TOBACCO EXPORTS: THE UNTAPPED POTENTIAL

1 Market Survey By: A. Kumaresan TOBACCO EXPORTS: THE UNTAPPED POTENTIAL . In spite of the health hazards of smoking and chewing TOBACCO , this agri-product is poised to grow at per cent annually, globally. In India, TOBACCO gains commercial importance because of the employment it provides and the revenue it generates for the Indian economy, especially through exports. T. obacco is an agro-based arresting the migration of rural la- es over 60 species of which two alone product processed from bour to urban centres. are cultivated. India grows both . the fresh leaves of plants Although there is a nation-wide Nicotiana tabacum and Nicotiana of the genus Nicotiana.' anti- TOBACCO campaign, the commer- rustica. The largest area is under It is widely available for cial importance of TOBACCO can never Nicotiana tabacum, which is grown sale in the dried and cured form, and be underestimated due to its rev- all over the country, while Nicotina is often smoked. It can also be chewed enue-earning POTENTIAL and employ- rustica is confined to the northern or inhaled (as with powdered snuff).

2 Ment generation capacity. and north-eastern states, , Ut- TOBACCO occupies a prime place in Botanically, the TOBACCO plant be- tar Pradesh, Bihar, West Bengal and the Indian economy on account of longs to the family Solanacea and the Assam. The cultivation of Nicotiana its considerable contribution to the genus Nicotiana. The genus embrac- tabacum accounts for more than 80. agricultural, industrial per cent of the foreign and export sectors. India exchange earnings. is currently the world's second largest producer TOBACCO growing of TOBACCO next to China, states and the fourth largest exporter of unprocessed Even though the TOBACCO in the world. cultivation of TOBACCO is TOBACCO , being a spread all over the coun- labour intensive crop, try, it is concentrated provides employment to in states like Andhra more than 60 lakh peo- Pradesh, Karnataka, ple who are engaged in Gujarat, Maharashtra, farming, curing, redry- Bihar, Tamil Nadu and ing, packaging, grad- West Bengal, etc.

3 Ciga- ing, manufacturing, rette TOBACCO is mostly distribution, export and cultivated in Andhra retailing activities. The and Karnataka, whereas beedi industry, which beedi TOBACCO is grown provides employment in Gujarat, Karnataka to around 44 lakh es- and Maharastra. Cigar sentially unskilled rural and cheroot TOBACCO are folk, and mostly women, grown in Tamil Nadu, is partly responsible for TOBACCO plantation Andhra Pradesh and Market Survey Table I. India's Export of Unmanufactured TOBACCO and TOBACCO Products During 2002-03 to 2007-08. Year Unmanufactured TOBACCO TOBACCO products Total Quantity Value Value Qty Value Value Qty Value Value (tonnes) (Rs crore) (US$ mn) (tonnes) (Rs crore) (US$ mn) (tonnes) (Rs crore) (US$ mn). 2002-03 107,715 19,842 127,557 1, 2003-04 128,186 22,776 150,962 1, 2004-05 138,159 24,774 162,933 1, 2005-06 142,007 1, 24,862 166,869 1, 2006-07 152,618 1, 28,370 180,988 1, 2007-08 174,690 1, 30,657 205,347 2, Source: The TOBACCO Board, Ministry of Commerce, Government of India Table II per cent is consumed for chewing, India's Export of Unprocessed TOBACCO to making beedis, snuff, gutkha paste, Major Countries During 2005-06 to 2007-08 jarda, hookah paste, etc.

