Call for industry unity in face of flue-cured ‘glut’

Concerned about a possible fall in demand for leaf tobacco on international markets, the Tobacco Board of India has called on flue-cured growers in Andhra Pradesh and Karnataka to stick to the authorized production targets for 2014-2015, according to a story in the latest issue of the BBM Bommidala Group newsletter.

The board has fixed a flue-cured crop size of 276 million kg for 2014-15, with the Andhra crop pegged at 172 million kg and the Karnataka crop set at 104 million kg.

However, if the board’s request was a recent one it seems to have come a little late. Eighty nine days into the selling season, Karnataka has already sold more than 46.25 million kg for an average price of Rs114 a kg, with best quality, bright leaf grades attracting a top price of Rs167 a kg.

And it has been announced already that auctions in Andhra are set to begin during the third week of February.

However, the board chairman, K. Gopal, expressed concern that countries such as the US, Brazil and Zimbabwe had produced surplus leaf during the past two years and that supply was now far in excess of demand.

There was a glut on tobacco markets because of the general decline in tobacco consumption in developed countries and because several international cigarette companies were holding huge stocks, he was quoted as saying.

India was exposed also because of the economic problems in Russia and the devaluation of the rouble.

But Gopal urged Indian tobacco exporters to consider implementing a minimum export price and not to undervalue or undersell tobacco on international markets.

And he said it was the duty of the trade to support growers in times of crisis by paying the minimum guaranteed price, even though it wasn’t legally bound to do so.