The Federation of All India Farmer Associations (FAIFA) has issued a stark warning regarding the severe impact of recent tax hikes on cigarette products imposed by the Union government. According to FAIFA, these steep increases have effectively brought tobacco auctions to a complete standstill at ten key platforms across Karnataka, including major centres in Mysuru and Periyapatna. This abrupt halt in trading activities is pushing thousands of tobacco farmers into significant financial distress and uncertainty.
Disruption Across the Tobacco Value Chain
In a detailed statement, FAIFA joint secretary Vikramraj Urs highlighted that the recent tax increases, which are estimated to exceed 70% on certain cigarette categories, have severely disrupted the entire tobacco value chain. This disruption has resulted in near-total non-participation by traders and buyers, effectively halting auctions across the state of Karnataka. Urs emphasized that the impact is not confined to Karnataka alone; it is beginning to spill over into neighbouring Andhra Pradesh as well, raising concerns about a wider regional crisis.
Mounting Financial Pressure on Growers
With repeated postponements of auctions and the marketing season advancing rapidly, tobacco growers are now holding large stocks of unsold produce. This situation is leading to mounting financial pressure, as farmers struggle to manage their investments and operational costs. The prolonged uncertainty surrounding the resumption of auctions has left farmers deeply anxious about the fate of their produce and their ability to recover investments during this critical season.
Threat to Upcoming Auction Season in Andhra Pradesh
Vikramraj Urs further cautioned that the ongoing disruption in Karnataka is now threatening to affect the upcoming auction season in Andhra Pradesh, which is scheduled to begin in the first or second week of March. If the issues are not resolved promptly, the ripple effects could exacerbate the distress among tobacco farmers in both states, potentially leading to broader economic and social challenges.
FAIFA's Urgent Appeal to the Government
In response to this escalating crisis, FAIFA has urgently appealed to the government to take immediate action. The association has called for a comprehensive review and rationalisation of the recent tax hikes, aiming to restore buyer confidence and ensure the swift resumption of tobacco auctions. FAIFA stresses that such measures are crucial to prevent further hardship for tobacco farmers and to stabilise the agricultural sector in the affected regions.
The situation underscores the delicate balance between fiscal policies and agricultural livelihoods, highlighting the need for careful consideration of the impacts on farming communities. As the debate continues, stakeholders await government intervention to address the concerns raised by FAIFA and support the tobacco farming sector through these challenging times.
