India: Tobacco Auctions Pick up In Karnataka

Source from:  Mydigitalfc.com 11/19/2015

Tobacco farmers in Karnataka are fetching better prices than last year thanks to a poor monsoon that brought down crops by about 20 per cent from the target even as growers in neighbouring Andhra Pradesh are still discussing ways to prop up demand.

In tobacco auctions in Karnataka, farmers are getting Rs 25 to Rs 35 per kg more compared with last year's average price of Rs 102 per kg.

The Tobacco Board had fixed a crop size of about 102 million kg but the production dropped to about 80 million kg in Karnataka, the second major tobacco growing state after Andhra Pradesh. "The production is less this year and the demand from the export market is picking up," said BV Javare Gowda, president, Federation of All India Farmers Associations.

Karnataka is a key producer of Virginia variety of tobacco, which is mostly used in making cigarettes. Tobacco from Karnataka finds its way to Europe, Africa, China, Egypt and other markets.

Out of the total production, about 70 per cent is exported. In Karnataka, auction happens between October to February while the plantation cycle is from May to August. It is cultivated in about one lakh hectares with yields ranging from 1,500 to 1,800 kg. About a lakh farmers are dependent on it directly and the cultivation provides employment to about five lakh people, Gowda said.

In Andhra Pradesh, where the auctions closed last month, farmers released Rs 22-23 per kg lower price than last year as output swelled to 195 million kg against 172 million kg fixed by the Tobacco Board, Seshagiri Rao, member of the board said.

"The prices are higher in Karnataka because the crop is lower and the number of participants in the auction is more than Andhra Pradesh," Rao said, adding, "Maybe foreign companies participating in the auction are contributing to the good price."

Auction in Andhra Pradesh is held between March and August, but this year it was extended due to higher crop and lower price.

The Tobacco Board has decided to cut the crop size by 30 per cent to 120 million kg for 2015-16 in Andhra Pradesh after taking into consideration the gloomy situation in the world markets, carryover stocks, declining demand for tobacco in domestic markets and growers' demand for assuring remunerative prices.

Farmer bodies say tobacco trade is hurt as about 25 million kg tobacco (20 billion cigarettes) were illegally finding their way to Indian markets. They do not include a pictorial warning and were being preferred, Gowda said. Farmer bodies will convene in Hyderabad to discuss this and other issues. Enditem