Employment Opportunities in Indian tobacco Industry

CASIRJ Volume 2 Issue 1 ISSN 2319 – 9202

International Research Journal of Commerce Arts and Science http:www.casirj.com Page 208

Employment Opportunities in Indian tobacco Industry

Dr. Anil Kumar Satyendra Kumar

Associate Professor / Supervisor Ph.D Researcher Deptt. of Commerce Applied Business Economics (Commerce) S.V. College, Aligarh U.P. S.V. College, Aligarh U.P.

Abstract:

In India, in the 17

th century, tobacco was introduced by the traders of Portugal within few

years of introduction, its cultivation spread to many parts of India. Tobacco is an important

commercial crop all over the world due to its use in one form or the other by the consuming

populations. The use of tobacco in the people for smoking increased from 1586 onwards

despite resistance from the government who levied taxes on smoking tobacco products.

Mariners and traders had introduced the tobacco crop agriculture in China, Japan, and into

other countries including those in Europe, Africa, Asia and even to Australia by 1605.

Tobacco is also an export oriented crop. It earns substantial amount of foreign exchange. The

foreign exchange earning through exports of unmanufactured tobacco and manufactured

tobacco products during 2006-07 touched Rs. 5210 million. Tobacco is a labour intensive

crop and it provides directly and indirectly employment to about 36 million people its

farming, curing, marketing, grading, re-drying, packing, manufacturing and distribution as

tobacco contributed Rs. 7790 million to export earnings in 1998/99. India has registered

tobacco farmers, Exporters, Dealers, Packers, Commercial Graders and Processors and many

more who are not registered.

Tobacco production is an important source of income for India‟s farmers. While alternative

crops are available in terms of agronomic suitability, in general a move away from tobacco

production would result in reduced income. Thus any attempts to control the use of tobacco

would need to take into account the economic impact on these sectors and marketing

channels have to be improved to increase consumption in to create more employment,

increase income of the rural people.

Introduction:

India is predominantly an agricultural economy and agriculture contributes 14.6 percent in

the year 2009-2010 to the Gross Domestic Product. Developing country like India has to

suffer naturally from too much of labour, caused by higher growth of population. It becomes


International Research Journal of Commerce Arts and Science http:www.casirj.com 09

a problem for the economy to provide employment to all. The level of employment in

agriculture is of fluctuating in nature. During busy season, almost all laborers would be fully

employed and in the off-season, they are forced to remain unemployed. The absorption of

under employment is possible through tobacco rearing which will be complementary to

agriculture. Commercialization of agriculture in India is critical to ensure optimum utilization

of scarce resources and to provide raw materials to industries at lower cost. Agriculture

diversification is one of the major growth of strategy in the National Agricultural Policy as

well as the Tenth Five year plan of India.

Many crops are grown in India some of them are food grain cereals, fruits, pulses and

oil seeds plants and another crops which are having “cash crops terminology” that are

sugarcane, cotton, tobacco, opium, mint, menthol, chikori, tea, coffee etc. Some out of them

have in-toxic properties and nicotine used by the people in various form. Tobacco is an

important commercial crop all over the world due to its use in one form or the other by the

consuming populations. The use of tobacco in the people for smoking increased from 1586

onwards despite resistance from the government who levied taxes on smoking tobacco

products. Mariners and traders had introduced the tobacco crop agriculture in China, Japan,

and into other countries including those in Europe, Africa, Asia and even to Australia by

1605.

In India, in the 17th

century, tobacco was introduced by the traders of Portugal within

few years of introduction, its cultivation spread to many parts of India. The main non flue

cured Virginia types of tobacco grown in India include Bidi, Natu, Cigar, Cheroot, Chewing

snuff and Hookah tobacco besides burley tobacco verities. On an average, bidi tobacco

accounts for the highest production among different types of tobacco cultivated in India. Its

annual production range from 1,70 thousand tons over 2,00 thousand tons followed by flue

cured Virginia tobacco whose average production range from 1,00 thousand to 1,50 thousand

tons on annual basis Natu, chewing, Hookah, Cigar & Cheroot and snuff types of tobacco are

also produced in significant quantities. Tobacco is cultivated in the states of Andhra Pradesh,

Gujarat, Karnataka, Bihar, Maharashtra, Orissa, Tamil Nadu, Uttar Pradesh, West Bengal.