4 (Value in Rs crore). Country 2005-06 2006-07 2007-08 Percentage increase in Government initiatives 2007-08 over 2006-07. In case of FCV (Flue Cured Vir- Belgium ginia) TOBACCO , the government of In- Russia ( ) dia and the TOBACCO Board announce Philippines a Minimum Support Price (MSP). Germany from year to year with the objec- Korea tive of protecting the interests of the Netherlands growers of FCV TOBACCO . There is a South Africa need to establish an organised mar- keting system for all types of TOBACCO UK ( ) so that Indian TOBACCO can achieve a Vietnam significant share in the international Egypt ( ) market. Nepal USA ( ) The TOBACCO industry: Ukraine An overview France Australia The TOBACCO industry in India Yemen ( ) contributes in a unique manner to Poland ( ) several important facets of the In- dian economy, covering revenue, ex- Singapore ( ) port, employment, and GDP growth. Bangladesh ( ) It mainly involves the manufacture Others of cigarettes, beedis, cigars and Total 1, 1, 1, cheroots, hookahs, snuff and other Source: The TOBACCO Board, Ministry of Commerce, Government of India chewing TOBACCO like zarda, gutkha and paan masala.

5 West Bengal, and chewing TOBACCO Bengal. The cigarette industry in India is grown in Tamil Nadu, Gujarat, Out of the total production, only is essentially capital intensive in Bihar, West Bengal and UP. Hookah 19 per cent goes into the manufac- nature. The growth of this industry, TOBACCO is grown in UP and West turing of cigarettes, whereas 81 both in India and abroad, represents Market Survey Table III. India's Region-wise Exports of Unprocessed TOBACCO During 2005-06 to 2007-08. (Quantity in tonnes; value in Rs crore). Region 2005-06 2006-07 2007-08 Percentage increase in 2007-08 over 2006-07. Quantity Value Quantity Value Quantity Value Quantity Value West Europe 43,213 48,049 57,559 East Europe 40,167 31,805 31,365 ( ) Middle East 31,656 10,652 9,698 ( ) South & South East Asia 12,618 32,893 44,408 Africa 7,917 20,743 19,234 ( ) ( ) North & South Americas 4,192 6,530 8,542 Australasia 2,244 1,946 3,884 Total 142,007 1, 152,618 1, 174,690 1, Source: The TOBACCO Board, Ministry of Commerce, Government of India a big revenue opportunity for the pancreatic can- Table IV.

6 Economy. cer). The World The beedi industry is one of the Health Organi- India's Exports of FCV TOBACCO foremost cottage industries in India. sation estimates During 2002-03 to 2007-08. Around 37 per cent of the TOBACCO that TOBACCO Year Quantity Value Value produced in India goes into beedi caused mil- (tonnes) (Rs crore) (US$ million). making as per an Indian Market lion deaths in 2002-03 74,169 Research Bureau (IMRB) report in 2004 and 100 2003-04 99,183 1996. The social significance of the million deaths 2004-05 105,417 beedi industry is that it generates over the course 2005-06 109,575 more employment compared to the of the 20th cen- 2006-07 120,300 1, cigarette industry. tury. From the beginning of the 17th 2007-08 137,779 1, century, TOBACCO has been playing an Per cent change in About the 2007-08 over 2006-07 important role in international trade. TOBACCO Recently, there has been a worldwide Source: The TOBACCO Board, Ministry of Commerce, Government of India anti TOBACCO campaign, which result- Board ed in modest drop in the area under The government of India estab- al trade fairs, and exclusive world cultivation and in the production of lished the TOBACCO Board under an TOBACCO exhibitions and symposi- TOBACCO .

7 But consumption of TOBACCO Act of Parliament in 1975 with a ums. in the world has remained more or view to bring about the all-round 4. Publicity through an exten- less stable. development of the TOBACCO industry sive advertisement campaign in with effect from 1st January 1976. the international media to promote The adverse effects Its headquarters are at Guntur, And- Indian TOBACCO . hra Pradesh. 5. Dissemination of informa- of TOBACCO The TOBACCO Board undertakes tion and various enquiries received TOBACCO use most commonly the following export promotion ac- from overseas customers to the ex- leads to diseases affecting the heart tivities: porters. and lungs, with smoking being a ma- 1. Inviting official and business 6. Problem solving with gov- jor cause of heart attacks, strokes, delegations from abroad. ernment agencies and organisa- chronic obstructive pulmonary dis- 2. Organising visits of Indi- tions RBI, customs; import/ex- ease (COPD), emphysema, and can- an official and trade delegations port procedures; problems with cer (particularly lung cancer, can- abroad.)

