Tobacco farmers income doubled over last 5 years

The Tobacco Board has undertaken several strategic activities to ensure the sustainability and growth of the tobacco industry. These include crop planning and regulation of production to meet both domestic and export demands.

The Board supports farmers by providing handholding assistance to produce tobacco of requisite quality to meet the standards of importing countries. The Tobacco Board was established on 1^st January 1976 by an Act of Parliament “Tobacco Board Act, 1975 (Act 4 of 1975)” for the overall development of the tobacco industry. The Board’s primary role is to ensure the smooth functioning of the farming system and to ensure fair and remunerative prices for tobacco farmers and the promotion of exports.  Financial assistance is extended to farmers through banks, along with the necessary inputs for the production of quality tobacco. The Board also engages in extension and developmental activities to promote sustainable tobacco cultivation practices.

India is the 2nd largest producer of tobacco in the world after China. India is the 4^th largest producer of FCV tobacco in the world after China, Brazil and Zimbabwe. India is the 2nd largest exporter of unmanufactured tobacco (quantity terms) after Brazil. Tobacco exports contribute sizable foreign exchange to the Indian exchequer. During 2023-24 the value of Indian tobacco exports reached Rs.12005.89 crore (1449.54 in US dollars). Tobacco farmers income has also doubled over the last 5 years.

To ensure better price discovery and secure remunerative prices for farmers, the Tobacco Board has implemented an IT-enabled electronic auctioning system for FCV tobacco. Additionally, export promotion activities are carried out to sustain and improve India’s tobacco exports. Welfare measures are extended to tobacco farmers, providing financial relief in the form of grants and loans during times of need.

Doubling of FCV tobacco farmers' income:

As the Board celebrates its formation day, it proudly highlights that Flue Cured Virginia (FCV) tobacco farmers' earnings have more than doubled between  2019-20 and 2023-24 from Rs.124.00 per kg in 2019-20 to Rs.279.54 in 2023-24.

This success is attributed to effective government policies and efficient market mechanisms that have enhanced the livelihoods of approximately 83,000 farmers. The Tobacco Board’s efforts have played a crucial role in ensuring better returns, demonstrating the positive impact of strategic support to the tobacco farmers.

The efficient and transparent electronic auction system being implemented by the Tobacco Board for the sale of tobacco produced by the farmers helped in achieving the Government's vision of doubling farmers' income in the FCV tobacco sector.

Zoom in Indian Tobacco Exports:

The effective Government policies and persuasion of the Tobacco Board resulted in achieving an increase in export growth by 87% during the past 5 years i.e., it achieved a record high export value of Rs.12,005.89 crore in the year 2023-24 as against Rs.6,408.15 crore in 2019-20.  During this period the export volumes have increased from 218.84 million kgs to 315.51 million kg.

Record-Breaking 2023-24 FCV Tobacco Season in Andhra Pradesh: A Boon for Farmers and for the FCV tobacco exports.

The 2023-24 crop season has turned out to be a remarkable year for FCV (Flue-Cured Virginia) tobacco farmers across Andhra Pradesh.  Despite facing natural calamities, our farmers’ determination and resilience resulted in a record-high production of 215.35 million kg kilograms of tobacco.  This is an outstanding achievement, further complemented by a record-high price realization of ₹288.65 per kilogram.

The surge in international demand for Indian FCV tobacco this year has played a pivotal role in achieving these unprecedented figures.  Not only has this benefited the farmers, who have reaped the rewards of their hard work, but it has also significantly contributed to the national exchequer by generating foreign exchange through exports.

The auctions for the sale of the 2023-24 Andhra Pradesh FCV tobacco crop commenced on 29th February 2024 and concluded on 14th October 2024. A total of 16 auction platforms were operated, distributed as follows: 5 platforms in NLS, 5 in SBS, and 6 in SLS. Over the course of 178 auction days, 43,021 growers participated, resulting in a record-high volume of 215.35 million kg of FCV tobacco marketed, including 9.46 million kg of scrap and bits of tobacco. Farmers realized an average price of ₹288.65 per kg, which is the highest average price ever recorded, and collectively earned ₹6,313.58 crore during the season. This season’s average price was ₹62.92 per kg higher than the previous year’s average of ₹225.73 per kg, with the highest price achieved being ₹411 per kg, compared to ₹289 per kg last year.

Additionally, 38,751 registered growers benefited from a penalty waiver for the sale of 76.84 million kg of excess tobacco, resulting in savings of ₹184 crore for the farmers. The Tobacco Board employees and growers also contributed ₹92.70 lakh to the Chief Minister’s Relief Fund to support victims of recent cyclones in Andhra Pradesh.

Electronic auctioning for tobacco ensures transparent price discovery, boosting farmer remuneration and supporting export-led industry sustainability. The Tobacco Board administers regulatory and developmental measures-crop planning, production regulation, quality assistance, bank-mediated financial support, extension activities, and welfare grants/loans-to sustain the tobacco industry and secure fair prices. It implemented an IT-enabled electronic auctioning system for FCV tobacco to enhance price discovery and market transparency, complemented by export-promotion activities that increased export volumes and values. Administrative relief, including a penalty waiver for excess sales, is recorded as direct financial support to growers.