India: Tobacco Growers Hit Road, Resenting Duties on Cigarettes

Source from:  The Times of India 02/24/2016

The government's move to discourage smoking in line with the World Health Organisation (WHO)'s organisation by increasing excise duty on cigarettes has triggered massive protests from tobacco growers across the state. Ahead of the presentation of the union budget for 2016-17 in the Parliament, the growers blocked the Rajahmundry-Eluru national highway on Tuesday with a demand against any additional taxation on cigarettes in the budget.

Similar protests were staged in the southern light soils (SLS) in Nellore and southern block soils (SBS) in Prakasam districts. The AP Confederation of Tobacco Growers Associations, which spearheaded the agitation, has attributed the higher taxation on taxation to the distress conditions in tobacco cultivation that manifested in the form of suicides last year. "More the taxes, higher the rates. If the rates are high, consumers obviously shifted to smuggled products which are available for a quite lower prices leading to a drop in domestic demand", says Gadde Seshagiri Rao, a spokesman of the confederation and former director of the Tobacco Board told TOI. Excise duty accounts for 70-80 per cent of the total price of cigarettes and it has been doubled in the last 3-4 years, he explained.

When the government is determined to discourage smoking by way of taxation, the sale of smuggled tobacco items are said to have become rampant. The cigarette products being dumped in the country through the illicit routes from Bangladesh and Sri Lanka indiscriminately. Share of smuggled cigarettes accounted for a staggering 25 per cent in the total volumes on sale in the country, says Seshagiri Rao. He sought to know why the government remained a silent spectator to the illegal trade if it is really serious enough to upkeep public health by weaning away people from smoking.

The drop in the sales of cigarettes in view of migration of consumers to smuggled items had led to a fall in demand and obviously in the prices of tobacco bales. The price of a kg of semi-flavoured tobacco grown in the NLS dropped to Rs 118 last year from Rs 129 per kg in the previous year. The State average price fell from Rs 115 to Rs 90, leaving the growers in utter distress conditions. When the producers invested Rs 100 for cultivation of one kg of tobacco, they hardly received Rs 90. According to official information, at least a dozen farmers committed suicide in the NLS, SLS and the SBS areas last year, warranting the Centre's intervention to ensure a fair deal in procurements by the traders.

The fall in the demand in the domestic tobacco market has forced the Tobacco Board to cut down the tobacco growing area to ensure a demand-supply parity. The tobacco traders, according to sources from the Tobacco Board, placed an indent before the board for production of 120million kgs this year over the average demand of 170-200kgs. Subsequently, the board is left with no alternative but to bring down the tobacco production by 44 quintals per Barron. Tobacco is grown in 2.25 lakh acres in the State. Enditem