All India Federation of Farmers Associations (FAIFA), a non-profit organization representing the cause of millions of cash crop farmers and farm workers in the states of Andhra Pradesh, Telangana, Karnataka, Gujarat, etc. reported today that the consumer price of legal cigarettes in India has reached the maximum limit to what the purchasing capacity of consumers can absorb in the context of cheaper and rapidly growing illicit cigarettes and alternatives, and any further tax increases would lead to a sharp reduction in FCV cultivation and impact farmers’ livelihoods.
According to Euromonitor International, volumes of illicit cigarettes in India have registered a whopping 44% in a decade, rising from 19.5 billion sticks in 2011 to 28.1 billion sticks in 2020. This pushes the market share of cigarettes in the country from 21.3% in 2015 to 27.6%. in 2020.
FCV cultivation has seen a huge decline
This increase resulted in a reduction in the size of FCV crops by 39%, from 316 million kg per year to 194 million kg per year between 2013-14 and 2021-22. The area under FCV in India has also witnessed a huge decline from 2,21,385 hectares in 2013-14 to 1,22,257 hectares in 2020-21, resulting in a loss of employment of 35 million man-days.
Today, legal cigarettes have become unaffordable in India. The cost of cigarettes in India is among the highest in the world as a percentage of GDP per capita, at 7.70%, compared to 0.46% for the United States and 1.14% for China (WHO report ). This is even though cigarettes represent only 8% of the tobacco consumed in the country, while 92% are other forms of tobacco. This is in stark contrast to the rest of the world where tobacco is synonymous with cigarettes accounting for 90% of tobacco consumption.
The World Health Organization (WHO) in a report on the Global Tobacco Epidemic, 2021 acknowledged that the affordability of legal cigarettes in India has declined sharply from 11.10% in 2010 to 13.78% in 2020.
These findings were corroborated by the results of the American Cancer Society study which observed that India has one of the lowest per capita cigarette consumption in the world.
Highlighting the plight of FCV tobacco growers, Gadde Seshagiri Rao, former Deputy Chairman of the Tobacco Council and Deputy Chairman of the Federation of All India Farmers’ Associations (FAIFA), said: “The current situation above puts the farming community under pressure as consumers turn to contraband cigarettes. who do not use household tobacco.
Since India is heavily and largely dependent on tobacco cultivation for its livelihood, the government must act sensibly and responsibly to achieve price parity between cigarettes and other forms of tobacco in order to control the cigarette market. illicit cigarettes which has grown exponentially at the expense of legal cigarettes. compromising the interests of tobacco growers and the government’s tobacco control objectives.
FAIFA Highlights: The Country’s Tobacco Farmers Are Suffering
FAIFA also pointed out that the country’s tobacco growers are suffering from the actions of vested groups advocating high taxes on FCV tobacco under the guise of meeting the government’s tobacco control targets. These groups bombard policy makers with misleading data and flawed research reports that present a biased picture of the illegal cigarette trade in India with the intention of downplaying the seriousness of the illegal cigarette trade in the country.
Javare Gowda, Chairman of the All India Federation of Farmers Associations (FAIFA), said: “It should be noted that a report recently released by the Organized Crime and Corruption Reporting Project (OCCRP) indicates that the One of the world’s largest multinational cigarette companies as part of its market expansion strategy has used smuggling as one of the distribution channels to increase their market penetration.
Unfortunately, invested groups do not share these market developments with policy makers. Despite this, the decision to project in the studies low levels of illicit cigarette penetration below international markets (which are better regulated) is an obvious projection error. These extremely unreliable studies should be viewed with caution as they paint a biased picture of the illegal cigarette trade in the country and downplay the seriousness of the illegal cigarette trade in the country.
Murali Babu, Secretary General of the All India Federation of Farmers Associations (FAIFA), said: “The approach taken by the government to make cigarettes unaffordable through a high taxation policy to discourage its consumption has endangering the livelihoods of FCV tobacco growers. Moreover, there is no clear evidence that there is a decline in tobacco consumption, as a decline in the legal demand for cigarettes is offset or even exceeded by the exponential rise in the illicit cigarette market and the growth in demand for cigarettes. other forms of tobacco. It is high time the government took a compassionate approach to achieving its tobacco control goals so that the interests of FCV tobacco growers are also protected.
Growth of illicit cigarettes leading to loss of revenue
He further pointed out that the growth of the illicit cigarette market in the country is causing a massive loss of revenue for the treasury, further limiting the government’s ability to help farmers refine their products for global markets through innovations.
According to the FICCI CASCADE study, the total loss to the economy due to cigarette smuggling was Rs 16,138 crore while the total loss of job opportunities in the sector is about 3, 34 lakh.
FCV tobacco has been one of the biggest earners of foreign exchange and in 2021, the crop worth over Rs 6,500 crores was exported. Indian FCV Tobacco has a new opportunity in the global market due to new use in medicines for several autoimmune and inflammatory diseases including diabetes.
Talk about the need to create new pathways for FCV tobacco growers, Ch. Yashwanth, National Spokesperson of the Federation of All India Farmers Associations (FAIFA), said: “Government needs to take an integrated approach to tobacco control in India given the substantial contribution of the tobacco industry to the country’s GDP and the reliance of livelihoods on tobacco growing.
It should strive for stable taxation on legal cigarettes and use tobacco tax revenues to promote R&D in tobacco cultivation to meet the emerging demand for tobacco in the international market.
We urge policy makers to take note of the double whammy that has hit farmers who are unable to sell their produce locally and at the right price due to a drop in demand for FCV tobacco, as price parity between cigarettes and other forms of tobacco has been disrupted and are losing their competitive advantage in export markets to smaller countries like Zimbabwe, which are gaining global market share at the expense of Indian tobacco exports.