Smooth auctions fail to lift tobacco buying

Unlike mirchi auctions, tobacco auctions by and large have been smooth at the 20 auction floors of the Tobacco Board in Prakasam, Khammam, Guntur, Krishna and West Godavari districts. But even then, buying has not gathered momentum.

On the 77th day of the auction, the total number of tobacco bales sold was 2,74,523 (3,68,11,433 kg). For the same 77 days of auctioning last year, 3,61,310 tobacco bales (47.34 million kg) were sold.

The average price offered for tobacco so far this year is Rs 39.67 per kg. Almost half the number of auction days is over, yet only 36.81 million kg of the 146.21 million kg crop (traders' projection 160 million kg) has been lifted. The authorised crop was only 108.16 million kg.

This year, Karnataka farmers produced 92 million kg of tobacco as against the authorised 65 million kg and buyers purchased the entire crop. Andhra Pradesh farmers too harvested excess crop, but seemed to have reconciled to a lesser price.

The tobacco farmers of Andhra Pradesh have so far been paid, on an average, Rs 3.50 less than what they were paid per kg last year. Speaking to Business Standard, Tobacco Board chairman P Dayachari admitted that the farmers were paid less this year.

He said he had already requested the trade and members of the Indian Tobacco Association (ITA) to hike the prices on the auction floors and increase the pace of auctions. He was optimistic that the buyers would purchase the entire crop before the season ended.

Dayachari said that a trade delegation led by him visited Egypt in March. In response, a four-member business team headed by Mohammed Sadek Rageb, chairman of the Eastern Company of Egypt, the biggest tobacco firm in that country, visited the tobacco-growing areas in Prakasam district this week.

The company buys 5,000-7,000 tonnes of tobacco from Andhra Pradesh every year. Farmers and traders hope to get a huge additional order from the company soon. Sadek met farmers, traders and exporters and personally studied the quality of the crop at the auction platforms. He visited the state last time in 1983.

Dayachari said that of the estimated 50.51 million kg of southern black soil (SBS) tobacco (34.57 kg authorised), bidders lifted 1,01,04,355 kg crop at six platforms in Prakasam district. Of the estimated 48.96 million kg southern light soil (SLS) tobacco (35.26 million kg authorised), farmers sold 1,51,40,021 kg at six floors in Prakasam district.

Of the estimated 38 million kg of northern light soil (NLS) tobacco (28.40 million kg authorised), they disposed of 1,06,30,678 kg crop at four floors in West Godavari district.

Of the estimated 4.42 million kg central black soil (CBS) tobacco (5.54 million kg authorised), buyers purchased 5,50,288 kg crop at a single platform each in Krishna and Guntur districts and of the estimated 4.32 million kg of northern black soil (NBS) tobacco (4.39 million kg authorised), they purchased 3,86,091kg crop at two floors in Khammam district.