India: Tobacco Traders on the Edge

Source from:  The Hindu 02/25/2016

Traders are keeping their fingers crossed as the first phase of auctions for Flue Cured Virginia (FCV) Tobacco is set to begin on Thursday.

Trade sources say that farmers were demanding the highest price of Rs. 160 per kg and yet, the Board finds itself on a sticky wicket as it has to maintain a fine balance between the grower's demand and trade concerns.

The year 2015 was a tumultuous one in the three-decade-old history of the Board after two farmers in Prakasam district committed suicide in the middle of auctions.

The fallout was immediate and the then Board Chairman K. Gopal was asked to go on leave and it was only after the Centre and State governments agreed to bail out the farmers by raising the average prices, the auctions could be concluded.

As the auctions begin this year, the situation is similar as traders are worried over declining demand for FCV Tobacco in the global markets saddled by carry over stocks.

Stringent anti-tobacco regulations in countries which had signed the Framework Convention on Tobacco Control (FCTC) also mean that demand for tobacco is on the wane.

Even in India, the Health Ministry proposed a series of measures aimed at curbing the use of tobacco by asking cigarette manufacturers to ensure that 80 per cent of the pack cover should have anti-smoking warning signals, but backed off, after pressure from tobacco lobby.

Taking a cue from global trade indices, the board has pegged the crop size at 120 million kg, a cut of 50 million kg from the previous year.

Auctions in three phases

Chairman, Tobacco Board, Manoj Kumar Dwivedi, said that the FCV Tobacco auctions would be conducted in three phases with the first phase beginning on February 25.

The auction would be held on alternative days at D.C. Palli and Kaligiri and in staggered timings daily at Podili- I and II, Kandukur -I and II auction platforms till March 10. Enditem