From Prosperity to Poverty
FCV tobacco farmers in India face the threat of having to undertake the reverse journey from prosperity to poverty as excessive taxation on cigarettes and extreme regulations impact the demand and price for domestic tobaccos
Continued excessive taxation and extreme regulations on Cigarettes in India has not reduced tobacco consumption in the country. These tough measures have only benefitted the illegal operators and smugglers of foreign brand cigarettes.
The negative impact of a booming illegal cigarette market in India is resulting in a sharp decline in demand and the consequent fall in prices of domestic cigarette tobaccos. Unlike the legal cigarette industry, illegal smuggled cigarettes do not use local tobaccos. A boom in the illegal cigarette sales affects the sale of legal cigarettes and reduces the demand for FCV tobacco, threatening the livelihood of the FCV tobacco farming community.
The dwindling demand for tobacco in the domestic manufacture of cigarettes is posing a challenging situation for the FCV tobacco farmers in the country. In view of a sluggish domestic market, the Tobacco Board has reduced the FCV crop size for Andhra Pradesh and Karnataka for the next crop year to just 220 Million Kgs. in 2016 compared with 276 Million Kgs in the previous year.
This fall in the authorized crop size will affect the farmers adversely since they have already made huge investments in tobacco curing barns and other infrastructure keeping in mind the usual crop size. Now that the crop size has been reduced, the farmers will be left with unutilized land leading to an increase in the cost of production. Moreover, there is no remunerative, viable alternative crop which the farmers can grow on their unused land. Hence, the situation is really grave for the FCV growers as lesser production is likely to severely affect their earnings in the current crop season even if better prices are realized in auctions.