Tobacco Board Authorised to Manage Excess Tobacco Sales

The Government of India has recently taken steps to regulate the tobacco market in Karnataka for the 2024-25 season. This decision comes amid concerns over excess and unauthorised tobacco production. The Commerce Ministry has issued a notification allowing the Tobacco Board to facilitate the auction of excess tobacco produced by both registered and unregistered growers.

Context of the Decision

The decision to authorise the Tobacco Board is aimed at addressing the challenges faced by tobacco growers. Approximately 12,000 growers produced tobacco without proper authorisation. This move is expected to provide them with an opportunity to sell their excess crops legally. The auctions are anticipated to continue for over a month, providing a vital avenue for these farmers.

Tobacco Production Statistics

For the 2024-25 season, the Tobacco Board has set an authorised crop size of 100 million kilograms (mkg) for Karnataka. Registered growers are estimated to produce around 74.74 mkg. Additionally, there is an estimated excess production of 7.32 mkg from registered growers. Unregistered growers have contributed approximately 11.04 mkg of unauthorised tobacco. Overall, the total estimated tobacco output in Karnataka stands at around 93.10 mkg.

Market Prices and Trends

Current auctions in Karnataka have seen growers realise an average price of ₹267.72 per kilogram. This price reflects a slight increase from the previous year’s average of ₹256.15. However, the total quantity sold so far this year is 60 mkg, a decrease from 84 mkg sold last year. This decline suggests a tightening market and may indicate shifts in demand or production practices.

Impact on Growers

The authorisation to sell excess tobacco is crucial for many growers. It provides a legal framework for selling unauthorised production, ensuring that farmers can mitigate losses. The Federation of Karnataka Virginia Tobacco Growers Association has brought into light the importance of this decision for the livelihoods of many farmers.

Future Outlook

The Tobacco Board’s actions are expected to stabilise the market and provide growers with necessary support. Continued monitoring of production levels and market prices will be essential. The success of this initiative will depend on effective implementation and the responsiveness of the market.

Questions for UPSC:

1. Estimate the impact of excess tobacco production on the livelihoods of registered and unregistered growers in Karnataka.
2. Critically discuss the role of the Tobacco Board in regulating tobacco production and sales in India.
3. Examine the factors contributing to the decline in tobacco sales from 84 million kilograms last year to 60 million kilograms this year.
4. Analyse the implications of fluctuating market prices on the economic stability of tobacco farmers in Karnataka.

Answer Hints:

1. Estimate the impact of excess tobacco production on the livelihoods of registered and unregistered growers in Karnataka.

1. Excess production allows unregistered growers to legally sell their crops, reducing potential losses.
2. Registered growers benefit from higher auction prices, improving their income stability.
3. Approximately 12,000 growers produced tobacco without authorization; this decision aids their financial recovery.
4. The Tobacco Board’s actions help create a structured market, enhancing growers’ bargaining power.
5. Legal sales of excess production can lead to increased investment in sustainable practices among farmers.

2. Critically discuss the role of the Tobacco Board in regulating tobacco production and sales in India.

1. The Tobacco Board sets authorized crop sizes, ensuring production does not exceed sustainable limits.
2. It facilitates auctions, providing a transparent platform for growers to sell their produce.
3. The Board monitors both registered and unregistered growers to maintain compliance and fair practices.
4. It plays important role in addressing excess and unauthorized production, protecting growers’ interests.
5. Through regulations, it aims to stabilize market prices and ensure a fair income for farmers.

3. Examine the factors contributing to the decline in tobacco sales from 84 million kilograms last year to 60 million kilograms this year.

1. Possible overproduction in previous years may have led to market saturation, affecting current sales.
2. Shifts in consumer preferences towards healthier alternatives could reduce demand for tobacco products.
3. Regulatory changes and increased scrutiny on tobacco farming may have impacted production levels.
4. Economic factors, including inflation, may have affected purchasing power and overall market demand.
5. Weather conditions and agricultural challenges could have influenced crop yields and quality this year.

4. Analyse the implications of fluctuating market prices on the economic stability of tobacco farmers in Karnataka.

1. Fluctuating prices can lead to unpredictable income, affecting farmers’ financial planning and stability.
2. Higher prices may encourage production, but sudden drops can lead to losses for growers.
3. Price volatility can impact the ability of farmers to invest in better farming practices or technology.
4. Stable prices are essential for long-term sustainability and economic viability of tobacco farming.
5. Market fluctuations can affect the bargaining power of farmers in auction settings, influencing their profitability.