Tobacco: A Catch-22 situation

It’s easy to say that there should be a ban on tobacco. But, till the farmers get an equally profitable option, it is a difficult step to take

  • Annual loss of over Rs. 25,000 crore (over Rs. 19,000-crore excise duty and around Rs. 6,000-crore worth of foreign exchange) which accrue to the national exchequer on account of excise duty and export of raw tobacco and tobacco products.
  • Loss of gainful employment to over 30 million farmers growing flue-cured Virginia (FCV) tobacco in Andhra Pradesh and Karnataka and farmers growing beedi tobacco in Gujarat.
  • Closure of around three dozen government offices belonging to the Indian Tobacco Board and Central Tobacco Research Institute (CTRI), employing around a thousand employees.

Tobacco: A Catch-22 situationTHESE will be the consequences if Commerce Minister Nirmala Sitharaman and Agriculture Min-ister Radha Mohan Singh decide to follow Health Minister Harsh Vardhan’s advice and wean farmers away from tobacco to alternative crops.

Harsh Vardhan wrote a letter to Sitharaman and Singh three months back, asking them to provide monetary and technical support to tobacco farmers in switching over to alternative crops. He wrote the letter after farmers involved in tobacco cultivation told him that they would need monetary compensation and technical support to switch over to alternate crops.

India is reportedly the second-largest producer and consumer of raw tobacco and tobacco products. The country grows flue-cured Virginia (FCV) tobacco, country tobacco, burley, beedi, restica and chewing tobacco. According to Manoj Reddy, Manager (Exports) in the India Tobacco Board headquarters at Guntur, Andhra Pradesh, the country exports raw tobacco and tobacco products worth Rs. 6,000 crore to 100 countries every year.

Andhra Pradesh and Karnataka alone produce 272 million kg of FCV every year. Reddy told gfiles that over 80 per cent of this tobacco is exported. Country tobacco, burley and chewing tobacco are also exported. But the beedi tobacco grown in Gujarat is mainly for local consumption. Besides Andhra, Karnataka and Gujarat, the tobacco is grown in various other States, including Tamil Nadu and Haryana.

Reddy said it might be hard to find an alternative crop to tobacco, a cash crop which is grown in light and heavy black cotton soils. He claimed no two crops would be equally remunerative. Apart from involving millions of farmers, the tobacco industry gives employment to processors, packers, dealers, graders and exporters.

There are tobacco giants like Godfrey Phillips India Private Limited (popular brands, Four Square, Red & White, Cavanders, Tipper & North Pole), Golden Tobacco (Panama, Chancellor, Golden’s and Steel), Sopariwala Exports and Bharat Beedi Works, which produce huge quantities of cigarettes, slim cigarettes, cigars, slim cigars, beedis, leaf tobacco and paan masalas. Sopariwala alone claims to export leaf tobacco to 75 countries. Bharat Beedi, on the other hand, claims to roll out 60 million beedis every day. The Indian Tobacco Board has 19 branches in Andhra and 12 in Karnataka. It sustains over 600 families.

Scores of farmers in Khammam and Guntur districts of Andhra Pradesh were asked to switch over to alternative crops due to heavy rains a few years back. A joint comparative study of these farmers with those of Prakasam district who still grow tobacco, undertaken by industry body ASSOCHAM and Thought Arbitrage Research Institute (TARI), says that tobacco led to higher returns for farmers than those engaged in growing other crops.

India is a signatory to the World Health Organisation (WHO)’s Framework Convention on Tobacco Control (FCTC) which seeks to establish a global agenda for tobacco control and reduce demand and supply by 2020.

VOL. 8 | ISSUE 11 | FEB 2015

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