Gujarat growers suffer price falls

| June 23, 2016

Tobacco growers in the Indian state of Gujarat have suffered falls in prices of between 45 percent and 61 percent, according to a Business Standard story relayed by the TMA.

The price plummet is being blamed on a decline in demand for bidis following the implementation of a regulation requiring graphic health warnings to be included on 85 percent of the two main surfaces of tobacco packs.

But the requirement was introduced in a way that meant that bidi manufacturers – and cigarette manufacturers – in India had to stop production for a while.

Tobacco prices in Gujarat have dropped to Rs700-1,200 per 20 kg from Rs1,800-2,200 per 20 kg.

Gujarat, which mainly grows tobacco used in bidi manufacture, accounts for about 45 percent of the estimated 800 million kg of leaf produced in India.

Industry representatives believe that the price factor and the level of unsold stock could reduce tobacco growing by 20-25 percent in Gujarat, where about 450,000 farmers produce about 360 million kg of tobacco on about 150,000 ha each year.

Meanwhile, the Tobacco Board of India, which does not have responsibility for the bidi tobaccos grown in Gujarat, cut the flue-cured tobacco crop targets for Andhra Pradesh and Karnataka to 120 million kg and 95 million kg respectively for the 2015-16 season, down from 173 million kg and 100 million kg in the previous season.

Murali Babu, of the Tobacco Growers Association, was quoted as saying that farmers had expected the restricted crop sizes to “bring in demand and push prices to a desirable Rs140-150 per kg or higher … but that did not happen”.

Due to the fall in demand and lower prices, many farmers were expected to switch to low risk alternative crops in the Kharif [monsoon] and Rabi [winter] seasons later this year.

Category: Breaking News

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