India leaf Exit Strategy Palls as Prices Rise

Source from:  tr.itsmyiq.com Aug 5, 2008 08/06/2008

The average price paid for flue-cured tobacco during auctions in Andhra Pradesh this season was Rs84.75 per kg, up from Rs47.47 the previous season, according to an Economic Times of India report quoting Tobacco Board figures. The cost of production was reckoned to be about Rs40 per kg. The Andhra crop came in at 165 million kg, down from 172 million kg last season but up on the authorized figure of 158 million kg. Board chairman, Dr J. Suresh Babu, was quoted as saying that he expected the higher prices to continue for another two to three years. Meanwhile, tobacco farmers in Karnataka, who were once planning to surrender their production licenses as part of a Board-devised industry exit strategy, are now changing their minds, according to a newkerala.com report. The president of the Karnataka flue-cured tobacco growers' association, Javare Gowda, was quoted as saying that the compensation of Rs25,000 per barn offered to farmers for surrendering their tobacco cultivation licenses might not find many takers because the prices of tobacco, which fetched an average of Rs60 per kg last season, could pass Rs120 per kg this season. In an interview with Tobacco Reporter earlier this year, Dr Babu said that he would have difficulty selling the idea of an exit strategy if prices rose too high. Auctions for the 2008-09 Karnataka crop, authorized at a record 100 million kg, are expected to begin next month. Enditem