has deep, flat, soil with good fertility and irrigation availability. Under these conditions, the yields in Huila are, on average, about 12% higher than in Santander (Tab. 5). It should be noted that yield does not only depend on the geographical conditions of the production area. Production technology and crop area Better technology, under the same conditions, will result in lower unit costs, higher yields and/or better quality product. The curve relating unit costs with acreage gives an idea of the level of technology of a production system. Each curve is “technology” or “technical degree”, which reflects the efficiency of the use of production factors. According to Fig. 1, tobacco producing areas of the present study have developed specific technologies in response to the availability of resources: mainly land, labor (including management thereof ) and financial capital. According to the graphs in Fig. 1, the technology gap between Santan- der and Huila is notable. The production technology of tobacco in Huila is based on the use of more land (Fig. 1), the mechanization of some tasks such as land prepa- ration and hilling, the specialization of labor in weeding, harvesting and classification, the use of large amounts of fertilizer (Tab. 7), and the widespread use of irrigation. Technological curves (Fig. 1) allow us to see the point that denotes the optimal size of the production unit that corresponds with the lower unit costs of production. In Huila, it is between 11 and 15 ha (approx. $3,200 - $3,700/ kg) and in Santander, it is between 2 and 3 ha (approx. $4,500 - $3,200/kg). Prices and quantities of production factors For all the production factors, Protabaco, which is active in both departments, offers producers inputs, materials and funding. Although the company maintains the same input prices for the two areas, the amounts and types of inputs that are delivered in each area are different, thereby changing costs. Meanwhile, producers provide/obtain the land, labor, equipment and tools, and most services. In each case, there are differences in prices and quantities. The most relevant production factors are: land, labor and fertilizer. In Huila, 85% more is paid for leased land than in Santander and 5% more for labor, but 6% less is used. Although Santander uses more and pays more for liquid fertilizers, Huila uses 24% more solid fertilizer than Santander, and pays 2% more for it (Tab. 7). A regression performed between yield and amount of solid fertilizer applied in Huila shows a negative relationship, indicating that increased fertilizer application may decrease yield. The same regression test for Santander shows a positive relationship between these variables. This result requi- res further analysis, taking into account the nutritional TABLE 6. Use of labor and land use types (%). Factors Municipalities Departments Campoalegre Garzón Capitanejo Enciso Huila Santander Labor Family 0 0 34 23 0 27 Permanent Workers 23 43 15 2 33 8 Temporary Workers 76 55 32 37 65 35 Wage earners 0 0 19 32 0 27 Labor contract 1 2 0 6 2 3 Total 100% 100% 100% 100% 100% 100% Land Owner 0 5 82 37 3 55 Renter 100 95 6 39 97 26 Sharecropping 0 0 12 24 0 19 Total 100% 100% 100% 100% 100% 100% 294 Agron. Colomb. 30(2) 2012 FIGURE 1. Ratio of acreage (ha) and unit cost ($/kg) in municipalities of Huila (A, Campoalegre; B, Grazón) and Santander (C, Capitanejo; D, Enciso), showing the optimal size of the production unit. The points were obtained by averaging three clusters of unit costs for each municipality. y = 293,16x 2 – 1912,8x + 6269,7 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 0 1 2 3 4 5 U ni t c os t ( $/ kg ) Acreage (ha) 3,150 3,26 R2= 1 y = 420,8x2 – 1908,9x + 6715,6 1,000 2,000 3,000 4,000 5,000 6,000 0 1 2 3 4 5 U ni t c os t ( $/ kg ) Acreage (ha) R2= 1 2.27 y = 16,237x2 – 356,17x + 5144,1 0 1,000 2,000 3,000 4,000 5,000 6,000 0 5 10 15 20 25 U ni t c os t ( $/ kg ) 3,191 10.9 R2= 1 4,551 y = 11,074x2 – 340,64x + 6345,7 R2= 1 0 1,000 2,000 3,000 4,000 5,000 6,000 0 5 10 15 20 25 U ni t c os t ( $/ kg ) Acreage (ha) 15.4 3,726 Acreage (ha) A B C D 295Barrientos F., Plaza T., and Rojas: Comparative analysis of Flue-cured tobacco production costs in Santander and Huila (Colombia) requirements of the plant, when to apply fertilizers, sou- rces used and soil characteristics. Possibility of reducing unit costs Production costs can be decreased as seen in the farms that yielded the lowest unit costs: $ 3,254/kg in Huila and $2,716/kg in Santander (Tab. 5). The characteristics of the farms with the lowest unit cost of each zone are: presence of postharvest room and oven, water for irrigation, investment capital (credit or cash), use of the results of soil analysis for fertilization, a density equal to or greater than 20,000 plants/ha, mechanized preparation of the ground where possible, use of about 1,000 kg of fertilizer per cycle and a surface close to the optimal cultivation area (Fig. 1). These features are related to lower production costs in each