Tobacco Prices In Andhra Pradesh Touched A New High

Guntur: On an upward swing all the time, tobacco prices in Andhra Pradesh touched a new high of Rs 140 a kg on all the five auction floors in the northern lights soils of West Godavari on Friday, the highest price ever realised for the crop on the floors.

According to sources in the Tobacco Board, till Friday roughly 139 million kgs of tobacco had been sold in the State at an average price of Rs 80 a kg and the maximum price recorded was in West Godavari, with tobacco fetching Rs 140.40 a kg.

According to Y Sivaji, President of the Andhra Pradesh Tobacco Growers’ Association, the maximum prices could be realised on the floors in West Godavari district as the farmers remained united and thwarted the trade’s attempts to depress prices.

“The system of ceiling prices has been abolished in West Godavari and in the case of two or more bidders bidding the same amount for a bale, the lottery system has been introduced. However, on the southern floors the system of fixing a ceiling price is being continued. It should be dispensed with,” he said.

On three auction floors in the State, the auctions have come to an end and at the present rate by June 15 or so the remaining tobacco (25-30 million kgs) may be sold off.

E-auction

On an experimental basis, the Tobacco Board is planning to introduce the electronic auction system. It is being introduced at Jangareddigudem in West Godavari in the first week of June. The Union Minister of State for Commerce, Jairam Ramesh, is expected to inaugurate it.

According to the Minister, e-auction is the solution to many of the gaps in the present system. It will address the deficiencies and result in better floor prices for farmers, he believes.

Centre Will Provide Cover For Tobacco Crop

Mumbai: Even as the Centre runs a campaign to stub out tobacco consumption in the country, it is set to provide a subsidised insurance cover for this crop. A first time for tobacco, the Government has included it in this year’s Budget list of crops that will be eligible for specialised insurance covers.

But, the proposal comes at a time when the Centre (albeit through its Health Ministry) has been active in curtailing the promotion and consumption of tobacco products. It has stepped up efforts to get large pictorial health warnings on cigarette and beedi packs, besides clamping down on surrogate tobacco advertisements.

Policy direction

Crop-insurance for tobacco has been consistent with the Government’s policy of supporting farmers, observes Dr Srinath Reddy, Cardiology Professor with the All India Institute of Medical Sciences and President, Public Health Foundation of India.

However, instead of encouraging tobacco farming, the Centre should have given a policy direction to help tobacco farmers shift to other crops, he said.

Tobacco is “a political and emotional crop” and there are several issues to be looked at before designing an acceptable insurance cover for tobacco, points out an ICICI Lombard official. Two years ago, ICICI Lombard had started a tobacco insurance pilot in Andhra Pradesh for ITC. But, the official said, the pricing of the product was considered to be high.

Following up on the Budget proposal for tobacco, state-run Agriculture Insurance Company is working on a tobacco insurance product. The company is working with the Ministry of Commerce and Industry to design insurance covers for tobacco and other plantation crops and spices.

The premium subsidy will be around 50 per cent. Insurance would cover the replanting cost as well as the loss of income, a source said.

Health vs demand

Confronting the health-challenge and explaining the contradiction of health curbs versus increasing demand, the Central Tobacco Research Institute’s (CTRI) Director, Dr. V. Krishnamurthy, said that they were developing alternative tobacco-related products.

Solanesol, extracted from tobacco, has anti-cancer, ageing and diabetes properties, he said. It has been patented by CTRI last October and is getting exported to Japan and the US.

Pure nicotine, from the beedi tobacco leaf, is also shipped to the pharmaceutical industry in the US. CTRI is also working on edible oil from the tobacco seed, by refining it. The product should be available in a couple of years, he said.

The demand for tobacco is on a rise, with worldwide cultivation decreasing. Earlier this week, FCV tobacco (used in cigarettes) got its highest ever price of Rs 95.40 per kg (compared to the regular Rs 50 per kg), propelled by demand, he said.

With a production of 700 million kg per year, India ranks behind China and Brazil. Tobacco contributes about Rs 7,000 crore in excise, and forex earnings from the crop are projected to touch Rs 2,000 crore this year, he said.

Mysore Tobacco Auctions Close On High Note

Kolkata: Mysore tobacco auctions in Karnataka, which officially closed last week on a buoyant note, has set many records since the launch of tobacco auctions in the country in 1984.

Record time

According to Tobacco Board officials, for the first time since introduction of auctions, not a single day was lost on account of interruptions, leading to completion of the auctions in record time.

Officials said though the market began on a cautious note owing to steep appreciation of the rupee, farmers have realised 6 per cent more than 2006, indicating a strong demand for the Mysore Neutral Filler tobaccos.

Rapid pace

According to L. Anand, a veteran tobacco grower of Mysore, demand peaked post-Diwali and continued till closure of the auctions. During this period, spanning over 50 days auction days, more than 50 per cent of the leaf sold was allotted by Tobacco Board officials to the trade at a top price of Rs 68/kg, it is learnt.

The Mysore 2007 markets opened in 10 auction floors on September 6, 2007, with the maximum price of Rs 68/kg (same as in 2006).

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A total volume of 88 million kg (mkg) was marketed in 99 auction days (against 152 auction days in 2006), indicating a record turnover of volume handled per day.

Price realisation

It is learnt that despite increase in the production of medium and low grades, compared with 2006 season, the per kg farmer realisation price in 2007 has gone up owing to a favourable global demand for leaf tobacco.

The crop marketed in 2006 was 97 mkg with the average price realised at Rs 55.95/kg. Farmers, it is learnt, have realised an average price of Rs 59.21 per kg during Mysore 2007 season, said to be the highest since inception of tobacco auction system some 23 years ago. The bright and medium grades in the just concluded auctions fetched average per kg prices of Rs 67.3 (Rs 34) and Rs 61.54 (Rs 43) respectively.

The rapid pace of auctions this year, a clear departure from that in previous years, according to Karnataka Tobacco Growers’ Association sources, has generated a lot of value for all stakeholders in the industry - for farmers in terms of farm waste reduction and for the trade in terms of better retention of keeping quality and colour of the leaf.