Surplus crop, weak exports: the crisis facing Andhra tobacco farmers | Explained
The ongoing crisis in the Flue-Cured Virginia (FCV) tobacco sector has exposed deep structural weaknesses in India’s tobacco marketing system, leaving thousands of farmers in
The ongoing crisis in the Flue-Cured Virginia (FCV) tobacco sector has exposed deep structural weaknesses in India’s tobacco marketing system, leaving thousands of farmers in Andhra Pradesh facing severe financial distress. A crop that fetched over ₹360 per kg during the previous season is now struggling to cross ₹265, with the average auction price remaining at just ₹219.50 per kg as of July 6. As auctions progress at a sluggish pace, farmers argue that the problem extends far beyond market fluctuations and reflects failures in production planning, procurement and export policy. According to the Tobacco Board, only 29.62 million kg had been sold by July 6, against the nearly 70 million kg that would normally have been auctioned by this stage. The Board had authorised production of 140 million kg for Andhra Pradesh during the 2025-26 season, but actual production is estimated at nearly 240 million kg, creating a surplus of about 100 million kg. Internationally, the situation has also deteriorated, with global FCV production reportedly having increased. While the numbers explain part of the crisis, farmers believe they do not tell the complete story.
Many growers allege that inadequate participation by companies and traders at auction platforms has further weakened competition and depressed prices. Recognising these concerns, Andhra Pradesh Chief Minister N. Chandrababu Naidu directed that companies ensure procurement at a minimum of ₹200 per kg, while Agriculture Minister Kinjarapu Atchannaidu ordered field-level inquiries into allegations of syndicate practices among tobacco companies. Indian Tobacco Association Secretary Yarlagadda Ankamma Chowdary attributed the situation largely to disruptions in exports. “The traders could not export the produce to the Middle East countries due to the ongoing war. Since the war started in February, exporters have found it difficult to send containers to Dubai,” he said. He said that “heavy taxes imposed by the Central government are discouraging the market sentiment,” while exporters are also deprived of export incentives because tobacco is categorised as a demerit crop. At the same time, Mr. Chowdary said buyers also have a responsibility towards farmers. “The traders and companies, who have given indent while deciding the crop size, must procure the produce from farmers. It is their responsibility,” he said, adding that the Association has been requesting all companies to actively participate in Tobacco Board auctions.
The BriefWire