Tobacco is also an export oriented crop. It earns substantial amount of foreign

exchange. The foreign exchange earning through exports of unmanufactured tobacco and

manufactured tobacco products during 2006-07 touched Rs. 5210 million. Tobacco is a

labour intensive crop and it provides directly and indirectly employment to about 36 million

people its farming, curing, marketing, grading, re-drying, packing, manufacturing and

distribution as tobacco contributed Rs. 7790 million to export earnings in 1998/99.

The agriculture economy of Uttar Pradesh revolves mostly around the bad or good

agriculture. Many crops contributes remarkable role in the Uttar Pradesh economy. Uttar

Pradesh has attained prominent position in tobacco area and production among the Indian

states. The area of production of tobacco in Uttar Pradesh is more than 24000 hect.,

producing annually 1,18 thousand metric tons and 62 quintal per/hect. In the agricultural



economy of Etah district, tobacco plays a remarkable important role. Tobacco occupied about

16 percent of Net area in season.

Review of the Literature

Indian Tobacco Association (1988) in his study, observes that there is need to train

employed and unemployed youth in the tobacco farming which can improve tobacco

productivity and quality. Good quality tobacco products can give good price for our

produce, increase the tobacco consumption, and help in branding of tobacco products.

International Tobacco Growers Association (1993) explained that the growth in

marketing professional manpower was around 5-10 percent per annum to meet

requirements overall tobacco farming sector.

FAO Corporate Document Repository produced by Economic and Social

Development Department (Tobacco supply, Demand and Trade by 2010, Policy

options and adjustment) and Food and Agriculture Organization of the United

Nations Rome, 2003 has pointed out that the more than Six million people depend

directly or indirectly on this sector for income and employment. The tobacco sector is

growing at a much faster rate than any other element of the crop.

The Economics of Tobacco and Tobacco Taxation in India, March 2010 (ISBN

978-2-914365-70-3) this report reviews current research on the economics of tobacco

taxation in India and makes recommendations for tobacco tax policy.

Object of the Study

The main objective of the study is Employment Opportunities in Indian Tobacco

Industry special reference to Etah district, Uttar Pradesh.

Methodology

Empirical study is based on both primary and secondary data. The district has been

identified because of its dominant position in tobacco production in the state as well

as in India. For the purpose of the study, an exhaustive list of farms of tobacco

operating in this district is prepared. Based on the number of the tobacco growers,

farms are grouped under small, medium and large size categories. In the present study

an attempt has been made to study the Employment Opportunities in Tobacco

farming at Etah.

Area of the Study



The present study mainly focus the employment situation or otherwise employment

Opportunities in Etah district. It consists of 5 Tehsel, namely Etah, Aliganj, Kasganj,

Jalesar, Patiyali. For Administrative purposes, the district has been divided in to 5

Tehsel, 15 Blocks, 1601 Village, and 898 Gram Sabha. For development purposes,

the district has been divided into 7 Municipalities, 149 Nayaya Panchayat, 12 Town

area committee.

Etah district is situated near the border of Rajasthan, therefore, the

temperature remains so high and rains as less than as normal and sometimes the rains

are quite uncertain. It has also been recorded that 80 percent of the rains one in the

month of June to September. A number of tobacco farms have scaled up their

operations to catch up with the export market for tobacco raw materials and products

in Bangladesh, Nepal, Pakistan, Sri Lanka, Singapore and Malaysia. Tobacco

business can be adopted a part or a full time business in villages as well as in cities on

a small scale or large scale. The people of this are have found two profitable avenues

for their subsistence one is that of lorry body building and other is tobacco industry.

Data Source

Primary Data

The primary data are collected from the sampled farmers. A pre-tested and well-

designed interview schedule is used to collect the primary data of sample respondents

of tobacco farmers by personal survey method out 100 Tobacco farms in Etah district.

Secondary Data

Secondary data are collected from the books relating to tobacco. The secondary data

are collected from various year books, records of tobacco farms, tobacco journals,

tobacco international and research publications are used to present a clear picture of

tobacco farming at present. The required data are also collected from Distt. Statistics

office, Director agricultural Data and product insurance, Uttar Pradesh Krishi

Bhawan, Lucknow and Diary of Uttar Pradesh, The tobacco Institute of India, New

Delhi, website - www.ibef.org, www.tobaccoboard.com, www.wikipedia.org.

