Financial Daily
from THE HINDU group of publications

Wednesday, January 24, 2001



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Tobacco economy needs holistic approach

G. Chandrashekhar

MUMBAI, Jan. 23

IT is unfortunate that a section of the tobacco growers in Andhra Pradesh turned violent and stormed the Tobacco Board office in Guntur because they were aggrieved that some growers had violated the court order declaring a crop holiday for tobacco for a year.

Law abiding farmers have demanded that the crop raised unauthorisedly in about 3,000 acres be ploughed by the Tobacco Board. The Board is in a quandary over the demand as it does not have any policing powers, nor does it have the wherewithal to undertak e the politically sensitive task.

The tobacco economy has been going through convulsions in the wake of over-production, sluggish consumption demand, lower exports and falling prices -- all this coming after years of robust growth. It is obvious, all those involved - growers, policy make rs, the Centre, the State Government - assumed that good times in the commodity market will continue for ever.

Tobacco continues to be a remunerative crop for most growers. There is, therefore, tremendous reluctance to shift away from this cash crop, even in areas where other crops can be grown. Research has shown that it would be possible to grow alternative cro ps such as oilseeds (groundnut, castor), foodgrains (maize, pulses), vegetables (onion, potato), cotton and chillies under different agro-climatic conditions.

However, the State Government has done precious little to wean growers away from tobacco and introduce other crops. Worse, the Centre's admitted position is that it does not have any proposal to provide alternative vocation to tobacco growers.

All this indifference is despite the fact that tobacco continues to be a commercially significant commodity and contributes handsomely to the exchequer. Excise revenues on tobacco products of all varieties during 1999-2000 were to the tune of Rs 7,416 cr ore and foreign exchange earnings on tobacco and tobacco products exports during the same year were Rs. 1,050 crore.

Quite clearly, neither the Centre nor the State government has bothered to provide appropriate guidance to the tobacco sector. It is a sector in need of guided growth. The policy makers have failed to prepare the tobacco growers for facing the vicissitud es of globalisation and rapid changes in market conditions.

As a result, now, the future of several lakh growers and millions of families employed in the tobacco industry has been rendered uncertain. The Indian tobacco industry which is in the private sector is estimated to provide employment to some 75 lakh fami lies. Over 60,000 farmers grow Flue Cured Virginia (FCV) tobacco, while farmers growing non-FCV tobacco types are an estimated 4 lakhs.

The State Government has a crucial role to play in regulating tobacco production. It must be realised that world-over, opposition to tobacco is gathering momentum, although within the country demand for tobacco is likely to expand in the near to medium t erm. It is common knowledge that consumption of tobacco in the advanced countries is declining rapidly and the only major markets left are developing countries. The latter are however known for their highly volatile economic performance.

The policy makers need to take a telescopic view of emerging trends across the world and within the country. A perspective plan for the next 5-10 years should help policy makers take crucial decisions today - decisions relating to production, marketing, exports, domestic consumption and prices. Effective monitoring of tobacco cultivation and marketing - without political interference - alone can sustain the tobacco economy.

More important is the need for weaning tobacco farmers away to other crops. The State government should play a pro-active role by identifying areas and crops that can replace tobacco. Growers too have a responsibility. Farmers organisations can work in t andem with State officials and ensure strict monitoring of cultivation.

There is, in sum, no alternative to a holistic approach, instead of ad hoc measures, to strengthen the tobacco sector so that the economic gains from the sector are maximised. For this, growers' organisations and policy makers have to work together, base d on a clear action plan.

Related links:
Tobacco farmers storm board meet
AP farmers find it hard to keep off tobacco

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