The Flue-Cured Virginia (FCV) tobacco sector in Andhra Pradesh is in turmoil,with farmers grappling with plummeting prices and a significant surplus. As of July 6, the average auction price for tobacco has dropped to ₹219.50 per kg, a stark decline from over ₹360 per kg in the previous season . This downturn has left many farmers in dire financial straits,as only 29.62 million kg of tobacco had been sold by early July, far below expected 70 million kg for this time of year.
Farmers attribute crisis to more than just market fluctuations. They point to systemic failures in production planning and procurement policies that have exacerbated their plight. The Tobacco Board had authorized the production of 140 million kg for the 2025-26 season, but actual production estimates suggest nearly 240 million kg, resulting in a surplus of about 100 million kg.
Internationally, the situation is equally bleak. Indian tobacco product exports have fallen by 34.81%,largely due to disruptions caused by ongoing conflicts in the Middle East, which have hindered traders' ability to export goods. Yarlagadda Ankamma Chowdary, Secretary of the Indian Tobacco Association,noted that since the war began in February, exporters have struggled to send containers to Dubai. He also criticized heavy taxes imposed by the Central government,which he believes dampen market sentiment.
In response to the crisis, Andhra Pradesh Chief Minister N. Chandrababu Naidu has mandated that companies procure tobacco at a minimum price of ₹200 per kg. Agriculture Minister Kinjarapu Atchannaidu has ordered investigations into allegations of collusion among tobacco companies,which farmers claim has reduced competition and driven prices down further.
Despite these governmental interventions,the Tobacco Board faces criticism for allowing production to exceed authorized limits and for its failure to ensure effective auction processes. Chairman Yashwanth Kumar Chidipothu acknowledged the slow pace of sales and attributed some of the issues to quality concerns, stating that farmers are bringing more low-grade tobacco to market, leading to increased rejections.
However,farmer organizations contest this narrative. Guduru Nagaraja,General Secretary of the Federation of All India Farmer Associations (FAIFA), argued that this year's crop quality is better than in previous years. He emphasized that farmers are not even recouping their input costs,warning that the tobacco sector supports millions of livelihoods,including farm laborers and transporters.
One grower expressed frustration over the market dynamics, stating that when farmers produce a surplus, it should incentivize buyers to procure more and export more,yet the opposite is occurring as prices continue to fall. In light of these challenges, the Tobacco Board has reduced the authorized crop size for the 2026-27 season to 80 million kg and reiterated its directive for companies to ensure minimum procurement prices .
While these measures may offer some relief,they do not address the root causes of the crisis. The FCV tobacco situation highlights the need for comprehensive reforms. Farmers require timely regulation of crop sizes, effective measures against unauthorized cultivation,and transparent participation from all registered buyers in auction platforms . Moreover,stronger intervention from the Union government is essential to facilitate exports during global disruptions .
Without addressing these structural deficiencies, burden of market failures will continue to disproportionately affect farmers, who remain most vulnerable link in the tobacco value chain despite being its primary producers.
