Rising Tobacco Prices in Andhra as Brazil and Indonesia Crop Failures Hit Global Markets: What You Need to Know

Tobacco known as the ‘Golden Leaf’ is one of the most profitable commercial cash crops worldwide and plays an important role in the world’s economy. In the 2022 fiscal year, India exported and manufactured tobacco for US$ 353 million. India is the Second largest producer of Tobacco in the world and contributes a huge portion of global demand after China and Brazil respectively.

Tobacco is consumed worldwide and is largely a huge cash crop considered for the farmers as it mints a considerable amount of profits before cultivation. It is typically grown in warmer conditions and requires a controlled supply of water for its irrigation and a well-drained rich soil.

It’s total contribution to the national economy is Rs 18,255 crores. In India, the tobacco crop directly or indirectly supports 36 million people engaged in production, processing, marketing, and exports which includes six million farmers and 5 million people involved in bidi-rolling and tendu leaf-plucking. Thus, the crop is a lifeline for a sizeable chunk of the population, particularly rural women, tribals, and other weaker sections of the society.

• The Decline of Tobacco Production in Indonesia

  Almost 60 percent of the Indonesian population are smokers, apart from consuming tobacco Indonesia is also a leading manufacturer and distributor of tobacco all over the world, but for the past two years, the farmers have struggled a lot due to the change in rainfall patterns and complications arising in the supply chain making the farmers adhere to losses which is forcing them to move to other crops such as corn and red beans.

  Tobacco farmers are at the bottom rung of the industry, while the middlemen who bought the harvest from farmers remained relatively unaffected. The intermediate buyers magnified the issue because farmers had no choice but to accept the prices they offered.



The tobacco trading system in Indonesia does not allow farmers to sell directly to big tobacco companies such as HM Sampoerna, Gudang Garam, or Djarum. The product must instead pass through a long chain of middlemen, small and large-scale traders, and tobacco graders before it arrives at the factory. More tobacco control makes for lower cigarette sales, equaling more misery for farmers.

Brazil’s tobacco output has also declined to 440m kg from an estimated of 550m kg, while zimbabwe’s crop production shrank to around 240m kg from an expected of 300m kg.



• The Rise of Tobacco Prices in Andhra Pradesh

  Due to the shift of demand and low cultivation of tobacco from countries like Indonesia and Brazil, the focus has now emerged at Andhra Pradesh one of the top producing states of tobacco in India, surging the prices and allowing the farmers to make profits.

  Global shortage of 400 million kg of tobacco spurs export demand for the crop premium leaves farmers in Prakasam and Nellore districts a record ₹210 a kg during e-auctions. In the last week of December 2023, the cyclone inflicted more damage, estimated at around 10,000 hectares, to the final-stage tobacco crops across the district. Many affected tobacco growers resumed cultivation in the 3rd and 4th weeks of December 23, while some even initiated re-plantation of tobacco saplings in the preceding days, a process still ongoing in a few areas. This surge in cultivation has led to abnormal increases in additional capital amounts required by many farmers.