Tobacco Farmers felicitated for adopting modern and scientific farming practices

·         17 Tobacco Farmers Awarded for exemplary farming practices and crop achievements.

·         Shri. GaddeSeshagiri Rao from Chityala Village of Gopalapuram Mandalam bagged the Lifetime Achievement Award

·         Tobacco famers highlighted their concerns and appealed for balanced tobacco control policies and moderate cigarette taxation

·         Farmers also appealed for their participation in policy formulation on tobacco

Hyderabad, 20th January 2017:The Tobacco Institute of India (TII), today hosted the 17th annual Tobacco Farmers Award 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.

Shri Shri P. Pulla Rao – Hon’ble Minister of Agriculture, Government of Andhra Pradesh, inaugurated the event in the presence ofShri RayapatiSambasiva Rao, Shri GallaJaydev, Shri Y. V. Subba Reddy, Shri MagantiVenkateswara Rao and Shri GokarajuGangaraju, Members of Parliament; Shri Manoj Kumar Dwivedi, Chairman of the Tobacco Board; Dr. D. Damodar Reddy, Director of CTRI; Members of the Tobacco board and a large number of tobacco farmers.

Speaking on the occasion, Shri Syed Mahmood Ahmad, Director, TII, said, “these awards seek to felicitatetobacco farmers whose consistent efforts and dedication have brought about success in terms of improvement of yields, productivity, quality and increased  global competiveness of domestic cigarette tobaccos through adoption of modern and scientific farming practices.”

Tobacco cultivation holds huge socio-economic significance in India. Being the second largest tobacco producer and a large exporter in the world, India has a huge livelihood dependency on tobacco with millions of farmers and workers engaged in cultivation of this crop. However, extreme regulatory measures, such as excessive Taxation on Cigarettes and extreme regulations like large Pictorial Warnings are having an adverse impact on 45.7 million people dependent on tobacco for their livelihood.

Farmers of FCV tobacco are in huge distress due to excessively high Excise Duty increase of 118% on cigarettes in the last five years. Due to high and discriminatory taxation despite accounting for a mere 11% of overall tobacco consumption, duty-paid legal cigarettes contribute more than 87% of total revenue from tobacco in the country. This huge disparity in revenue collection is evident from the fact, that on a per kg basis, tax on cigarettes is 51 times higher than tax on other tobacco products. Such punitive taxation on Legal Cigarettes has forced consumers to shift to cheaper and revenue-inefficient non-cigarette tobacco product forms, and to tax-evaded illegal cigarettes.In fact, around 68% of non-cigarette tobacco products in the country are produced in the unorganized sector and thus escape all regulations and taxation.

Mr. Ahmad stated, “High and consistently escalating taxes on Cigarettes provide a profitable arbitrage opportunity to illegal trade operators for tax evasion. Consequently, illegal trade in Cigarettes in India has grown steadily over time. However, due to the particularly steep duty increases since 2012-13, there has been a huge spurt in the growth of illegal cigarettes which incidentally, has also been acknowledged by the Government on the floor of the Parliament. After all high taxes increase the arbitrage opportunity for illegal operators and drive business to the underground, clandestine trade in illegal cigarettes.”

The thriving illegal cigarette trade which now accounts for 1/5th of the Cigarette Industry in India is not only causing substantial revenue loss to the Government (estimated at more than Rs.9000 crore per annum) but also affecting the livelihood of tobacco farmers as smuggled cigarettes do not use domestically produced tobaccos.

Tobacco Farmers felicitated for adopting modern and scientific farming practices

Tobacco Farmers felicitated for adopting modern and scientific farming practices

Tobacco Farmers felicitated for adopting modern and scientific farming practices

Mr. Ahmad added, “Apart from high taxation, the implementation of the extreme 85% Pictorial Warnings in April last year has provided a further fillip to the already large and growing Illegal Cigarette trade. The Industry had apprehended this and now this has been confirmed by Market Research studies that as a result of the change in size of pictorial warnings, from 40% of the front of packs to 85% on both sides, consumers have begun to demonstrate a noticeable preference for smuggled cigarettes that do not carry the warnings.”

The uninterrupted growth of the illegal cigarette trade in the country has led to a consistent decline in the legal Cigarette Industry volumes. This has adversely affected the demand for domestic tobaccos impacting prices at auction platforms and earnings of Indian tobacco farmers. This disturbing market scenario not only affected farmers’ earnings last year but continues to pose a challenge to Cigarette (FCV) tobacco farmers even this year with earnings substantially reduced due to the drop in the authorized crop size in view of declining demand conditions.

This is a matter of grave concern and everyone associated with the crop, be it the Government, Industry, Trade or the tobacco growers, need to discuss and address with greater urgency. This is particularly important in view of the fact that tobacco is a highly remunerative crop in India providing sustainable livelihood to millions of farmer families and for which no viable alternative crop has been established so far in agro-climatic conditions that are similar to the tobacco growing regions in India.

Even the WHO Framework Convention on Tobacco Control (FCTC), which has been seeking to diversify farmers from tobacco cultivation has not been able to suggest a remunerative alternative crop to tobacco or a model tobacco crop diversification programme to tobacco growing countries despite undertaking a host of initiatives over the years.

Keeping in mind the adverse situation the farmers have been put-in by skewed taxation focused on cigarettes alone and extreme regulatory policies, the Government should desist from any further tax increase on Cigarettes as that will only aggravate the situation of offtake of Indian tobaccos and increase the stress on earnings of domestic tobacco farmers. There is a compelling case for a gradual transition to a more uniform tax regime across all tobacco products in order to contain the movement of tobacco consumption to cheaper revenue-inefficient tobacco products and to illegal cigarettes. This could well be achieved by levying GST at a uniform tax rate on all tobacco products while ensuring Revenue Neutrality, a fundamental principle enshrined in the GST.

Farmers present at the Awards function noted their concern and distress at being kept out of the COP7 meeting of the WHO FCTC, which was hosted by India. This was despite their repeated pleas to the WHO and the Government of India, for inclusion as decisions at the COP7 could have a direct bearing on the livelihood of tobacco farmers.

Participation of stakeholders in COP meetings is essential to ensure that the farmer and Industry view point on various issues is taken cognizance of and no unilateral and discriminatory one-sided decision is taken by the FCTC Parties. In fact, neither the WHO nor the Government should ignore the crucial role of stakeholders in the policy-making process.

The Indian Government should not get swayed by the propaganda of the international NGOs who under the misguided notion that FCTC Guidelines are mandatory on the Indian Policy Makers, campaign for unreasonable regulations and should instead adopt a balanced approach towards tobacco control regulations. Such an approach is necessary in large tobacco growing and exporting countries like India where tobacco is a very important commercial crop providing sustainable livelihood to millions and garnering significant revenue and foreign exchange earnings for the country.

The unwarranted distress being faced by FCV tobacco farmers and others dependent on tobacco for their livelihood makes it important that any policy initiative seeking higher taxes and stringent tobacco control regulations should take cognizance of the consequences of such measures on the livelihood of millions that are dependent on tobacco.