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Farmer Earnings

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Farmer Earnings

Tobacco provides direct and indirect employment to more than 45.7 million people, around 70% of whom are in the agricultural sector. Tobacco is a highly remunerative crop providing economic/social benefits to farmers in the tobacco growing regions.

ASSOCHAM study Tobacco Economics in India: The Voice of the Farmer and other Stakeholders found that the tobacco growing areas of the three major tobacco producing States in India, viz., Andhra Pradesh, Karnataka and Gujarat are better off in several socio-economic parameters as compared to the non-tobacco growing areas of these States. “…tobacco does create higher returns and other social capabilities for its farmers than those who are engaged in growing other cash crops,” the study report observed.

Studies conducted by the Central Tobacco Research Institute (CTRI), Rajahmundry, have shown that FCV tobacco is more remunerative than other crops grown in the region, and is difficult to substitute.

The performance of FCV tobacco has been impressive, particularly in terms of  farmer earnings. Between 2001-02 and 2013-14, the gross earnings of FCV tobacco growers have increased more than six times.

FCV Tobacco 2001-02 2013-14 Change
Production (Mln. Kg) 167.97 315.92 88%
Average Price (Rs/Kg) 34.80 122.60 252%
Gross Returns (Rs Cr)* 584.55 3873.19 563%
Exports (Rs Cr) 483 4086 746%

Source: Tobacco Board (*Derived)

However, demand for FCV tobacco has reduced considerably post 2013-14 due to sharp decline in legal cigarette volumes on account of high taxes and growth of illegal cigarette trade causing shrinkage of farmer earnings.

With the continued presence of a large illicit cigarette market in the country, FCV tobacco farmers have seen their crop offtake reduce substantially over the years leading to a loss of livelihood.

The pragmatic tax policy of recent years has resulted in the recovery of legal volume and higher demand for domestic FCV tobaccos. Consequently, FCV crop production during 2022-23 and 2023-24 were higher, however, it still remains below the levels attained in 2013-14.

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