International data are collected from The publication of United Nations Ford and

agriculture (FAO) and U.S. Department of agriculture. The secondary data like cost

and financial information are collected from the owners of the sample farmers

through a well-designed schedule.

Employment Potential in Tobacco Farming

http://www.ibef.org/



Tobacco farming can provide self-employment to unemployed and under employed

rural folks. India occupies second place in tobacco production (750 m kg) and exports

(260 m kg) after China (2300 m kg) and Brazil (270 m kg). The tobacco crop fetches

more than 4100 crores of foreign exchange besides generating about 17415 crores of

excise revenue to the exchequer annually. It provides livelihood to about 36 million

people and about 6 million farmers and 20 million farm labour are engaged in tobacco

farming in over 15 states in the country. According to the perspective plan for Uttar

Pradesh, Tobacco units likely to provide employment to at least 1.5 lakhs of people,

another 20 thousand people will get jobs in other ancillary activities. The Indian retail

market currently estimated at $490million in project to grow at a compounded annual

to reach $ 865 billion (growth rate of 6 per cent) in vision 2023 and Central Tobacco

Research Institute vision - 2050 has viewed that Cultivated tobacco has a large

genome size with approximately 4.5 billion base pairs. The tobacco genome initiative

has generated over one million gene-space sequence reads from methylation-filtered

tobacco genomic DNA libraries. In the next 40 years, the Vision envisages research

in the following critical areas -

Developing high yielding tobacco varieties with superior quality, pest and

disease resistance and high input-use-efficiency.

Genetic resource management.

Climate resilient interventions for management of biotic and a biotic stresses.

Managing resource constraints for production efficiency and product quality.

Developing green technologies for production, protection and processing.

Farm mechanization to reduce cost of production.

Exploiting tobacco as an oil seed crop and as a source of valuable

photochemical and bio-engineered products.

Promoting alternative cropping systems/farming systems to tobacco.

Energy and time saving post- harvest technologies.

Similar increase in employment generation also can be anticipated due to

acceleration in broiler production, marketing of tobacco product, processing

etc. So increase in tobacco production activities will help to generate more

employment. It will also help to solve gender issues in employment since the

tobacco operations can be handled with ease both by men and women.

Exports and key Markets

Exports of India tobacco and tobacco products have witnessed a rising trend

and growth in the last seven year exports have grown at a rate of 15.8 per cent

from US$322.49 million in 2005-06 to a record.



India is the second largest exporter of FCV tobacco in the World.

Indian tobacco is exported to around 100 countries.

India Exports unmanufactured tobacco primarily to Western Europe,

south-East Asia, East Europe and Africa.

Employed people in Indian tobacco Industry

India has registered tobacco farmers, Exporters, Dealers, Packers, Commercial

Graders and Processors and many more who are not registered.

Table 1 No. of registered Employed people in Indian tobacco Industry

Type of employed people Numbers

Farmers 96865

Exporters of Un-manufactured

tobacco

153

Exporters of Products 247

Dealers 662

Packers 27

Commercial Graders 52

Processors 8

Source: Tobacco Board - ministry of commerce & Industry, Govt. of India

and website of www.wikipedia.org.

ECONOMIC ANALYSIS OF TOBACCO MANUFACTURING

ENTERPRISES

It is estimated that over 2.3 million persons depended on this sector for their

livelihood. The annual wage bill in these enterprises averaged Rs 4300 million, and

annual wages per worker varied from Rs 8400 in bidi factories to Rs 55730 in

cigarette, cigar and cheroot factories. The total net value added by all enterprises

averaged Rs 15000 million per annum, of which bidi factories contributed 41.2

percent, and cigarette and allied industries 34.3 percent. The total annual wage bill in

the cigarette and allied industries, despite wages per worker being substantially

higher, was only 4 percent of its gross value of output, compared to 16 percent in the

http://www.wikipedia.org/



bidi factories, because bidi manufacturing is more labour intensive. Bidi

manufacturing is estimated to provide employment to more than 4.4 million workers,

a large number of whom are women and children. If the forward and backward

economic linkages are taken into account, bidis generated 1310 million workdays,

whereas cigarettes generated 340 million workdays.(Table 2)

Table 2 Employment (formal + informal) in the bidi and cigarette industry,

1994/95

Cultivator Processor Manufacturer Wholesaler Retailer Total

Full-time

equivalent

Bidis 140000 29300 2 964000 110000 113000 437 300

Cigarettes 124000 2200 10620 110666 886066 1134128

Persons

employed

Bidis 290000 44000 4 461000 83000 757000 5635000

Cigarettes 267000 3278 10620 81616 543000 906090

Workdays

(million)

Bidis 41.5 8.8 889.2 371.1 n.a. 1310.6

Cigarettes 37.1 0.7 3.2 299.0 n.a. 340.2

Note: n.a. = not available.

