ITC, GTC to raise tobacco procurement in Andhra

The Indian Tobacco Company (ITC) and the Golden Tobacco Company (GTC) are planning to enhance the procurement of tobacco in Andhra Pradesh. The two companies have promised to buy 5-6 million kg, and 2 million kg respectively, more than what they had actually planned for this year.

However, Indian Tobacco Association (ITA) president Narendranath did not give any categorical assurance over the specific price hike of per kg of tobacco, which crashed from Rs 52 per kg in January to the present Rs 38. The remaining crop of about 72 million kg tobacco would be paid a better price at the auction floors throughout the season, he said.

ITA, which represents buyers, manufacturers and exporters, has promised farmers, their leaders, and Tobacco Board officials that its members would ensure better prices for the tobacco crop during the present season.

However, Narendranath said the present price of Rs 37.83 was a better price over last year's Rs 34.9 paid during the same period. Steps against smoking had gained momentum all over the world, particularly in the developed world.

International companies reduced their tobacco purchases as cigarette sales crashed by 40 per cent. They opted for low nicotine (less than 1 per cent), low tar (less than 10 per cent), and low priced tobacco.

The demand for tobacco also plummeted in the domestic market as government's measures like 10 per cent hike in excise were affecting cigarette manufacturers.

Despite these setbacks, he said, the ITA members, as in the past, would rise to the occasion and lift the entire tobacco crop at prices lucrative to farmers. The farmers will be able to see the change this week itself, he added.

Farmers sought a hike of Rs 5 per kg, as cost of producing a kg of tobacco has gone up by 50 per cent and stands at Rs 40. They also appealed to Tobacco Board chairman P Dayachari to suspend auctions if the ITA did not honour its word.

Dayachari appealed to the ITA to hike tobacco auction prices as farmers were getting frustrated. He feared that they might take to more violent agitations. About 1.52 lakh tonnes of tobacco was exported in 2003-04 and 1.59 lakh tonne in 2004-05, he said.

Traders, on an average, earned $1.6-1.72 per kg. If the buyers increased the auction floor price by Re 1 per kg, it would affect them by only Rs 7.5 crore. As 50 per cent of the Andhra crop would be consumed by the domestic manufacturers, they should consider paying better prices to farmers.

Farmers' leader Y Sivaji said that the exporters earned a net profit of Rs 10 per kg out of which they could share a rupee or two with farmers. Farmers have so far lost about Rs 100 crore by way of loss of colour, quality and content in hygroscopic tobacco and Rs 60-70 crore by way of unremunerative prices.