Virginia tobacco auctions , which commenced in March in Andhra Pradesh, are in the initial stages. The farmers are a worried lot, as the prices of low-grade tobacco are discouraging this season due to drought conditions in Prakasam and Nellore districts.
There is a slump in yields in the two major tobacco-growing districts of Nellore and Prakasam this season due to drought conditions, according to sources. The low-grade tobacco production, in percentage terms, is also expected to be more.
The auctions commenced in phases from March on all the 18 floors and till date a quantity of 12.69 million kg of tobacco has been sold at an average price of Rs 142.40 per kg as against 11.9 million kg sold last year at an average price of Rs 151 per kg . There is thus a marked slump in the average price in comparison with last year, especially for the low grades. .
The authorised crop size this season in Andhra Pradesh is 136 million kg and the actual output may be around 133 million kg.
Currently, the low-grade tobacco is fetching roughly Rs 100 per kg, which the farmers complain is too low even to recover the costs. They expect a hike of at least Rs 15-20 per kg from the trade. The export orders may be finalised in May and then there may be some improvement in prices on the floors, farmers feel.
The auctions in Karnataka are completed and a quantity of 85 million kg was sold at an average price of Rs 142 a kg.