With global stocks of tobacco piling up and Indian Tobacco Association's (ITA) insistence on buying less next year, tobacco farmers will have to reduce acreage by at least five per cent for the first time in the last five years.

The Tobacco Board is planning to use this bleak demand situation to reduce the crop size that would also help the country meet FCTC (WHO Framework Convention on Tobacco Control) norms.

The Production Committee of Tobacco Board has recommended reduction of crop size by at least 5 per cent to 162 million kg as against the usual 170 m kg in Andhra Pradesh. A similar reduction is likely to be imposed for crop in Karnataka, which grows 100 m kg, as well, after it completes auction in the next few weeks. The market also absorbs unauthorised produce of 50 m kg.

In all likelihood, the Board would ratify the Committee recommendation at the upcoming meeting on September 9, 2011, keeping in view the hostile market conditions.

“The ITA wrote to us that they cannot buy not more than 120 m kg. But the board convened a meeting with them and asked them to revise the figure. As a result, they agreed to buy 140 m kg,” Mr G Kamala Vardhana Rao, Chairman of Tobacco Board, told Business Line.

The industry was sitting on a pile-up of 250-300 m kg and had no appetite to add more. In turn, the ITA had cut its procurement estimates. As it did, the association had indicated that it was not going to buy produce from Central Black Soils and Northern Black Soils that produced 7 m kg.

Most of the crop size cuts might come up in regions that covered Krishna and Guntur districts in Andhra Pradesh.

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