Tobacco market in Andhra Pradesh in crisis due to slump in global demand
Vijayawada: Poor demand in the global markets has induced serious crisis in tobacco market in Andhra Pradesh. In fact, the tobacco growers themselves put the traders in advantageous position by producing almost 40 percent surplus crop than the authorized stock.
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Betting high on the prices fetched by the FCV (virginia) tobacco growers during the last season, hundreds of farmers swung into cultivation of black burley tobacco causing further crisis in the market.
The state govt is virtually struggling to achieve balance between the growers' demands for high prices and the slow response from the traders to pick up stock. Virginia tobacco growers have been complaining about rejection of stocks in the auction platforms particularly in Ongole-I, Ongole-II and Vellampalli platforms in Prakasam district.
In order to escape from the demands for high price, the traders are simply rejecting the stocks without offering any price.
While the farmers are expecting a price of anywhere around Rs 300 per kg, the traders are ready to pick up the stock between Rs 220 and Rs 250 per kg.
State govt held several rounds of discussions with the big exporters, cigarette manufacturing companies and requested them to pick up stocks to avoid further protests from the field.
However, the situation did not ease as traders are still awaiting for export orders.
CPI(M) state secretary V Srinivasa Rao demanded that the Centre must purchase stocks through state trading corporation (STC) or tobacco board. He criticized the state and Union govts for not responding to the tobacco growers' concerns.
The tobacco board authorized a crop of 167 million kg for FCV during the 2024-25 crop season after taking feedback from the growers and traders.
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Sensing trouble that farmers might go for additional crop, board chairman Yaswanth Kumar Chidipothu himself went around the tobacco growing districts and appealed to farmers to stick to the authorized stock. However, several farmers went ahead with the additional crop and the production touched almost 240 million kg, which is nearly 70mkg higher than the authorized crop size.
Taking advantage of the situation, exporters and traders deliberately slowed down the purchase apparently to exert pressure on the growers.
The growers too did not realise the situation in the initial weeks and sticked to their demand for a price above Rs 300 per kg. The stalemate led to almost no purchase situation in the auction platforms. After nearly 70 days of launching the auctions, just 52 mkg of stock was purchased, of the total expected production of 240 million kg.
The growers are worried that it might take at least 4 to 5 months to pick up the authorized crop and another two months to pick up surplus stock.
This means that auctions might not be going to be completed any time before Nov.
Even as the FCV growers struggle to overcome the crisis, the cultivation of about 80 mkg of black burley, which is just a mixing stock, has deepened the crisis. While the white burley was almost picked up by the traders as per the bond, the black burley was left unattended.
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