Poor show at auctions, high inventory hit tobacco prices

Unsold stocks with traders have become a bane for tobacco growers in Andhra Pradesh this season. Traders are not taking active part in auctions and even if they do, the prices quoted are at low levels, when compared with those offered last season.

The auctions, which started in the northern black soils in east Godavari and parts of Khammam districts, the central black soils (CBS) in Krishna and Guntur districts, and northern light soils in West Godavari district, are doing well, but the product from the southern light soils (SLS) and southern black soils in Prakasam district are not getting the expected price for this season.
While tobacco was sold at the highest price of Rs 120 a kg earlier, it is now quoted at Rs 98-100 a kg. This is a cause of concern for growers, who are blaming the Tobacco Board. Farmers allege the Board could have intervened when the prices were falling. Instead, it was absent from the auction platforms, leaving it to traders to decide the prices.
According to the Tobacco Board, only 4.12 million kg of tobacco was sold at various auction platforms as on March 23. Of this 3.62 million kg was from the SLS, which came from Prakasam district. Ironically, farmers from this part of the state have been on a warpath with the Board for the past season on prices. The strike forced the Board to intervene and hold talks with traders on offering better prices. However, this year, the Board is yet to step in to help growers.

“Besides the fall in quality of the product, traders have huge inventory. We have served notices to traders to give us details of the available stock. We will decide once we get the reports from them,” said G Kamalavardhana Rao, Tobacco Board chairman.

When asked about intervention, Rao said they were suggesting traders to explore export opportunities. “We are asking the traders to visit different markets in various countries to export tobacco. There are several countries looking for imports and the traders have to find those markets and move their stocks. We will have special interaction with the traders soon on this,” Rao added.

He was hopeful that growers would get a better price once traders get the export orders.

However, the Virginia Tobacco Growers Association president and former MP, Yalamanchili Sivaji, said the Board was helping the traders more than the growers. He said traders were waiting for export orders on the one side and purchasing tobacco at the lowest price outside the auction platforms on the other.

“Traders are not offering better prices at the platforms, creating panic among growers. At the same time, they are purchasing tobacco outside the auction platforms by offering low prices. The Board remains a spectator to this game and traders are dictating terms to the Board,” Sivaji said.

He brushed aside the unsold stock claim and said traders were waiting for growers to keep their stocks at home till these get discoloured and to then buy the product at lower prices. “Traders are adopting several methods to loot farmers,” he added.