Foreigners wary of high prices in tobacco auction

International buyers are yet to participate in Karnataka's current tobacco auction season (September 2006-February 2007), owing to high prices prevailing in the market.

According to an official at the Tobacco Board, international buyers have not placed orders and are adopting a wait-and-watch policy, with high prices ruling at all the nine auction platforms in the state.

Normally, international buyers descend on the state auction platforms by the first week of November, buying bought 50 per cent of their requirement by December. "But, this season, they are either delaying their participation or they may skip," the official added.

Another reason for the non-participation is the strong rupee quoted over other foreign currencies. The strong rupee pushes up transport costs by almost 50 to 60 per cent of the commodity price.

In the absence of international buyers, it is the local and domestic traders and a few tobacco companies, who are buying in the anticipation of international participation.

Karnataka has 40,000 registered growers and exports 70 to 80 per cent of its produce. Since the beginning of the current tobacco season, 32.44 million kg have been marketed as against 83.27 million kg authorised for the state.

The following are the prices quoted at auction platforms, with the authorised quantity and the quantity sold as on November 23: H D Kote paltform "� Rs 60.59 per kg (average price), 6.72 million kg (authorised quantity), 3.67 million kg (quantity sold); Hunsur-I "� Rs 57.98 per kg, 9.37 million kg, 3.87 million kg; Hunsur-II "� Rs 58.43 per kg, 8.60 million kg, 3.69 million kg ; Periyapatna-I "� Rs 62.69 per kg, 10.84 million kg, 4.03 million kg; Kampalapura "� Rs 58.15 per kg, 14.68 million kg, 5.54 million kg.