- 17 Tobacco Farmers Awarded for exemplary farming practices and crop achievements
- Shri B. N. Jayaram, a veteran tobacco farmer from Karnataka bagged the Lifetime Achievement Award
- Indian FCV tobacco farmers under severe pressure due to the fall in domestic demand for tobaccos grown by them
- High taxes have made cigarettes in India unaffordable, pushing consumers to cheaper traditional tobacco products and illegal cigarettes
- Government loses Rs.13,000 crores p.a. in tax revenues due to illegal cigarette trade
- Any further tax increase on cigarettes will aggravate the situation of low-offtake of Indian tobaccos and increase the stress on earnings of domestic tobacco farmers
- Government should adopt a consultative approach for policy development on tobacco so that livelihoods of farmers are protected
Mysuru, 9th January 2020: The Tobacco Institute of India (TII), today held the 20th TII Tobacco Farmers’ Awards ceremony to recognize tobacco farmers for adopting contemporary farming practices that help improve yields, produce better varieties and make Indian tobaccos competitive in the global market.
Gracing the occasion were Shri Prathap Simha, Shri Sa. Ra. Mahesh, H. P. Manjunath, Shri K. Mahadeva, Shri Y. Raghunadha Babu, Chairman, Tobacco Board, T V Ravi, Director-Auctions, Tobacco Board, Dr. S. Ramakrishnan, Head of CTRI Research Station, Hunsur; Vasudeva Rao, Member Tobacco Board and farmer leaders, B V Javere Gowda, Karnataka & G Sheshagiri Rao, AP.
Speaking at the awards ceremony, Shri Syed Mahmood Ahmad, Director, TII, said, “The Tobacco Institute of India instituted these awards in 1999 with a view to felicitate and encourage the cigarette leaf tobacco farming community for its effort in adopting modern and progressive farming practices, which would help improve yields, produce improved varieties, and make Indian tobaccos competitive in the global market. These awards also endorse TII’s unwavering commitment to tobacco farmers and recognize their significant socio-economic contribution to the country.”
Tobacco in India provides livelihood to millions of farmers, farm labourers, tribals, women workers and their families. No other country in the world has as huge and wide-spread dependence on the tobacco crop for livelihood as India.
Tobacco is also a highly labour intensive and remunerative crop providing much higher returns than other crops grown in similar agro-climatic regions. FCV tobaccos grown in the country are used in the manufacture of domestically produced cigarettes and the balance tobaccos are exported to more than 100 countries globally. Besides the prevailing global tobacco trade scenario, the off-take of FCV tobaccos is largely dependent on domestic cigarette production.
However, the Legal Cigarette Industry in India came under huge stress on account of punitive taxation during the period 2012-13 to 2017-18 which has hurt farmers, sub-optimized revenue, provided impetus to the burgeoning illegal cigarette trade and affected the entire legal cigarette value chain.
Mr. Ahmad said, “High and escalating taxes on Cigarettes provide a profitable arbitrage opportunity for tax evasion. Consequently, illegal trade in cigarettes in India has grown steadily over time. However, due to the particularly steep increases since 2012-13, there has been a 36% increase in illegal cigarette trade, increasing from 19.5 billion sticks in 2011 to 26.5 billion sticks in 2018, with its resulting debilitating impact on the Legal Cigarette Industry which shrunk by around 22% during the same period.”
The Legal Cigarette Industry in India accounts for a mere 9% of total tobacco consumption and yet is the major revenue contributor to the Government, providing 80% of collections from tobacco. The balance 91% consumption is represented by traditional products like chewing tobacco, bidis, khaini etc. and illegal Cigarettes.
The reason for this distorted pattern of revenue collections is that cigarettes are subjected to high and inequitable taxation, as compared to other tobacco products, which are largely produced in the unorganized sector and are prone to tax evasion. As a result, revenue realization by the Government on a per kg basis of tobacco used in various product forms is 41 times higher on cigarettes than on other tobacco products.
Mr. Ahmad added, “Over time the share of legal cigarettes in overall tobacco consumption in the country has shrunk by 40% to a mere 9% at present from 21% in 1981-82. During the same period the consumption of other forms of tobacco products, including duty-evaded cigarettes grew by 70%. High taxes have made legal cigarettes in India unaffordable, pushing consumers to cheaper traditional tobacco products and illegal cigarettes. As a percentage of per capita GDP, Cigarette taxes in India are amongst the highest in the world as per the data presented in the WHO Report on the Global Tobacco Epidemic, released in 2019.”
The increase in taxation and the resultant drop in legal cigarettes have also had a devastating impact on the Indian FCV tobacco farmers who are under severe pressure due to the fall in domestic demand for tobaccos grown by them. After all contraband products do not use locally grown tobaccos. Since 2013-14, the earnings of FCV tobacco farmers have shrunk substantially due to drop in off-take of tobacco for the manufacture of domestic legal cigarettes and global market fluctuations.
It is very important to recognize the socio-economic importance of tobacco and its employment-generation capacity while framing tobacco taxation and regulatory policies in India. Policy initiatives seeking excessive cigarette taxation and extreme regulations should bear in mind the consequences of such measures on the livelihood of millions that are likely to get affected.
Therefore, any policy development on tobacco must ensure the active involvement of tobacco farmers and wide ranging consultation with all stakeholders. This will ensure adoption of policy that is balanced, evidence-based, equitable and implementable and prevent the unleashing of unilateral policy initiatives that lead to adverse consequences on the livelihood of tobacco farmers and on the occupation of all those who are engaged in the legal tobacco supply chain.
About TII Awards:
The Tobacco Institute of India (TII) instituted the TII Tobacco Farmers’ Awards in the year 1999 to recognize and encourage the Flue Cured Virginia (FCV) tobacco farming community into adopting modern and scientific farming practices. These awards seek to facilitate improvement in yields, productivity, quality and global competitiveness of the domestic cigarette tobaccos through adoption of contemporary farming practices.
The response and success of these awards over the years encouraged us to subsequently extend them, in 2009, to include the air-cured varieties of tobacco also.
This annual awards ceremony also provides a platform for all stakeholders in tobacco sector to meet and interact on issues of common interest, particularly regarding farming practices and policy formation.