India: Growers, Traders Spar Over Tobacco Prices

Source from:  www.thehindubusinessline.com 03/04/2009

Guntur, Mar. 3 Sale of tobacco in Andhra Pradesh is very sluggish, almost at a standstill, on the auction floors, as there is disagreement between farmers and the trade on prices, with the former expecting prices well above Rs 100 a kg, especially in the northern light soils in West Godavari district. Sales suspended The Tobacco Board, following the usual practice, made an attempt to commence auctions on different floors in the State in a phased manner, beginning with Prakasam and Nellore districts in the third week of February. But auctions had to be suspended there as the trade was not willing to pay the minimum of Rs 100 a kg sought by the farmers. Auctions had to be suspended there and they were resumed on February 27. But since then the transactions are negligible as the trade is not willing to pay more than Rs 100 a kg sought by the farmers. Farmers are demanding Rs 110 a kg or so, enthused by the high prices paid in Karnataka. The maximum price in Karnataka touched Rs 150 a kg. The average price in that State was Rs 110 a kg. In Andhra Pradesh, West Godavari district produces the best tobacco in the northern lights soils. Therefore, the farmers on the floors at Jangareddygudem, Koyyalagudem and Devarapalli expect at least Rs 110 a kg, as in Karnataka, but the trade is not willing to buy tobacco at such prices. Supply glut It is said that more than 200 million kg (mkg) of tobacco has been produced in the State against the 170 mkg of crop size fixed by the board. Some estimates suggest the crop could go up to 220 mkg. The huge surplus is also likely to have an adverse impact on the prices. Till the trade and the farmers come to an understanding on the prices, the auctions are likely to be sluggish in the State. In the last phase, auctions in the floors on central black soils and southern black soils are scheduled to begin on Friday. It is hoped that the stalemate on prices will be resolved by then and transactions will gather momentum by then. Enditem