Tobacco farmers seek to shift to other crops as prices fall

Written by Sandip Das | New Delhi | Updated: May 31 2012, 08:59am hrs
Excess stocks in the global markets continue to put pressure on the domestic prices of Flue Cure Virginia (FCV), the finest quality of tobacco used in cigarettes, grown mostly in Andhra Pradesh and Karnataka, forcing many small farmers to look to other crops.

According to the Tobacco Board, the regulator of the crop in the country, the average FCV tobacco prices fell to R89.62 a kg during 2010-11, from a peak of R105.66 a kg during 2008-09, leading to many small farmers exploring possibilities of growing other crops.

India, being signatory to the WHO framework convention on tobacco control (FCTC), has committed to reduce the crop size so that a large chunk of agricultural land used for tobacco production could be used for grain production.

We have reduced crop size during the last three years and we want to restrict the cultivation of tobacco, which would not only ensure better prices for the farmers but also meet the commitment made under the FCTC, G Kamala Vardhana Rao, chairman of the Tobacco Board, told FE.

The crop size for FCV, which is grown under the supervision of the Tobacco Board, has declined to 2.2 lakh hectare during 2011-12, from 2.5 lakh hectare three years back. Thus, the production has declined from 300 million kg to 245 million kg during the same period.

An official in the Andhra Pradesh agriculture department said many tobacco farmers have shifted to other crops such as Bengal gram (chickpea), cotton and jowar (sorghum). The Tobacco Board, in collaboration with Central Tobacco Research Institute (CTRI), plans to reduce crop size every year by around 5%.

The government earned central excise revenue by selling cigarettes to the tune of R13,500 crore and foreign exchange of R4,163 crore from exports of tobacco and tobacco products during 2010-11.

Agriculture ministry officials say there is reluctance on the part of tobacco farmers to shift to other crops is understandable due to a well established support system provided by the Tobacco Board since 1985 to 1.6 lakh registered farmers, mostly in Andhra Pradesh and Karnataka. They are supported by way of saplings plantation, bank loans, getting fertilisers and selling leaves via auction.

In a rehabilitation proposal for tobacco farmers presented to the commerce ministry, the Tobacco Board has asked for R5 lakh to be given to every tobacco barn (used for drying tobacco) for encouraging them to take up other crops.

In order to extend the proposed rehabilitation package to the existing 96,865 barns, a financial compensation of R4,843 crore is needed which the commerce ministry is yet to take a call on. A pilot project report on rehabilitation scheme for tobacco farmers to take up alternative crops envisages a financial package for the farmers which is under consideration of the Centre, Rao said.