area. Additionally, certain tasks can be done more efficiently such as weeding, hoeing, harvesting and postharvest (less labor), or more efficient use of fertilizers in Huila is possi- ble (less labor and fertilizer) and increased use of these in Santander (higher yield), and finally, a cheaper method of soil preparation could be developed in Santander (increased mechanization). Conclusions and recommendations Production costs indicate the investment amount of a production project, reflect agro-ecological conditions of production and resource use efficiency and the competitive- ness of a company in the international market. Cost production information in Colombia is varied, so taking into account various sources to have an average reference is recommended. The most reliable sources are tobacco companies. The two areas in the present study differ in climate and soil conditions, availability of labor, crop area size of tobacco, type of land use, capital investment and technological level. The structure of production costs of tobacco is similar in the two study areas. There are some differences in the use of production factors, such as site preparation, weed control, water management and type of land use. For the calculation of tobacco production costs, the “unexpected” should only be used for planning and/or investment purposes. Production costs of tobacco differ by department and mu- nicipality, as well as by size of production unit. In Huila, costs are higher per hectare and per kilogram of product than in Santander. At the municipal level, Enciso has much lower costs per hectare per kilogram of product, while in Capitanejo costs are higher per kilogram. In Huila, compared with Santander, more is paid on average for land, labor and some inputs such as fertilizers. In the latter department, more days are spent per hectare / cycle but using family labor and wages, so explicit costs are lower. We recommend scientific research on this last topic and the “apparent” overuse of fertilizers in Huila. TABLE 7. Costs and amounts of wages, fertilizer and land for one hectare of tobacco. Municipality and Department Wages per hectare Wage unit cost ($) Liquid fertilizer (L ha-1) Liquid fertilizer unit cost ($/L) Solid fertilizer (kg ha-1) Solid fertilizer unit cost ($/kg) Land unit cost ($/ha) Campoalegre Average 276 16,000 1.7 16,512 1,323 1,376 931,432 Maximuum 294 16,000 4 45,846 1,627 1,576 1,001,818 Minimum 260 16,000 0 12,892 884 1,227 712,500 Garzón Average 265 17,000 0.9 10,791 1,166 1,430 990,909 Maximum 297 17,000 3 13,578 1,811 1,653 1,000,000 Minimum 232 17,000 0 0 260 1,289 900,000 Capitanejo Average 286 16,500 1.3 13,030 1,070 1,463 537,413 Maximum 321 16,500 8 20,475 1,251 1,986 1,200,000 Minimum 266 16,500 0 0 828 1,166 300,000 Enciso Average 286 15,000 2.3 16,038 931 1,333 503,704 Maximum 311 15,000 14 95,813 1,513 1,448 1,000,000 Minimum 267 15,000 0 0 301 1,128 320,000 Huila Average 270 16,500 1.3 13,515 1,241 1,404 961,171 Maximum 297 17,000 4 45,846 1,811 1,653 1,001,818 Minimum 232 16,000 0 0 260 1,227 712,500 Santander Average 286 15,750 1.9 14,897 984 1,382 520,556 Maximum 321 16,500 14 95,813 1,513 1,986 1,200,000 Minimum 266 15,000 0 0 301 1,128 300,000 296 Agron. Colomb. 30(2) 2012 Based on unit costs, Santander has a greater range (diver- sity) of technological levels than Huila, where technol- ogy is more homogeneous (less yield difference between maximum and minimum), characterized by increased mechanization, increased use of irrigation, increased use of fertilizer and taking advantage of economies of scale. The latter is clearly reflected in the production of tobacco, showing optimal surfaces (with existing technology), 11-15 ha in Huila and between 2 and 3 ha in Santander. This does not mean, however, that the economy of scale is always the answer to lower production costs. Proof of this is seen in Enciso (Santander), where the lowest unit costs of the study areas have been achieved. It is possible to reduce the unit costs of tobacco produc- tion. Options include the availability of investment capital and water for irrigation, efficient fertilization manage- ment, efficiency in cultural practices, mechanization of land preparation, optimal cultivation area and efficient use of land (sharecropping and leasing). Businesses and producers need to try to implement each option for cost reduction. Acknowledgements The authors are grateful to the project: “Evaluación técnica y económica de alternativas para el mejoramiento de la fertilización de tabaco (Nicotiana tabacum) tipo Flue- cured en los departamentos de Santander y Huila” and to the Ministerio de Agricultura y Desarrollo Rural for financing this study. Literature cited Agronet. 2009. Área cosechada, producción y rendimiento de tabaco rubio, 1987-2008. In: http://201.234.78.28:8080/jspui/bitstre am/123456789/1335/1/2008425103956_TABACO-SANTAN- DERES.pdf; consulted: July, 2012. Bages, F. 2009. Cálculo de la competitividad de tabaco Burley en Santander. 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