Tobacco Sales Dip at Auction Centres

Farmers badly affected by fluctuations in global market which slowed down purchases

Published: 28th May 2015 06:03 AM  |   Last Updated: 28th May 2015 06:03 AM   |  A+A-

VIJAYAWADA: The decade-long ‘happy days’ of the tobacco-growers in the state appear set to end this year and they are staring at possible losses to the tune of several lakhs of rupees per barn (each barn takes tobacco grown in an area of 1.9 to 4 hectares depending on the type of soil used for curing).

Compared to last year, bales of tobacco are moving at a snail’s pace at all the 19 auction platforms and many farmers are forced to take back their stocks home at the end of the day. Last year, at the end of 54 working days of the auction period, half of the yield was sold out, but this time not even 1/10th of the stock has got cleared for the same period.

“The slowdown in the movement of tobacco at the auctioning platforms is really a worrying factor. If the  situation continues, we will suffer losses like never before,” said Syed Vaji, whose family grows Flue-Cured Virginia - North Light Soil (FCV-NLS) variety tobacco in about 100 acre in Buttayagudem mandal of West Godavari district.

He said they were forced to sell tobacco at ` 70 to ` 90 a kg - which was half the rate at which it was sold the previous year. Even at ` 70, there were only a few takers, he bemoaned. The FCV-NLS variety of tobacco is grown extensively in eight mandals of West Godavari district. This year too, they have had a good crop like last year, but the last year’s fortunes seem to deserted them. 

“Since there are no takers, we have stopped sending the bales to the auction platforms some 15 days back. What is the use of sending them there and bringing them back suffering more losses in turn, as the quality of the leaves is affected due to exposure to the sun,” Nagaraju, a tobacco-grower from Jangareddygudem, said.

Though different factors have led to the slowdown of the movement of tobacco during the auctioning, traders say that last year’s carryover stocks with the exporters and the tobacco product-manufacturers was the main reason. “There is less demand for tobacco this year from the manufacturers and exporters alike. Not just in the FCV-NLS or the SLS varieties, even in the traditional black soil FCV tobacco there has seen a slump in sales. Though the Tobacco Board officials are hopeful of orders by May-end or by June, the situation is not bright,” an official of a tobacco products manufacturing firm said. 

K Srinivas Rao, a tobacco-grower and buyer in Prakasam district, blamed the slowdown on the world market fluctuations. “Seventy per cent of the tobacco cultivated in AP is exported and now exporters are saying that the demand has come down as the customers are not placing orders stating they have surplus stocks. It is also being claimed that the consumption of tobacco products has decreased, but nobody is sure of the exact reasons. The fact remains that the slowdown in tobacco auctions will push the growers into losses, if the situation is not remedied at the earliest,” he explained.

For more or less the same reasons, the auction of tobacco in Karnataka, the only other state to cultivate the commercial crop, got delayed. This has had a cascading effect on the auctioning in Andhra Pradesh. Since most of the companies have to wind up their tobacco procurement operations in Karnataka before engaging in Andhra Pradesh, there is said to be the delay contributing to the slowdown in the market.


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