Another price crisis in Andhra

The ‘crisis’ on the flue-cured tobacco market of Andhra Pradesh, India, became grave on Monday as auctions were disrupted on six floors by growers angry at the low prices being offered, according to a story by Ch. R. S Sarma for the Business Line.

The early part of the selling season went relatively well. At the end of March, it was reported that, after 25 days of sales, 5.85 million kg of flue-cured had been sold for an average price of Rs138.72 per kg, whereas, during the same period of last year, 3.85 million kg had been sold for an average price of Rs118.09 per kg.

The Business Line report said that so far this year about 11 million kg of flue-cured had been auctioned for an average price of Rs135 per kg, but growers were complaining that there was now no active trade participation.

According to Y. Sivaji, the tobacco-farmer representative who once organized a ‘crop holiday’ – a season in which growers did not produce tobacco – in the state, was quoted as saying it was “most unfortunate that the Union government does not have a clear and comprehensive policy on the issue”.

“As usual, the trade is playing foul,” he said. “Showing the pictorial warning issue as a pretext, the major companies have almost withdrawn from the auction floors and the prices have plummeted. The farmer is left high and dry.”

Sivaji was apparently referring to the fact that India’s three main tobacco manufacturers, which beside them account for more than 90 percent of the domestic duty-paid market, had shut their factories because of confusion over the requirements surrounding new health warnings.

He said the tobacco farmers in AP were willing to switch over to alternative crops provided the government facilitated the switch-over. The government should formulate a comprehensive policy to discourage tobacco production and consumption and take steps to enable farmers to raise alternative crops.