Agri Business

Rescue tobacco farmers from falling into debt trap, asks farmers’ body

Kurmanath KV | Updated on May 11, 2020 Published on May 11, 2020

FAIFA demands loan moratorium, pre-GST tax rates

With tobacco auctions delayed for over six weeks due to the Covid-19 pandemic, tobacco farmers have asked the Government to consider a moratorium on loans and sanction of ₹25,000 each to tide over the crisis.

The farmers have also appealed for reducing taxation on cigarettes to pre-GST levels so that demand can be restored for the domestic legal cigarette industry.

“Failure to bail out the current duress for tobacco farmers will force many of them into debt trap,” they said,

“About 13 crore of kilograms of tobacco worth ₹1,700 crore is lying un-sold as auctions were put on fold. Though the auction activity has resumed on some platforms, it has not picked up yet. Tobacco farmers are in distress,” Federation of All India Farmers' Association (FAIFA) General Secretary Murali Babu has said.

The inordinate delay in the sale of the produce has resulted in loss of weight and deterioration in quality, leading to a loss of about ₹200 crore to farmers.

In Gujarat, more than 33 crore kg of tobacco worth ₹2,700 crore of tobacco is lying unsold.

“The growers are in severe financial distress. We appeal to the government to sanction ₹25,000 each to all the registered tobacco farmers,” Yashwanth Chidipothu, National Spokesperson of FAIFA, has said.

He apprehends lukewarm demand from the traders as sales of cigarettes and other tobacco products had been hit in the last six weeks due to the lockdown. “Failure to revive demand could result in significant price drop in auctions and loss of income for farmers,” he said.

The FAIFA asks the government to reduce taxes temporarily on cigarettes as FCV (flue-cured Virginia) tobacco demand has drastically fallen during the lockdown.

Though auctions have resumed in Green Zones, the pace of auctions is very slow. As against sale of 1,000 bales a day, 80-150 bales are being sold.

Gujarat scenario

The FAIFA said tobacco farmers too are in severe distress. The tobacco produced there is used in bidis and other tobacco-based products. About 33 crore kg of tobacco that the farmers produced there is also waiting to be sold. The price of the produce is pegged at ₹ 2,700 crore.

The federation asked the government to reopen auctions with immediate effect. “The Government should ensure pre-Covid-19 rates so that farmers don’t suffer much,” Javare Gowda, President of FAIFA, said.



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Published on May 11, 2020
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