The Indian Tobacco Board has slashed the flue-cured tobacco (FCV) crop size for the upcoming 2026-27 season by 43% in Andhra Pradesh and 44% in Karnataka, according to a report by businessline dated July 27, 2026. The drastic reduction—to 81 million kg from 142 million kg in Andhra Pradesh, and to 51 million kg from 100 million kg in Karnataka—comes in response to a severe market glut that has depressed domestic demand.
Fundamental driver: oversupply and competition
The Board, operating under the Union Commerce Ministry, is tasked with regulating FCV tobacco production and curing to ensure remunerative prices for growers. However, actual production had far exceeded the previously set crop size limits, compounding a glut worsened by rising competition from Brazil and African countries, according to the report. Farmers acknowledge the rationale behind the cut. "We understand the rationale. We are aware that there is a glut," said PS Murali Babu, President and former General Secretary of the Federation of All India Farmer Associations (FAIFA), as quoted by businessline.
Supply-side intelligence
The reduced crop size effectively cuts allowed output to 2,000 kg per barn (about 4 acres) for 2026-27 versus 3,600 kg per barn previously. However, the cost of production remains unchanged, making the smaller allocation unremunerative for growers, the report noted. Farmers are also concerned about unlicensed producers who bring an estimated 2 million kg of tobacco to market at about ₹230 a kg, distorting prices. Vivekananda, a tobacco farmer from Eluru district in Andhra Pradesh, urged the government and Board to curb illegal farming through confiscation of produce and deposit of proceeds into the Tobacco Growers' Welfare Fund.
| Region | 2025-26 Crop Size (million kg) | 2026-27 Crop Size (million kg) | Cut Percentage |
|---|---|---|---|
| Andhra Pradesh | 142 | 81 | 43% |
| Karnataka | 100 | 51 | 44% |
Demand-side pressures
Domestic demand for FCV tobacco has been significantly dampened by the glut, with competition from Brazilian and African exporters further pressuring prices, businessline reported. The Board evaluates global market conditions annually to set crop sizes, and the current decision reflects a need to align supply with weakened demand.
Price outlook and government response
Farmers, while not complaining about the cut, are left wondering how to manage the upcoming season. PS Murali Babu called on the government to devise a strategy to help farmers identify alternative crops. Meanwhile, Andhra Pradesh Chief Minister N Chandrababu Naidu has directed officials to prepare a short-, medium-, and long-term strategy to address tobacco farmers' challenges, including exploring possibilities to store produce so farmers can wait for opportune selling times, the report said.
For commodity traders and procurement teams, the Board's decisive supply reduction signals a potential tightening of FCV tobacco availability from India in 2026-27, which could support prices if demand stabilizes. However, the pervasive unlicensed market—estimated at 2 million kg at ₹230/kg—may continue to exert downward pressure. The absence of a clear alternative crop plan adds uncertainty to future supply dynamics.
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