8 Importers through Indian missions cers of the larynx and mouth, and 3. Participation in internation- abroad, etc. Market Survey Table V. India's Export of FCV TOBACCO to Major Countries During 2005-06 to 2007-08. (Quantity in tonnes; value in Rs crore). Country 2005-06 2006-07 2007-08 per cent increase in 2007-08 over 2006-07. Quantity Value Quantity Value Quantity Value Belgium 13,879 16,728 18,632 Russia 20,593 16,234 13,011 ( ) Philippines 3,096 8,946 12,043 Germany 5,935 6,546 8,680 Netherlands 3,112 3,119 5,605 Vietnam 7,084 3,977 6,153 Korea 4,994 4,581 8,968 UK 7,662 7,049 6,469 ( ) South Africa 987 4,198 4,200 Egypt 5,467 7,371 4,446 ( ) Australia 1,917 1,466 3,150 Nepal 4,171 4,320 4,460 UAE 868 2,290 2,959 Poland 2,714 2,794 2,765 Ukraine 5,144 3,339 3,923 ( ) Indonesia 366 171 2,057 6, Singapore 3,646 4,857 2,836 ( ) Brazil 1,140 1,949 total (incl. others) 109,575 120,300 1, 137,779 1, Source: The TOBACCO Board, Ministry of Commerce, Government of India TOBACCO growers of Andhra Pradesh, ternational TOBACCO merchants and Activities of the Board Karnataka, Maharastra and Orissa, domestic manufacturers to take up Soil and water testing.

9 At competitive rates. low productivity areas for agronomi- 1. The Board had established Financing TOBACCO growers. cal development with a view to im- two soil testing labs one at On- The Board helps get crop loans from proving quality and thus promoting gole in AP and another at Peri- banks and helps banks in recovery exports. yapatna in Karnataka state. The by routing sale proceeds through the Awards to growers. The To- Board also avails the services of concerned banks. It arranges ad- bacco Board honours the best grow- soil testing labs of the state gov- ditional loans at about 7 per cent ers for achieving higher yields every ernments in AP and Karnataka, interest rate from nationalised year as a step towards inculcating a whenever required. banks for procuring inputs like spirit of competition among them. 2. The Board organises the col- coal, fertilizer, etc. lection and analysis of soil and It has organised the setting up Export of TOBACCO water samples of growers, free of of four ATMs in different places cost.

10 Of West Godavari district by ICI- India's export of unprocessed 3. It advises concerned growers CI bank, which is extending crop TOBACCO and TOBACCO products from about the correct dose of fertilisers loans and input loans at 7 per cent 2002-03 to 2007-08 is clearly shown and requirements for irrigation. interest to growers, through these in Table I. Insurance facilities. The To- ATMs. The export of raw TOBACCO from bacco Board facilitates group per- Trade participation in crop India in terms of volume shows a sonal accident policies and barn in- development. The TOBACCO Board steady growth from 1,52,618 million surance policies for the registered had successfully roped in some in- tonnes in 2006-07 to 1,74,690 mil- Market Survey Table VI. Break-up of India's Export (Variety wise) of Non-FCV TOBACCO During 2005-06 to 2007-08. (Quantity in tonnes; value in Rs crore). Variety 2005-06 2006-07 2007-08. Quantity Value Quantity Value Quantity Value Flue Cured Virginia 109,575 120,300 1, 137,779 1, Burley 16,632 15,744 19,622 Sun Cured Natu 3,094 3,047 4,339 Top leaf/Jutty 2,983 2,322 2,201 Lal Chopadia 6,131 7,159 5,337 Judi 1,184 1,019 0 0.