Source: Bidi and Cigarette Industry – A Comparative Status. Indian Market Research

Bureau Report, 1996.

Future developments in tobacco demand

There are clear trends in consumer preferences, in both domestic and world markets.

Consumers prefer cigarettes with low nicotine content; lighter cigarettes; and

cigarettes produced from regular “O” grade tobacco. Companies are therefore

changing production technology by reducing fertilizers – especially nitrogen – to

reduce yields, and adjusting planting time, spacing, topping and harvesting systems,

as well as striving to reduce nicotine levels and not harvesting overripe tobaccos to

avoid “R” grades. Although proportionally minor, aromatic tobacco (oriental type) is

important for a number of small farms in the northeast. Production has been about



800 to 1000 tonne/year of high-value tobacco. The area planted has been increasing,

to some 1500 ha, with 1176 growers in the 2000/01 crop. It is mainly used in blends

for cigarette brands – the so-called American blend. Export of such blending types is

a promising sector. The suitable soil and climate in the northeast has made aromatic

tobacco production an important agricultural activity and a major source of income

for producers. It helps the regional economy by creating around 16000 jobs from May

to November each year.

AREA, PRODUCTION AND YIELD

Table 3 Block wise Area, Irrigated, Production and Productivity of Tobacco in

Distt. Etah

S.No Development

Blocks

Area Irrigated

Area

1 Aliganj 6642 6642

2 Jaithra 1520 1520

3 Sakeet 256 256

4 Sheetalpur - -

5 Nidhauli Kalan - -

6 Marehara - -

7 Awagarh - -

8 Jalesar - -

9 Sidhpura 1608 1608

10 Patiyali 1568 1568

11 Ganjdudwara 2280 2280

12 Sahawar 465 465

13 Amanpur 375 375

14 Kasganj 25 25

15 Soron 145 145

Source : District Statistical Diary Etah 2007-08



Table 4 Region wise Tobacco Crops Cultivation

S.No. Regions Area in

lakh/ha

Irrigation

in lakh/ ha

Production in

lakh/ha

Average

Production

1 Western Region 1014 101.4 10982.8 42.17

2 Central Region 76.6 76.6 26.91 41.2

3 Bundelkhan Region 0.12 0.12 0.43 35.83

4 Eastern Region 13.99 14.03 56.72 36.9

Source: Director, Agriculture Statistics & crops Insurance Uttar Pradesh ,Lucknow.

The area under tobacco, some 0.25 percent of the total cropped area, has fluctuated

irregularly over the past three decades. The area under tobacco appears to be strongly

influenced by prices in the preceding year. As a result of increasing yields, production

of tobacco rose from 362000 tonnes in 1970/71 to 646000 tonnes in 1997/98(Table 5)

Table 5 : Area, production and yield of tobacco in India

Period Area

(„000 ha)

Production („000

tonne)

Unit yield (kg/ha) Proportion with

irrigation (%)

1970/71 447 362 810 23.7

1975/76 368 350 950 29.8

1980/81 452 481 1065 33.7

1985/86 397 441 1111 39.9

1990/91 385 563 1353 43.2

1994/95 381 567 1486 45.3

1995/96 395 535 1356 N.A.

1996/97 432 599 1386 N.A

1997/98 464 646 1393 N.A.

Source: Directorate of Economics and Statistics, Ministry of Agriculture. Various

issues. Area and Production of Principal Crops in India.



