India: Tobacco Board's Intervention Seems Inevitable

Source from:  Newindpress.com (in) 05/10/2004

In spite of the Union Commerce Ministry's reluctance to permit the Tobacco Board for market intervention in the liberalisation era, the present scenario seems that it would become inevitable for the new government to rescue the farmers. It may be recalled that last year itself in an unanimous resolution the Tobacco Board had sought the Government's clearance for market intervention from its own financial resources of Rs 60 crore collected from farmers towards penalties. Chairman P Dayachari had written a letter persuading the Centre to respond quickly. However the government has turned down the pleas. The Tobacco Board yesterday arranged a meeting with traders and farmers to ensure better price at auction platforms. However the meeting failed to yield any result as traders made it clear that it would not be possible for them to offer more price. They assured that they could at best maintain the present price. Though Chief Minister N Chandrababu Naidu has convened a meeting with traders and farmers on Monday at Hyderabad it may not take place in view of the counting on Tuesday. Both the farmers and traders are showing interest to discuss with the new government after the completion of election process both at the Centre and also in the state. The Indian Tobacco Association president Ch Narendra Nath disputed farmers claims that they were offering lower price than last year. According to the data available with the Tobacco Board they are now offering Rs 6 more for lower grades, Rs 3 more for medium grades and 30 paise more for high grades than the last year. Narendra Nath said when they had signed contracts with foreign buyers they expected a price of Rs 71 per kg, but now it has come down to Rs 63. If this exchange rate further falls drastically, he feared traders might unable to maintain even the existing price. As against to the permitted production of 105 million kg the Tobacco Board is expecting a crop of 140 million kg this year in Andhra. So far only over 42 million-kg was sold at auction platforms. It is very difficult to clear over 100 million-kg of tobacco unless the Tobacco Board was permitted for market intervention. While demanding postponement of production committee meeting two days ago, Varginia Tobacco Growers Association honorary president Dr Y Sivaji and president Chunduru Ranga Rao also felt the need for government intervention. Enditem