India: Greedy Traders Force Tobacco Farmers into Panic Selling

Source from:  The Times of India 07/26/2012

Tobacco farmers continue to be at the receiving end of rapacious merchants. According to market analysts, farmers have lost nearly Rs 400 crore on account of low prices offered by merchants. They were forced into panic selling for lower prices by merchants' wait-and-watch approach. More than 90% of the registered exporters and buyers kept away from the market for nearly two and half months leaving the entire tobacco auction platform at the mercy of the tobacco giant - Indian Tobacco Company (ITC). According to the latest information, more than 135 million kg of stock was sold out against the total authorized produce of 161 million kg for the current season. While farmers expected at least Rs 100 per kg for low grade tobacco, those of medium grade demanded Rs 120 per kg. On other hand, the growers of premium varieties expected a price ranging between Rs 130 and Rs140 per kg, but the traders did not pay even Rs 110-120 per kg. The low grade tobacco fetched Rs 63 per kg for farmers while the medium grade went for Rs 85-90 per kg. "Price increase by Rs 15 per kg could have helped the farmers gain Rs 120 crore," said former MP Yalamanchili Sivaji. Former board member Chunduri Rangarao alleged that the traders offered cheap prices to farmers though there was a huge demand for Indian tobacco in the international market. Admitting that absence of the leading players at the auction platforms had put paid to the hopes of growers, a senior Tobacco Board official said the situation could have been worse had the board not intervened to bring pressure on the merchant community. Board chairman Kamalavardhan Rao warned the merchants that their ploy could trigger agitations by the farmers who might declare a crop holiday and leave them in disarray. However, exporter Tadisetty Muralimohan blamed it on poor export orders in the initial days which kept them away from the auctions. Predicting of the next season being a 'rewarding' year for tobacco exporters, Tobacco Board chairman G Kamalavardhan Rao suggested that they offer better prices to the farmers. Speaking at a meeting at Ongole after the inauguration of board's regional office here, the chairman said that there were indications of shortfall in production in Brazil and Zimbabwe which could prove advantageous for Indian tobacco in international market. "So try to help the farmers by offering them decent prices from now onwards. It will help you too," he suggested. He said the good returns to the farmer would make them produce good crop and help the exporter fetch good price in the international market. He said that the interests of the farmers should be kept in mind. Enditem