The Hindu Business Line : AP, Karnataka tobacco farmers back auctions

Issues
Currently, the problem is rising cultivation costs owing to scarcity of key inputs.
Important goals are higher yield, step-up in overall productivity.

Guntur April 12 Tobacco farmers in both Andhra Pradesh and Karnataka, by and large, swear by the present auction system compared to the erstwhile contract farming system, stating that the real problem now is rising cultivation costs owing to scarcity of key inputs such as fire-wood (used for curing of tobacco leaf in the barns) and availability of quality planting materials.

Fetching premium

Farmers told Business Line recently at the Tangatur auctions in Ongole that average auction prices (hovering around Rs 46) could go up if more competition was present at the auction platform. The NLS (northern light soil) and SLS (southern light soil) crop in AP fetch higher prices owing to quality. The crop in the KLS (Karnataka Light Soil) region fetches a premium in the international market because of higher quality as a neutral filler.

According to the Director of Central Tobacco Research Institute, Rajahmundry, under ICAR, Dr V. Krishnamurthy, all R&D efforts were now directed towards raising quality of both FCV and the SLS-NLS varieties from India to fetch an international price of at least $1.5 from the existing $1.

Average price

While the average prices for the FCV variety in the on-going AP auctions have seen Rs 6-7 increase per kg, farmers are not happy, as production costs have shot up. As per figures of Tobacco Board, AP auctions till the 9th week (from beginning of auctions this year in February end) have fetched an average price of Rs 49.58, with some 17.48 million kg of leaf auctioned.

In the corresponding period of last year, the respective figures were Rs 45.45 and 7.42 m.kg.

Higher per hectare yield and step-up in overall productivity for better value realisation from the cash crop are now perceived as two important goals before the Indian tobacco farmer, who sees both opportunity and challenge in tobacco.

Global opportunity

Trade and industry majors now see better opportunities for Indian tobacco in the global arena, especially for flavourful varieties such as Oriental or Burley as traditional producers such as Zimbabwe have witnessed a huge slump in crop production. It is felt that much higher price realisation is possible through introduction of flavourful varieties (where we need to do much more).

In this context, veteran tobacco farmers of Andhra Pradesh, such as Mr Chinta Venkateswar Rao and Mr S.M. Anantharamu, both members of Tobacco Board also, said since India predominantly produces filler varieties of tobacco, international prices of flavourful varieties cannot be used to assess our price band.

Output costs

According to Mr Anantharamu, prices must also be viewed in the context of production costs. It is stated that production cost was $4,137 per ha in Brazil compared to $1,193 per ha in India. He said unlike their counterparts in other parts of the world, the Indian tobacco farmers enjoyed a transparent auction system.

He said the auction system guaranteed fair weighment, correct grading and prompt payment to growers.

On the global farm prices of FCV tobacco, Amrican, Brazilian and Zimbabwean tobaccos are categorised as flavourful tobaccos, fetching much higher prices compared to Indian tobaccos.

It is also felt that the quality neutral filler tobacco produced in Mysore areas, along with the produce in the Northern Light Soils (NLS) in West Godavari areas of AP, could be our best bet in the current export market.