A new report by the Federation of All India Farmer Associations (FAIFA), developed with Artha Arbitrage Consulting LLP, warns that India’s revised tobacco tax regime, which took effect Feb. 1, could significantly disrupt the country’s flue-cured Virginia (FCV) tobacco sector. The policy reintroduced central excise duties on cigarettes and raised the GST rate on tobacco products to 40% while removing the GST compensation cess, increasing the overall tax burden. The report estimates the changes could reduce FCV crop offtake by nearly 20% and eliminate approximately 2.6 million man-days of employment across farming and related supply chain activities. It also projects illicit cigarette consumption could rise by roughly 39%, potentially exceeding 46 billion sticks, as higher prices shift demand toward unregulated products, while ongoing tax disparities between FCV-based products and other tobacco categories continue to contribute to declining FCV acreage and grower participation.
Category: Agriculture & Sustainability
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India Withdraws 18% Duty on Unmanufactured Tobacco
India’s Union government withdrew the 18% central excise duty on unbranded, unmanufactured tobacco and tobacco refuse for retail sale, according to a gazette notification issued on Feb. 1, 2026, the same day the Union Budget for 2026–27 was presented. The move revokes a duty imposed in December 2025 and follows representations from tobacco farmers and industry stakeholders, including a delegation led by the Tobacco Board chairman, who warned the tax would burden growers and disrupt the market. The withdrawal does not affect existing excise duties on cigarettes, which remain unchanged and continue to be levied based on stick length.
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Withheld Funds Crippling Philippine Tobacco Farmers
Billions of pesos (1 peso currently equals 0.017 USD) in tobacco excise tax shares earmarked for Philippine tobacco-growing provinces from 2023 to 2025 remain unreleased, triggering mounting frustration among industry leaders and farmers in the Ilocos region, according to the Philippine Star. Long regarded as the “Solid North” that underpinned President Ferdinand Marcos Jr.’s electoral support, tobacco farmers now warn that the government’s failure to remit funds mandated under Republic Act 7171 threatens rural livelihoods amid rising production costs. Industry representatives said the prolonged delay has crippled critical programs intended to support farmer self-reliance and local development.
Former Ilocos Sur governor Luis “Chavit” Singson, author of RA 7171, said that despite the signing of the P6.79-trillion ($115.4 billion) 2026 national budget, excise tax shares from the previous three years remain unpaid. He warned that the withholding of funds has created service gaps that undermine socio-economic stability in tobacco-producing areas, preventing local government units from addressing urgent needs and advancing infrastructure and agricultural projects. Singson emphasized that tobacco remains a pillar of the national economy and that the law was designed to provide local government units with consistent, predictable resources.
Singson expressed cautious optimism that the appointment of Acting Budget Secretary Rolando Toledo could help resolve compliance bottlenecks delaying the releases. He urged the national government to honor its commitments, calling for the funds to be released within 30 days to avert further hardship. Pointing to Ilocos Sur’s plans to expand irrigation, road networks, and tourism infrastructure, he described it as ironic that excise tax shares vital to these initiatives remain withheld, despite the province being recognized by the Commission on Audit as the country’s richest.
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Zimbabwe’s Increased Efficiency Base for Market Growth
Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) released projections for the 2025/26 growing season, interpreting the numbers as a nation that is becoming more efficient. Registered farmers declined 19.3% to 101,443, yet planted area increased 21.7% to 113,536 hectares, suggesting rising productivity and capital intensity. One such example of progress, according to the TIMB, is the irrigated planted area increasing to 24,000 hectares this season, up from 19,700 hectares last season.
Contract farming continues to dominate, accounting for about 75.6% of planted area, though industry observers note that the 15% share of self- or bank-financed growers offers renewed support for Zimbabwe’s traditional auction system.
Output is projected to climb to 400 million kg this year from 354 million kg last season, reinforcing tobacco’s position as Zimbabwe’s largest agricultural export and second-biggest foreign currency earner after gold. Export earnings reached $1.4 billion by mid-December 2025, down slightly year on year, as weaker demand from traditional Asian markets—particularly China—was offset by strong growth in Europe and steady gains within Africa. The European Union stood out, with export earnings surging 64.5% to $169.6 million, reflecting rising demand for Zimbabwe’s flue-cured Virginia leaf, while the Far East remains the largest market, accounting for 60% of total export value despite a 14% decline.