A wide variety of tobaccos are grown in 16 states in India under diverse agro climatic

conditions. However, most of the varieties grown (other than Virginia, Burley and

Oriental) are of non-cigarette types. These include natu, bidi, chewing, hooka

(hookah), cigar and cheroot tobaccos and account for about 77 percent of the total

output (Table 6). Cultivation of FCV tobacco was initially confined to the traditional

black soil areas of Uttar Pradesh. However, to suit the quality requirements in internal

and export markets, cultivation of FCV was encouraged in light soils in Uttar

Pradesh. In the initial years, the varieties grown were limited to Havana tobacco used

in cigars, and Lanka tobacco used in the manufacture of snuff and bidis.

Subsequently, other forms, like FCV, were introduced.

Table 6 : Distribution (percentage) of production of different types of tobacco in

India.

Year Percentage distribution of production of different tobacco types Total Harvest

(‘000 tonne) FCV Natu Bidi Cigar Hookah Cheroot Snuff

1975-76 27.7 10.9 31.4 4.3 7.1 17.2 1.4 349.8

1980-81 26.1 10.6 36.5 2.8 7.7 14.8 1.5 520.1

1985-86 18.0 13.8 39.3 4.0 6.8 17.0 1.8 441.2

1986-87 23.7 9.5 40.0 2.4 6.1 16.9 1.4 461.8

1987-88 15.4 9.8 37.6 2.7 8.7 24.1 1.7 367.4

1988-89 21.2 12.2 33.9 2.9 9.4 18.8 2.1 492.8

1989-90 18.8 12.9 33.4 2.8 6.2 23.5 2.4 551.6

1990-91 20.3 10.5 35.5 2.6 14.1 14.9 2.1 558.4

1991-92 28.2 12.3 28.6 2.4 12.4 13.5 2.6 584.4

1992-93 27.08 10.4 31.6 2.8 13.3 11.9 2.2 596.5

1993-94 22.0 10.7 33.4 2.8 17.3 11.7 2.1 562.9

1994-95 20.0 7.9 38.6 3.1 3.9 24.4 2.1 566.7

1995-96 22.0 9.0 38.3 3.2 3.2 22.2 2.1 535.2

1996-97 23.4 8.1 34.2 2.1 5.8 25.8 1.6 617.9

1997-98 23.6 8.1 29.5 1.5 6.6 29.1 1.5 646.0

Source: Directorate of Tobacco Development, Ministry of Agriculture, Chennei



Conclusion

Tobacco production is an important source of income for India‟s farmers. While

alternative crops are available in terms of agronomic suitability, in general a move

away from tobacco production would result in reduced income and food security for a

considerable number of farmers. Manufacturing, particularly of bidis, is also a source

of employment and hence of income for a large number of people. Thus any attempts

to control the use of tobacco would need to take into account the economic

impact on these sectors. To be effective, measures to control the use of tobacco would

need to address all forms of consumption, not only cigarettes. In particular, this would

mean dealing with the economic and political difficulties of taxing, or otherwise

controlling, bidis and other non-cigarette forms of tobacco consumption.

Suggestions

Marketing channels have to be Improved to increase consumption in to create more

employment, increase income of the rural people.

References

CTRI (Central Tobacco Research Institute). 1999. Status Report on

Research Programme on Alternative Crops to Tobacco. CTRI, Indian Council

of Agricultural Research, Rajahmundry, Andhra Pradesh

DES (Directorate of Economics and Statistics, Ministry of Agriculture).

2000. Cost of Cultivation of Principal Crops in India.

NCAER (National Council of Applied Economic Research). 1994. Export

potential of the tobacco sector. Study, including sample survey carried out

through the Rapid Rural Appraisal technique, sponsored by the Tobacco

Institute of India, New Delhi.

Bibliography

Food and Agriculture Organization of the United Nations. Rome, 2003

FAO project Tobacco Supply, Demand and Trade by 2010: Policy

Options and Adjustment,

District Statistical Diary Etah 2007-08

Tobacco Board - ministry of commerce & Industry, Govt. of India



Bidi and Cigarette Industry – A Comparative Status. Indian Market

Research Bureau Report, 1996

Director, Agriculture Statistics & crops Insurance Uttar Pradesh

,Lucknow.

Directorate of Economics and Statistics, Ministry of Agriculture. Various

issues. Area and Production of Principal Crops in India

Directorate of Tobacco Development, Ministry of Agriculture, Chennei

www.ibef.org, www.tobaccoboard.com, www.wikipedia.org

http://www.ibef.org/

Employment Opportunities in Indian tobacco Industry

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