- 15 tobacco farmers felicitated for exhibiting excellence in farming
- Event attended by political leaders, tobacco industry players and farmers
- Tobacco and tobacco products generate annual foreign exchange earnings of Rs 6,500 crore
- The Indian tobacco industry contributes Rs 12 lakh crore to the country’s economy
- Illegal cigarettes now represent 1/3rd of the Indian legal cigarette market
- Pragmatic tobacco policies, long-term stability on cigarette taxation and sustained enforcement action against smuggled cigarettes are needed to effectively counter illegal cigarette trade
Ongole, 26 August 2022: The Tobacco Institute of India (TII) today organized the 22nd edition of the Tobacco Farmers’ Awards to honour progressive farmers from Andhra Pradesh and Telangana who have demonstrated the benefits of contemporary farming practices, leading to enhanced productivity levels. An award ceremony to honour the progressive Tobacco farmers from Karnataka was held in Hunsur in April 2022.
The awards ceremony was attended by the Hon’ble Member of Parliament, Shri M. Sreenivasulu Reddy; Member of Legislative Assembly, Shri M. Maheedhar Reddy; Vice Chairman, Tobacco Board, Shri H.C. Basavaraju; Tobacco Board Members, Shri Mareddy Subrahmanyeswara Reddy, H.R. Dinesh and Shri Podda Varaprasada Rao.
The ceremony witnessed the felicitation of 15 tobacco farmers in three separate categories — Lifetime Award (1), Best Farmer Awards (7) and Recognition Awards (7).
Speaking at the awards ceremony, Shri Sharad Tandan, Director, TII, said, “The Tobacco Institute of India instituted these awards in 1999 with a view to honour 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 endorse TII’s firm support to tobacco farmers and acknowledge their important socio-economic contribution to the country.”
He added that tobacco is a crucial commercial crop in India, making enormous socioeconomic contribution in terms of agricultural employment, farm incomes, revenue generation and foreign exchange earnings. India is the world’s second largest tobacco producer and a leading exporter, with exports of leaf tobacco and tobacco products generating annual foreign exchange earnings of around Rs 6,500 crore.
“Although tobacco is grown on a small share of the country’s farmland, it makes a substantial contribution to the exchequer with regard to tax revenues and foreign exchange earnings. The tobacco industry in India contributes around Rs 12 lakh crore to the economy, according to an ASSOCHAM study,” Shri Tandan added.
The Golden Leaf in India provides livelihood to 4.6 crore people which includes farmers, farm labour, bidi workers, tendu leaf pluckers, traders and retailers, etc. It is also a highly labour intensive and remunerative crop providing much higher returns than other crops grown in the region. Studies conducted by the Central Tobacco Research Institute (CTRI) have confirmed that no single crop is more remunerative than FCV tobacco in this region.
FCV is the main exportable tobacco produced in India and more than half is exported with the rest used in domestic cigarette manufacture. Due to the small and shrinking share of tobacco consumption in the form of legal cigarettes (8%), non-cigarette tobacco varieties dominate production in India. However, FCV tobacco exports alone garner foreign exchange earnings of around Rs 3,000 crore annually.
“Even though India produces more than 13% of the world’s tobacco, its value share of the global tobacco leaf exports trade is only 5%. This is because exportable varieties like FCV tobacco account for less than 30% of the country’s leaf tobacco production. If India aligns its production pattern with global demand, it will raise its share of export earnings substantially. Notably, India exports around 50% of its total FCV production while exports of Brazil and Zimbabwe range between 70% to 90% of their FCV tobacco production,” TII Director said, adding that tobacco has the potential to become a major export commodity provided the cash crop is supported by favorable regulatory and export policies.
The TII Director said that it is a matter of serious concern that the legal cigarette Industry in India has been under huge distress in the last decade with a massive drop in cigarette volumes, on the back of excessively high taxation, extreme tobacco regulations and the disruptions caused by the Covid pandemic.
Extreme regulations and high taxation produce counter-productive results. They do not reduce demand for tobacco, but merely shift it from the legal tax-paid and regulation-compliant products to cheaper, tax-evaded regulation non-compliant illegal products.
The current tobacco control law in India is amongst the most stringent in the world particularly when compared with other tobacco producing countries like USA, China, Zimbabwe and Malawi. Tobacco control measures in India have also been far more stringent than the top tobacco/cigarette consuming countries, the USA, China and Japan, who amongst them account for around 50% of global consumption. For instance, India with 85% pictorial warnings, is ranked eighth in the world, by the size of warnings, whereas the global average warning size is less than 45%.
While legal cigarettes adhere to all regulations, illegal cigarettes do not comply with any regulations such as the mandated large pictorial warnings. In fact, absence of pictorial warnings on packs of smuggled international brands of cigarettes conveys to consumers an impression that these cigarettes are safer alternatives to their Legal counterparts. Illegal operators taking advantage of the consumer preference for non-compliant packaging are flooding the Indian markets with attractive cigarette packs without pictorial warnings.
High tax increases between 2010 and 2020 have made legal cigarettes in India amongst the least affordable in the world. Cigarette taxes in India, as a percentage of per capita GDP, are amongst the highest in the world.
It is, therefore, not surprising that India has become the 4th largest illicit cigarette market in the world, resulting in an estimated annual revenue loss of more than Rs. 15,000 crores to the Government. Illegal cigarettes now represent 1/3rd of the Indian legal cigarette market. This thriving contraband trade severely impacts the Legal Industry, Government revenues and earnings of cigarette tobacco farmers in the country.
The growing illicit cigarette trade has severely impacted Indian FCV tobacco farmers as contraband products do not use locally grown tobaccos. From a normal crop size of 316 million kgs in 2013-14, the crop size has shrunk to an average crop size of around 215 million kgs per annum for the past 5 years. The massive drop in FCV tobacco production has resulted in loss of livelihood of farmers and workers in the tobacco growing areas of the country. An estimated 35 million man-days of employment have been lost due to the FCV tobacco crop reduction in the country causing huge shrinkage in farmer earnings.
The prosperity of FCV tobacco farmers is intrinsically linked to the domestic legal cigarette industry. A stable domestic legal cigarette market achieved through balanced regulations and stability in cigarette taxes will benefit Indian FCV tobacco farmers by increasing the offtake of locally grown tobaccos.
Thus, it becomes imperative for our policymakers to strike a balance between the regulatory priorities of the country and the huge socio-economic significance of tobacco in India, particularly in terms of providing a sustainable livelihood to lakhs of farmers and other people dependent on tobacco sector.
According to TII, pragmatic tobacco policies and long-term stability on cigarette taxation, along with sustained enforcement action against smuggled cigarettes are needed to effectively counter illegal cigarette trade, enhance Government revenues and protect livelihood of the Indian tobacco farmers.
The ceremony also witnessed the release of a Coffee Table Book commemorating 21 years of TII’s glorious journey of awarding progressive tobacco farmers.
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.