Poor demand for tobacco: Calls for govt. intervention too early, say experts

The poor demand for tobacco across auction platforms in the State may have led the Opposition Congress to make an appeal for immediate government intervention, but experts in the tobacco industry are hopeful of a turnaround in the demand for the commodity in the coming months.

More than a month after auctions started in Karnataka, the demand for tobacco has remained muted, raising concern among the farmers who are wary of COVID-19 dashing their hopes of making a decent earning.

A good 80 per cent of Flue Cured Virginia (FCV) tobacco cultivated in Mysuru region across Periyapatna, Hunsur, H.D. Kote and K.R. Nagar is exported for manufacturing cigarettes.

Several Congress leaders including former Chief Minister Siddaramaiah and former Chamarajanagar MP R. Dhruvanarayan, besides Hunsur and H.D. Kote Congress MLAs H.P. Manjunath and Anil Chikkamadu respectively have raised the issue and urged the government to come to the rescue of the tobacco farmers immediately.

Congress leaders in Mysuru have referred to the intervention by neighbouring Andhra Pradesh government, where the Andhra Pradesh State Co-operative Marketing Federation Ltd or AP Markfed, purchased tobacco bales in July this year to arrest the fall in prices due to COVID-19 lockdown. AP Markfed purchased a total of 13 million kg.

However, sources in Tobacco Board as well as FCV Tobacco Growers’ Federation of Karnataka point out that demand for tobacco has been historically poor during the month of November as most of traders participating in the auctions will be awaiting confirmation of the orders for the samples they send to the buyers abroad.

As more than 80 per cent of the tobacco cultivated in Mysuru region is exported abroad, the traders will first send samples and await confirmation of the orders with details on the quantity and prices. “Once the orders are confirmed, trading will pick up”, said Javare Gowda, President of FCV Tobacco Growers’ Federation of Karnataka, who had also served as a Vice-Chairman of the Tobacco Board.

Regional Manager of Tobacco Board, Mysuru, Manjunath was hopeful of the trading picking up towards the end of November and early December. He said a lot of orders for low grade tobacco are pending confirmation.

Though good quality tobacco is being bid for as high as ₹178 per kg, the low grade tobacco is finding few takers. The demand for low grade tobacco is poor even at ₹95 a kg. “Many traders, who had also participated in auctions in Andhra Pradesh, point out that they had purchased low grade tobacco at ₹70, which they are unable to liquidate”, a source claimed.

Auctions in Karnataka started on September 30 in two platforms and on October 7 in the remaining nine platforms. The auctions are expected to go on till March 2021. By mid-November, about 19.5 million kgsof tobacco has been auctioned.

The Tobacco Board earlier this year had revised the crop size from 99 million kg to 88 million kg for the year in view of the likely dip in demand due to COVID-19. But, sources in the Board said yield is expected to cross 95 million kg.b


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