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Tobacco farmers anxious as Covid-19 second wave triggered price correction

SLUGGISH TOBACCO MARKETS CAUSED BY PROLONGED LOCKDOWN

Tobacco growing farmers are anxious and crossing their fingers as the second wave of the Covid-19 pandemic has triggered a correction in the prices of different grades of tobacco at a time when they are hoping to cover their input cost suffered last year due to sluggish markets caused by prolonged lockdown.

When the auction platforms opened, buyers were paying more than ₹180 per kg for the dazzling grade varieties. According to a group of farmers at the Vellampalli auction website/platform, the same varieties are now fetching at most ₹170 per kg.

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Major buyers of produce destined for global markets have been avoiding the auction in recent months due to health issues posed by an increase in the number of infections.

‘We’re doing all we can to raise the amount of bales traded every day by at least 100. Due to sluggish market conditions, 400 to 500 bales are currently being traded,’ Southern Light Soil (SLS) Regional Manager D. Venugopal explained.

Market is sluggish

Farmers are worried that the tobacco trade will be disrupted this year as well, as coronavirus has already caused lockdown in some parts of the country and part of the world. There is still a long way to go, as of now only 7.26 million kg of tobacco has been traded so far, compared to a projected output of over 70 million kg in conventional tobacco growing areas covered by the SLS and Southern Black Soil auction platforms.

Unseasonal rains hit tobacco production in Nellore and Prakasam districts during the rabi season in several stretches, forcing farmers to go for gap filling after the wet weather damaged the early planted crops.

Intervention in the market

‘Because the tobacco industry receives a lot of foreign exchange, the Centre should put the State Trading Corporation (STC) to work.   Like last year, the State government should guide the Markfed to intervene to establish market buoyant forces,’ said N. Chimpriya, president of the Vellampalli II Tobacco Growers’ Association.

The auctions got off to a promising start, with the price of F1 grade rising to ₹184 per kilogramme. After just 20 days after the platforms were launched, the market has entered corrective mode.

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The average price realised for the 3.55 million kg sold so far has fallen to ₹170.95 kg on SBS (Southern Black Soils) auction platforms. According to Tobacco Board sources, the 3.71 million kg sold so far on SLS (Southern light Soils) auction platforms fetched an average price of ₹173.30 per kg.