Tobacco farmers of Andhra Pradesh are being destroyed not by drought, not by pest, not by nature, but by a system designed to cheat them. A farmer who grows Grade-1 tobacco in Andhra Pradesh is receiving ₹100 less per kilogram than his counterpart in Karnataka for the same grade of the same crop, in the same season, at the same time. This is not a market outcome. This is a manufactured outcome — the product of buying company collusion that the government has failed to detect, deter, or punish.
The numbers tell the story of a systematic betrayal:
- At auction centres in Andhra Pradesh, Grade-1 tobacco is currently fetching ₹250 per kilogram
- The same Grade-1 tobacco was selling at ₹280 per kilogram just 30 days ago
- In Karnataka, Grade-1 tobacco is currently selling at ₹350 per kilogram
- The price difference between AP auction centres and Karnataka: ₹100 per kilogram — a 40% gap that cannot be explained by quality, transportation, or market fundamentals
When two companies operating in the same auction centre agree, explicitly or implicitly not to bid against each other beyond a certain price, the farmer has no recourse. He cannot take his tobacco elsewhere easily. The auction system requires him to sell on the day his lot comes up. He cannot store indefinitely. He cannot transport to Karnataka without significant cost and logistical difficulty.
The Scale : 130 Million Kg of Production
The scale of this year’s tobacco crop makes the price suppression scandal even more consequential.
For the 2025-28 season, the Prakasam Region Circle has notified 90.20 million kilograms of tobacco for auction. It is estimated that there will be an additional 130 million kilograms of tobacco production beyond the notified quota — surplus crop that farmers are trying to sell outside the formal auction system, at whatever price the market offers.
With 130 million kilograms of surplus tobacco seeking buyers, the bargaining power of individual farmers is minimal. The buying companies know this. They are exploiting it. At the current suppressed price of ₹250 per kilogram versus the Karnataka rate of ₹350, the aggregate loss to Andhra Pradesh’s tobacco farming community across even a fraction of this production runs into hundreds of crores of rupees.
The Regional Auction Data: Collapse Across All Centres
The price collapse is not confined to one centre or one district. It is state-wide, simultaneous, and accelerating:
- Prakasam Region Centre 1: Opening price ₹250. Grade-1 ungraded tobacco opening at ₹250 per kilogram — a price that does not cover input costs for many farmers
- Ongole Region: 11 auction centres active in the 2025-26 season. Prices beginning at ₹224 per kilogram at auction opening
- The previous year’s opening prices were higher — the trend is downward, not upward, despite no corresponding collapse in end-market demand for tobacco
The 2024-25 season saw prices of ₹280 per kilogram. The current season has opened at ₹250. The 30-day decline within the current season from ₹280 to ₹250 suggests the suppression is intensifying as the season progresses and more farmers are forced to sell.
While the government celebrates its investment summits, lays foundation stones for luxury hotels near temples, and borrows ₹523 crore every single day, the tobacco farmer of Andhra Pradesh sits beside his unsold bales and watches his year’s work being valued at ₹250 per kilogram — ₹100 less than he would receive if he could somehow move his crop across the state border into Karnataka.
He cannot afford the transport. he cannot afford the wait; he cannot afford the storage and increasingly he cannot afford to keep farming.
