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Lacklustre market makes tobacco growers angry

To resort to agitations from today, demand FDI in sector

May 20, 2019 12:22 am | Updated 07:35 am IST - ONGOLE

Air of uncertainty:  A farmer bringing tobacco bales for sale to the Ongole II auction platform.

Air of uncertainty: A farmer bringing tobacco bales for sale to the Ongole II auction platform.

Farmers’ organisations will resort to agitations at the e-auction platforms from Monday in the traditional tobacco growing areas in Prakasam and Nellore districts demanding that foreign direct investment (FDI) be allowed in the sector to turn India into a definite market for the commercial crop.

Their demand comes in the wake of the auctions remaining lacklustre in the two districts under the Southern Black Soil (SBS) and Southern Light Soil (SLS) regions.

‘Captive growers’

“India is presently viewed only as an “opportunity market” by the global tobacco giants. When FDI is allowed in most of the sectors, including the highly-sensitive defence, why should it be disallowed in the tobacco sector?” ask farmer leaders here.

“We have been rendered captive growers, meeting the needs of the domestic cigarette manufacturers and exporters, who give exaggerated tobacco requirement at the time of finalisation of the production policy by the Tobacco Board but fail to turn up fully at the time of the auctions,” complains a group of farmers under the Ongole II auction platform. Only a handful of players buy tobacco, resulting in a situation of oligopoly, they lament.

Drought, infestation

“During this rabi, we have produced tobacco much against odds. In the wake of severe drought for the fifth consecutive year, we had to incur additional expenditure for arranging water through tankers,” explains Aburi Seshagiri Rao, farmers’ association president under the Vellampalli auction platform.

Orobanche cernua , a parasite infestation, has added to our woes with productivity coming down by half from the normal 10 quintals per acre though the extent of land under the crop has gone up to about 58,000 hectares as against 50,000 hectares in the previous year,” he says.

Poor grade outturn

As a result, the grade outturn has been poor with low grade and greens accounting for more than 50% of the estimated produce of 80 million kg in the two regions, medium grade 30% and bright grade the remaining, he adds.

“Low grade does not find favour with the traders, who are keen on purchasing bright grade tobacco. The traders are also driving down the market price for the low grade variety,” says Prakasam Rythu Sangham general secretary D. Gopinath.

“When auctions began in March, the low grade tobacco attracted buyers at ₹110 per kg. But now, it has dropped to about ₹90 per kg. The rejection rate has gone up to more than 30%,” he laments.

“In this situation, the Tobacco Board should intervene to lift the market sentiment to avert the suicide spree witnessed in 2014-15, when the then Commerce Minister Nirmala Seetharaman visited the bereaved family members and announced bonus price for the low grade variety,” says Virginia Tobacco Growers’ Welfare Association secretary Chunchu Seshaiah.

So far, 26.48 million kg tobacco has been marketed after 42 days of auctions, with 9.40 million kg of bright grade varieties fetching on an average ₹163.5 per kg, 10.14 million kg of medium grade varieties attracting buyers at ₹136.5 per kg. The 6.94 kg of low grade varieties marketed so far got an average price of ₹101.61 per kg, according to sources in the Tobacco Board.

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