Dumping Bengal gram in view of sluggish market condition, farmers in drought-prone Prakasam district went for tobacco cultivation in a big way during 2014-15 cropping season hoping to get a better average price for the third year in a row.
But the average price for Flue Cured Virginia (FCV) tobacco is likely to less than Rs 100 a kg this year as grade out turn is likely to be a mixed one and in view of uncertain global market condition. The crop this year will be relatively lesser bright grade and more medium and low grades compared to last year, said Mr. V. Sesha Sai Reddy, Leaf Manager-South, Agri-business Division of ILTD, a major player in a conversation with The Hindu .
Tobacco production is likely to between 190 and 200 million kg in the state including 130 million kg in the Ongole region, this year, as against the crop size of 172 million kg set for the State, he added even as farmers gear up for auctioning of tobacco set to commence during next month. Global players preferred tobacco from least developed countries (LDCs), which attracted lesser import duty compared to tobacco from India, which has been looked at as an opportunity market and not a definite one, he adds.
In spite of violation of the crop size of 172 million kg fixed by the Tobacco Board, by producing about 213 million kg in the previous year, farmers realised a better average price of Rs. 109 a kg of tobacco, according to Tobacco Board sources.
This year, farmers in Karnataka, where tobacco is a kharif crop, were able to get an average price of Rs. 109.69 by marketing about 50 million of the authorised crop of 101.65 million kg, about 14 per cent less than the price realisation last year, explains Mr. Bellam Kotaiah, founder chairman of BVL Group, one of the largest exporters. According to indications, Brazil and Zimbabwe, major players in the sector, had a carryover stock of 50 million kg, adds Mr. Kotaiah, also former Indian Tobacco Association president. With no firm indication from overseas buyers, the India Tobacco Association is mulling to seek postponement of auctions AP by the Tobacco Board till the auctions are completed in Karnataka, said ITA president Mittapalli Umamaheswara Rao
After a major cigarette manufacturer reduced the indent by 20 million kg and another exporter cut down indent by 8 million kg, the Tobacco Board had urged the ryots to voluntarily cut down on tobacco production by at least 20 per cent of the crop size when cultivation began.
