'Tobacco exports set to touch Rs 1,450 crore'

The Indian Tobacco Association (ITA) estimates that tobacco exports will touch Rs 1,450 crore this year, a 25 per cent increase over last year's Rs 1,162 crore. Tobacco exports were at Rs 888 crore in 2002-03.

ITA president Ch Narendranath told Business Standard that Indian tobacco is exported to over 90 countries. Around 40 per cent of the exports are destined for Europe and Russia. Strategic and competitive pricing are helping the Indian exporters to gradually increase their share in the world market, he said.

Narendranath said: "With the the governments in Europe removing farm subsidies, the Indian tobacco can now compete with that produced by European farmers. The farmers in the US have reduced cultivation of tobacco due to escalation of input prices."

"The crop in Zimbabwe is expected to come down further from 80 million kg to 40 million kg this year. These factors are expected to turn the market in favour of the Indian tobacco. If the present scenario continues and if the government continues its 2 per cent incentive under DEPB (Duty Entitlement Pass Book) to exporters and the dollar remains stable, the tobacco exports from our country would touch Rs 3,000 crore in just five years," he said.

The tobacco auctions in Karnataka are slated to begin on September 3. The ITA president observed that the Karnataka crop would not impact the prospects of Andhra crop as the two crops had different profiles, different customers and utility values.

"While 10 million kg of Karnataka tobacco is required for the domestic market and 64 million kg for exports, 60 million kg of Andhra tobacco would go for exports and 55 million kg for domestic market. the Karnataka farmers are expected to produce 78 million kg tobacco this year.

The tobacco auctions in Andhra Pradesh during 2003-04 were peaceful and satisfactory, barring a few incidents. The farmers on an average earned Rs 34.90 per kg as compared to Rs 34.80 in 2002-03. The farmers brought 147.97 million kg tobacco to the auction floors, recording the largest production in 25 years. They exceeded the target of 108 million kg crop set by the Tobacco Board. Buyers, though hit by a weak dollar, rose to the occasion and lifted the whole crop, the ITA president said.

The Andhra farmers, according to Narendranath, should focus on the crop quality. The foreign customers will not compromise on quality.

"With quality and competitive pricing, it's easy to make a dent into competitors' market. The government should help farmers produce high quality tobacco," he said.

Around 350 small tobacco dealers were hit by competition and unfavourable market conditions and were pushed out of business, he said.

Though the RBI announced a relief package for these small dealers, it had not implemented it. The package would help small dealers take part in tobacco purchases, making auctions more buoyant and competitive, Narendranath said.

According to the ITA president, the ITA leaders and around 20 MPs called on finance minister P Chidambaram and commerce minister Kamal Nath on August 24 and appealed to them to implement the relief package for small dealers at the earliest. The ministers promised to take up the issue with the RBI and do the needful, he said.