High taxes on cigarettes impact farmer’s income

NEW DELHI: High taxes on cigarettes may have led to a drop in sale of domestic brands of cigarettes, but it has impacted farmer’s income and also increased smuggling, a representative of a farmers association said.

“From sale of 104 billion cigarette sticks in 2013-14 by organised players, it has come down to 90 billion sticks in 2014-15. It should be good news but the truth is that majority of cigarettes are being smuggled from the porous border of Pakistan, Nepal, and Bangladesh due to the huge price differentiation. This is making an impact on farmer’s remuneration,” said PS Murali Babu, general secretary at the Federation of all India farmer association.

Farmers association said that as per the Ministry of Finance data, custom seizure of smuggled foreign cigarettes has exploded in the last two years. Seizures in the first four months of 2015-16 at 55,890 was double the quantity seized in 2013-14.

“In Andhra Pradesh farmers in 2014-15 season got Rs 90 per kg, whereas a year ago it was Rs 115 a kg. The government instead of providing solutions, have issued orders to tobacco farmers in Andhra Pradesh to cut tobacco cultivation by 52 million kgs next year (harvesting begins by December). A sudden call for cutting production is going to be difficult to absorb for farmers already under debt,” said Gadde Seshagiri Rao, member, Tobacco Board.

Rao said that since 2009 when pictorial warnings were introduced on cigarettes, the illicit cigarette trade has grown by 31% thereby, reducing the demand for farmers.

India is the second largest exporter of quality tobacco earning.`6,000 crore in foreign exchange every year, said Rao.