The tobacco growers in Gujarat are set to reap rich dividends on growing demand this year. Tobacco farmers have managed to fetch higher prices at the onset of the season, thanks to a dip in tobacco yield and a rise in demand from gutkha and bidi manufacturers.
For example, the prices of Deshi (Bhukko) tobacco are currently being quoted around Rs 1,300-2,000 per 20 kg, depending on the quality and payment schedule. The prices of the same variety hovered around Rs 1,200-1,400 last year in central Gujarat, the primary tobacco growing region in the state.
“The tobacco season, which started earlier in February, began on a firm note. In the first tender of the season, prices were quoted higher by Rs 300-400 per 20 kg. On an average, prices (all types) have firmed up in the range of Rs 500 -700 so far,” said Vijay Patel, a leading tobacco trader based in Nadiad.
“Apart from Gujarat, the trend is more or less similar in other tobacco growing states such as Maharashtra, Andhra Pradesh, West Bengal and Uttar Pradesh. These states have also witnessed an average price rise of Rs 500,” said Bipin Patel, vice-president, Gujarat Tobacco Merchants’ Association (GTMA).
According to market players, the prices of Kalkatti (Bhukko) in central Gujarat have increased to Rs 800-1,200 per 20 kg from Rs 600-800 last year. In north Gujarat, Kalkatti (Bhukko) prices have jumped up to Rs 600-1,300 depending on quality, which stood at Rs 450-650 in 2007-08. Other varieties such as Deshi Red Chopadiyu and Black Chopadiyu are likely to fetch Rs 300-400 more. These varieties will hit the market after July.
Marketmen attribute the sharp surge in prices to lower yield and lack of tobacco stock. “Despite an increase in acreage in Gujarat, the yield has taken a hit due to unfavourable weather conditions,” said Bharat Patel, president, Unjha Vibhag Tamaku Mandal, a tobacco division of the Unjha Traders Association. The area under tobacco cultivation in Gujarat has increased to 87,600 hectares in 2008-09 from 61,000 hectares in the previous year.
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“Last year, tobacco production in the state was lower. As a result, there were no stocks left for the new season,” he added.
At present, the market is witnessing an increase in demand from bidi and gutkha manufacturers as some of them have started procuring directly from farmers. In addition to this, many small time traders have also jumped in the fray as the prices of tobacco had reached a record level last year. Tobacco production is likely to remain flat at 120,000 tonnes to 130,000 tonnes in 2007-08.
The per bigha yield in the state is estimated to decline to 500 kg in 2008-09 from 800 kg last year. However, there are other players who expect a marginal rise in production this year.