87.6m kg Tobacco Sold in 99 Auction Days

Source from:  The Hindu Jan 22 2008 7:22PM GMT  01/23/2008

Mysore tobacco, which is in demand in the international market, has been "sold out" almost a month-and-a-half before the scheduled closure of the auction season. The swift purchase of tobacco across the 10 auction platforms in the region saw exporters vie with one other to purchase 87.6 million kg of the commodity during 99 auction days, setting a record in terms of tobacco transaction volume. Notwithstanding the appreciation of the rupee in terms of dollar, exporters were willing to even pay a higher amount for the tobacco. The average price of tobacco, which was Rs. 55.94 a kg last season, rose to almost Rs. 60 a kg this season because of the demand in the international market. Regional Manager of Tobacco Board, Mysore, Vishakantaiah, said the tobacco auction platforms across the region witnessed a swift transaction when the auction season began in the first week of September 2007. "Not a single day was lost on account of interruptions of auction this season," he told The Hindu. Early end The auction season, which normally culminates in the last week of February, ended on January 10 this year with 87.6 million kg sold in 99 auction days. Also, the average price of tobacco realised by farmers this year was 6 per cent more than last year's despite concerns over the depreciating value of the dollar making an impact on the tobacco growers. Tobacco Board member Javare Gowda attributed the rapid pace of auction this season mainly to the decline in production in Brazil and Zimbabwe, two leading tobacco growing countries. Also, European Union's decision to withdraw subsidy on tobacco cultivation led to a fall in the commodity's production. China, which is the world's leading tobacco producer with an annual production of 2,000 million kg, too participated in the auction of Mysore tobacco this season to meet the shortfall in its requirements. Chinese delegation "A Chinese delegation visited the tobacco growing regions and placed orders with their agents for Mysore tobacco," Mr. Javare Gowda said. In view of the slump in global tobacco production, the exporters had to make a beeline to Mysore tobacco auction platforms to meet their contractual obligations to international cigarette manufacturing companies. Flue cured The Virginia flue cured variety of tobacco grown in the Mysore region, which is also called Mysore Neutral Filler tobacco, has been scientifically proved to contain less harmful substances than conventional tobacco. "It contains less cancer causing substances. The content of tar in Mysore tobacco is minimal," Mr. Javare Gowda said. The auction of tobacco, which is frequently disrupted by farmers suspecting foul play by buyers and the Tobacco Board, was free of any interruptions this year. "The price of tobacco remained steady ever since the auction season began," he said. The price of top grade or bright variety of tobacco, which fetched Rs. 68 a kg when the auction season began, did not fluctuate during the course of the season. Similarly, the medium grade of tobacco fetched the farmers around Rs. 60 while even the poor grade tobacco yielded a price of Rs. 50 a kg. However, Mr. Javare Gowda said that farmers could have received still better prices on account of the prevailing situation, which was highly advantageous. "I still suspect there was some sort of cartelisation among purchasers. Though the price did not fall, it could have gone up to Rs. 72 to Rs. 75 for the bright grade of tobacco," he said. Enditem