New health warning rule chokes tobacco farmers in Gujarat

Farmers worry about Rs 3,000 crore of unsold stock lying with them

The government's mandate on health warning on 85 per cent of tobacco product packs has left tobacco farmers high and dry. In Gujarat alone, farmers are fearing huge financial losses at a time when season has peaked, due to manufacturers ceasing tobacco purchases from farmers due to the new mandate.

With about 48 per cent share, Gujarat is the largest tobacco producer in India but has been witnessing around Rs 3,000 crore of unsold tobacco with farmers currently. If slack demand continues, the financial condition of farmers in Gujarat could worsen.

"The tobacco farmers and retailers of Gujarat are facing an unprecedented threat because of the policy shock of 85 per cent warnings on beedis and chewing tobacco, which has led to overnight closure of the tobacco industry in India. This may create financial crunch for farmers and it will disturb their social and economical arrangements," said Bhikhubhai Patel, president, Gujarat Tobacco Merchants Association.

 

There are 450,000 farmers engaged in tobacco cultivation in Gujarat, whose entire families are dependent on tobacco for their livelihoods. Tobacco is cultivated on 150,000 hectare of farm land in Gujarat, with annual production of 360 million kg of tobacco produce. In value terms this amounts to approx Rs 3,000 crore in monetary value for Gujarat tobacco farmers.

April is the peak selling time, however, due to the industry closure, manufacturers have suspended tobacco buying, resulting in almost 100 per cent of tobacco produce lying unsold with farmers.

"These crops are stocked in the open at farmer homes as there are no proper storage facilities. With monsoon expected to arrive soon, the entire crop is under threat of getting damaged, killing the annual earnings prospects for Gujarat farmers unexpectedly," said Patel.

The state has more than 150,000 micro-retailers, traders and panwallas, selling tobacco products across the state. Their livelihood primarily depend on selling of tobacco products. Sale of other confectionary and supplementary products stocked by these micro retailers is also totally dependent on the success of retailing of tobacco products.

Raju Lalwani who represents Ahmedabad Paan Beedi Vikreta Association said, "The micro tobacco retailers of Gujarat are in panic mode because of the threat to their livelihoods. With tobacco production having stopped, it will be hard for small retailers to sustain their businesses."