The Hindu Business Line : Tobacco prices touch record Rs 110 a kg

Under the hammer
About 94.5 million kgs sold at an average price of Rs 77.25, against last year’s Rs 47.50
Farmers rake in around Rs 285 crore incremental income this year

Our Bureau

Guntur, April 24

Tobacco prices are continuing to rule high in the Andhra Pradesh auctions. For the first time, Virginia tobacco fetched a record Rs 110.40 a kg on Thursday on the Koyyalagudem auction floor in West Godavari district. The district produces the best tobacco in the State.

Average price

So far, 94.5 million kgs of tobacco has been sold on the auction floors in the State at an average price of Rs 77.25 a kg as against last year’s average price of Rs 47.50 a kg by this time. Still, roughly 60 million kgs of tobacco remains to be sold in the State. According to rough estimates, the farmers have got an incremental income of Rs 285 crore more this year than the same time last year.

Admitting that the farmers are getting very good prices this season, Dr Y. Sivaji, President of the Andhra Pradesh Virginia Tobacco Growers’ Association, said that certain factors in the international market triggered the price rise on the auction floor. “The drastic slump in production in Zimbabwe from a level of 250 million kgs to 60 milion kgs, due to racial unrest in that country, is one of the major factors for the price rise. There has been production slump in Brazil by 70 million kgs or so and besides that China is no longer able to dump in the international market at lesser prices, as it has joined the WTO. There are no carryover stocks in India or anywhere else in the world,” he said.

Plea to growers

Dr Sivaji, however, cautioned the farmers in the State to be wary of the “designs of the trade to effect a price correction in the State.

The trade is attempting to depress prices by forming into syndicates and imposing a ceiling price. Such attempts should be foiled by farmers and they should get an average price of $2 a kg on the floors.

They should not part with the crop, if they do not realise the price”.

On the floors in the southern lights soils and southern black soils, he alleged, “the trade is up to its old tricks.” He also cautioned farmers that they should not go in for surplus production, encouraged by the high prices. The reduction of punitive cess for the current year’s surplus from Rs 2 a kg plus 15 per cent of the value to Rs 1 a kg plus 5 per cent of the value was not a correct move, he said.

Dr Sivaji, however, expressed happiness that he could realise the long-cherished dream of securing $2 a kg to the Indian tobacco farmer this season.