Farmers cultivating Flue Cured Virginia (FCV) Tobacco in Andhra Pradesh are worried over a Health Ministry proposal to hike taxes on cigarette.
The proposal if comes into effect, would set off an increase in prices of cigarette made in the country and could possibly provide a backdoor entry to unauthorised smuggling of low quality tobacco from outside the country.
“We see a drop in average tobacco prices by 10-15 per cent per k.g. The proposal to hike taxes on cigarettes could result in a fall in exports and could invariably lead to a slump in auction prices,'' said general secretary of Tobacco Farmers Federation, Gadde Sivaram Prasad.
About one lakh small and marginal farmers cultivate FCV tobacco on various types of soils in Krishna, West Godavari, Prakasam and Khammam districts. The farmers get their produce on various auction platforms where buyers from national and international firms procure the Tobacco.
Domestic traders usually buy more than 70 per cent of tobacco and use it for domestic consumption. The demand for quality FCV tobacco also ensures better remunerative prices.
“Tobacco farmers are already reeling under adverse weather conditions. Tobacco is a rain fed crop and any change in rain patterns will adversely impact the production,” said Mr. Sivaram Prasad.
Traders feel that tobacco products, including cigarettes have already been taxed heavily in India and any fresh hike in taxes could see a reduction in sales. “There has been an increase of 22 per cent tax on cigarette during 2012-2013 and 14 per cent hike in 2013-2014,” said a representative of trader.
With India being a signatory to Framework Convention on Tobacco Control (FCTC) of World Health Organisation, there has been a concerted campaign to place a cap on authorised crop size. The authorised tobacco production in Andhra Pradesh and Karnataka is at 175 million K.G.