Andhra Tobacco Crisis: Surplus Crop and Export Woes Push Prices to Record Lows
Andhra Pradesh's Flue-Cured Virginia (FCV) tobacco farmers are facing severe financial distress as prices have plummeted due to a massive surplus and disrupted exports. The average auction price stood at just ₹219.50 per kg as of July 6, a steep drop from over ₹360 per kg during the previous season. According to the Tobacco Board, only 29.62 million kg had been sold by that date, against the usual 70 million kg expected at this stage.
The crisis stems from a production surplus: the Board authorised 140 million kg for the 2025-26 season, but actual production is estimated at 240 million kg, leaving an excess of 100 million kg. Globally, FCV production has also increased, further weakening demand for Indian tobacco.
Farmers allege that inadequate participation by companies and traders at auction platforms has driven down prices. To address this, Andhra Pradesh Chief Minister N. Chandrababu Naidu directed companies to procure at a minimum of ₹200 per kg, and Agriculture Minister Kinjarapu Atchannaidu ordered field inquiries into alleged syndicate practices.
Indian Tobacco Association Secretary Yarlagadda Ankamma Chowdary attributed the situation to export disruptions due to the Middle East war, which has hindered shipments to Dubai and the region. He also cited heavy taxes imposed by the central government and the classification of tobacco as a demerit crop, which denies export incentives. He stressed that traders and companies who gave indent for the crop must procure the produce.
Tobacco Board Chairman Yashwanth Kumar Chidipothu said the Board is persuading traders to increase procurement and ensure no bales are rejected. However, he also pointed to quality issues, noting that farmers are bringing more low-grade produce to markets. Farmer organisations contest this, with Guduru Nagaraja of the Federation of All India Farmer Associations stating that quality is better this year, but input costs are not being recovered. A farmer added that the surplus naturally benefits buyers, but they are using it to reduce prices instead of increasing procurement.
The Board's inability to curb the production surplus has drawn criticism, while the slow auction pace continues to worry thousands of livelihoods dependent on the tobacco sector.
