We Aim to Reduce Tobacco Crop Size by About 5%

Source from:  The Financial Express 10/10/2011

Tobacco is a regulated cash crop, grown mostly in Andhra Pradesh, Karnataka and a few other states of the country. The Guntur-based Tobacco Board, set up under the commerce ministry, has played a key role in its cultivation and marketing, and in ensuring remunerative prices for the farmers. In the light of the adverse effects of tobacco on health, there's been growing clamour for reducing the area under cultivation. In this backdrop and amid soaring prices, G Kamala Vardhana Rao, chairman, Tobacco Board, spoke to FE's Sandip Das about a range of issues. Explain about the tobacco crop and role of board in protecting interest of the farmers? Till 1985, the government was not directly involved in the crop, with its role limited to providing some extension services to farmers. Initially, companies used to buy tobacco directly from the farmers. Realising that the farmers were getting a raw deal, the government formed the Tobacco Board and introduced an auction system. This was to ensure that farmers got paid in line with the global supply situation. However, unlike other crops, tobacco is one crop whose cultivation is not to be increased or promoted. In other words, the crop is to be regulated. That is, you vary the crop size depending on the demand and supply conditions. While it is a commercial crop, it is, sometimes, treated as an agricultural commodity. What are the types of tobacco produced in the country? What kind of revenue is generated from them? We produce around 100 million kg annually of flue cured virginia (FCV), used in making cigarettes. Besides that, around 50 million kg of other tobacco (non-FCV) is produced in MP, Gujarat and West Bengal. The Tobacco Board doesn't deal with the latter category. The tobacco industry is sizable and the government earns around R13,500 crore annually as central excise by selling 102 billion cigarette sticks. The foreign exchange that we earn from the export of tobacco and tobacco products is R4,400 crore annually. Nobody can cultivate tobacco or manufacture cigarettes without the Tobacco Board's permission. It is cultivated only in Andhra Pradesh, Karnataka and a few parts of Maharashtra and Orissa. The area under tobacco cultivation in India is around 2.5 lakh hectare, with about 1.25 lakh farmers involved in it. With the campaign against smoking having been stepped up, what steps is the board taking to gradually reduce tobacco crop? India signed on to the WHO's Framework Convention of Tobacco Control (FCTC) in 2004, under which we have an obligation to regulate its cultivation and encourage farmers to go for alternative crops. We have presented to the government a proposal under which tobacco farmers wishing to surrender their barns (where leaf is dried or cured) can do so for a compensation. This year, we aim to reduce the crop size by about 5%. Explain the global scenario on tobacco supply. Egypt is a big buyer of tobacco as is west Europe. ITC dominates the market with around 70% purchase of the total FCV produced in the country. It is not a competitive trade as far as auctions are concerned. Both traders and farmers argue that they are not making enough money from the product. Enditem