2010 a nightmare for tobacco farmers

For Andhra Pradesh tobacco farmers, 2010 was a tough year.

Heavy rain in the last week of November and the first week of December damaged the crop extensively, resulting in a loss of around Rs 625 crore (Rs 6.25 billion).

"According to our estimates, standing crop in 52,000 hectares out of the total 110,000 hectares has been either partially or fully damaged.

"This is the worst crop loss the state has witnessed in the last 30 years," Tobacco Board chairman G Kamalvardhan Rao told Business Standard.

According to Rao, the investment loss to the 41,000 farmers who cultivated tobacco in the state is estimated around Rs 250 crore (Rs 2.5 billion).

In addition, the loss on account of crop damage will be Rs 375 crore (Rs 3.75 billion).

Thus, the total loss comes to around Rs 625 crore (Rs 6.25 billion).

"Our entire investment has gone down the drain," Tobacco Board member and general secretary of the Tobacco Farmers Federation, G Sivaram Prasad, said, adding that the crop that would survive would be of low quality.

He said the cyclonic storm led to excess nitrogen in the soil.

Consequently, the quality of the output would decline.

"We will incur further losses due to low-grade tobacco," he added.

Andhra is a major producer of flue-cured virginia tobacco, the main export variety, and accounts for 70 per cent unmanufactured exports.

The state accounts for 70 per cent and the neighbouring Karnataka 29 per cent of the total FCV production in the country. The remaining one per cent is shared by Maharashtra and Orissa.

Rao said the value of FCV tobacco exports last year stood at Rs 4,040 crore (Rs 40.4 billion).

The crop size had been 207 million kg in Andhra and 107 million kg in Karnataka. Over 70 per cent of the FCV tobacco produced was exported.

However, on account of damage to the crop, the

export of FCV tobacco this year is expected to decline steeply.

"We expect at least a 30 per cent decline in exports both in value and volume terms," Prasad said.

FCV tobacco cultivation is stated to be capital as well as labour-intensive. Cultivation of a hectare requires 680 man days.

And, the investment per hectare is estimated to be between Rs 35,000 and Rs 50,000 depending upon the type of soil and other agro climatic conditions.

The Tobacco Board has announced a compensation of Rs 6,000 per hectare for fully damaged and Rs 4,000 a hectare for partially damaged crop.

This apart, the board has decided to ask nationalised banks to waive interest on crop loans, reschedule loans for the next four years and sanction an additional loan of Rs 50,000 to each tobacco farmer whose crop was totally damaged and Rs 30,000 to those whose crop was partially damaged.

Tobacco farmers are not happy with this.

They are demanding a subsidy of Rs 100,000 a hectare, besides treatment on a par with coffee growers.

"In 2007-08, the Centre extended financial assistance of about Rs 120 crore (Rs 1.2 billion) to coffee growers to replace the diseased plants. We want similar treatment from the Centre," Prasad said.

In this context, he pointed out that more than 1.5 million farmers and farm workers were engaged in tobacco cultivation in Andhra. Tobacco is cultivated on 125,000 hectares over nine districts in the state.

"Cultivation of tobacco, particularly the FCV variety, is far more remunerative than other cash crops. Hence, it is very difficult for us to substitute it with any other crop," he added.