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Philippines Planting New Sources for Tobacco-Curing Fuel
The Philippines’ National Tobacco Authority said it will roll out a five-year sustainable fuelwood program this year to support flue-curing tobacco farmers while promoting reforestation in key growing areas. Under the Kahuyang Pangkabuhayan at Pangkalikasan initiative, 80 hectares of alienable and disposable land will be planted mainly with fast-growing trees such as ipil-ipil, kakawate, and bamboo to supply fuelwood needs and restore ecological integrity. The program, developed with the Environment Department and local governments, is intended to reduce pressure on natural forests while providing additional livelihood opportunities for tobacco-farming communities through 2030.
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Zimbabwe Tells Tobacco Farmers to Stop Planting, Get Tending
This week, Zimbabwe announced that it exceeded its tobacco planting target for the 2025/26 season, surpassing a record 140,000 hectares, prompting the government to urge farmers to halt further planting and focus on crop management to maximize yields and leaf quality. Agriculture Permanent Secretary Prof. Obert Jiri said late-planted dryland tobacco should be curtailed, with emphasis now on pest and disease control, weed management, and split fertilizer application amid heavy rains. A national crop and livestock assessment later this month is expected to confirm strong early performance and yield prospects, with fertilizer supplies largely adequate despite short-term top-dressing delays.
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New Tractors Strengthening Cuba’s Tobacco Production
Cuba’s tobacco sector is investing in modern machinery to boost production efficiency, with 300 tractors delivered to individual producers and cooperatives across multiple provinces last year, the Tabacuba Business Group told Granma on Monday. Financed through farmers’ foreign currency earnings and a flexible installment program, Tabacuba provides the equipment at cost, without profit, to expand access for growers.
José Liván Font, First Vice President of Tabacuba, said the initiative contributes hundreds of millions of dollars annually to the national economy and supports small-scale family operations. In Pinar del Río, which produces 70% of Cuba’s tobacco, 75 tractors were delivered alongside photovoltaic systems for irrigation and lighting, enhancing energy independence and operational efficiency.
Tabacuba said it plans to import another 300 tractors and related agricultural implements in 2026, aiming to further improve working conditions, increase production, and raise incomes for tobacco producers nationwide.
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Zimbabwe Pushing Tobacco Processing for Value Addition
Zimbabwe will intensify tobacco processing and value addition from 2026 as part of efforts to boost exports of finished tobacco products, a senior government official said. Lands, Agriculture, Fisheries, Water, and Rural Development permanent secretary Professor Obert Jiri said plans are underway to encourage the establishment of local processing plants, shifting the industry away from raw leaf exports toward higher-value products, including cigarettes.
Zimbabwe produced a record 355 million kg of tobacco in 2025, generating about $1.2 billion in sales, and production has the potential rise to 500 million kg by 2030, Jiri said. He argued that converting locally grown tobacco into finished products could dramatically increase export earnings, estimating the potential value of more than $40 billion if current volumes were processed domestically.
The industry has also undergone a structural shift, with more than 140,000 farmers—over 80% of them smallholders—now involved following land reform. The government says expanding beneficiation will help farmers capture more value and create jobs, building on recent investments such as a $100 million tobacco processing plant commissioned in Harare in November.
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Zimbabwe Tobacco Planting Up 21%
Zimbabwe’s tobacco hectarage increased by 21% to 100,594 hectares this season, up from 83,391 hectares during the same period last year, according to the Tobacco Industry and Marketing Board (TIMB). Mashonaland West leads production with the largest combined area under irrigated and dryland tobacco, followed by Manicaland and Mashonaland Central, reflecting strong growth across major producing regions. The TIMB said 90% of growers are operating under contract farming arrangements.
While production has expanded into new regions, the government is seeking to reduce reliance on offshore funding and has proposed a $60 million facility to boost domestic financing, support sustainable growth, and promote value addition in the sector.
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China Key to Zimbabwe’s Record Tobacco Output
Zimbabwe’s tobacco sector has surpassed 350 million kg in 2025, thanks in large part to Chinese support, Finance Minister Mthuli Ncube said. Speaking in Harare after signing agreements on China-aid irrigation projects, Ncube highlighted China’s role in providing both credit facilities and market access through China Tobacco, helping small- and medium-scale farmers grow the sector beyond expectations.
The assistance has helped Zimbabwe maintain its position as Africa’s top tobacco producer and a significant player globally. The tobacco industry remains a cornerstone of Zimbabwe’s agriculture, supporting over 160,000 households, according to government data.