Business Daily from THE HINDU group of publications
Thursday, Jul 20, 2006
Business Daily from THE HINDU group of publications Thursday, Jul 20, 2006 |
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Agri-Biz & Commodities
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Tobacco Tobacco Board may peg crop size at higher level Ch. R.S. Sarma
Bullish outlook During 2005-06 season, farmers fetched Rs 10 a kg more than previous season. Favourable global market conditions to help fix a higher crop size. Carryover stocks with trade almost nil.
Guntur , July 19 The tobacco crop size for the current season (2006-2007) will be fixed at a meeting of the production committee of the Tobacco Board in Hyderabad on Thursday. As a prelude to the meeting, Tobacco Board officials held discussions with farmers in the board. It is indicated that the crop size may be fixed somewhere in the region of 140-150 million kgs. The actual production in the State during 2005-2006 was 145.4 mkg and the crop was sold at an average price of Rs 46.33 per kg, Rs 10 more per kg than the previous year.
Farmers happy
Farmers are a happy lot this year for the first time in several years, as they could get a good price. The auction process could also be completed in record time. As the international market conditions seem favourable, due to reduced production in Zimbabwe and other factors, the Tobacco Board is also likely to peg the crop size at a level much higher than usual. Usually, for the past several years, the crop size is being pegged at 110 mkg and subsequently revised upwards by 10 mkg or so. This year, it is anticipated, the crop size may be in the range of 140-150 mkg.
Fears
However, there are also apprehensions that any substantial increase in the crop size might lead to depression of prices and, therefore, the board should take a firm assurance from the trade on the minimum price to be paid. Mr Bangaru Babu, a former member of the Tobacco Board, is critical of the board officials for making announcements that the international market conditions are good. "It sends wrong signals to the farmers. If the farmers go all out and grow more, there may be a huge surplus and it is to the advantage of the trade. It is the usual practice with the trade to paint a rosy picture at the time of the fixing of the crop size and then ditch the farmer on the auction floor," he said. However, currently , there are no leftover stocks with the trade and the prospects for tobacco exports seem bright in the coming season , according to all available indications. Therefore, the board may plump for a bigger crop size, in spite of a few dissenting voices.
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