Andhra prices tumble

Tobacco growers in the Indian state of Andhra Pradesh had sold 63.51 million kg of leaf during the 98 days of marketing since auctions began in early March, according to a story in the latest issue of the BBM Bommidala Group newsletter.
The average price was said to have been down to Rs137.38, but there was no mention of what the comparison average price was.
However, a previous report, after 60 days of marketing and with 24.77 million kg of tobacco sold, put the average price at Rs163.00 per kg; so the average price fell by nearly 16 percent during the period from the 60-day to the 98-day stage of the marketing season.
In addition, a newsletter story from last year had it that after about 40 days of marketing, 21.57 million kg of tobacco had been sold for an average price of Rs145.53 a kg; so it would seem that prices this year are running about 5-6 percent below those of the previous year.
It is often said that prices are dependent on the quality of the leaf on offer, but this seems unlikely to the case here. The report said that a major share of the 63.51 million kg that had been auctioned, 34.36 million kg, comprised bright grades that fetched an average of Rs154.00 a kg.
Meanwhile, 18.39 million kg of medium-grade leaf had traded for an average price of Rs133.18 a kg, and 10.8 million kg of low-grade leaf had sold for an average price of Rs91.19 a kg.
In fact, as is usually the case, prices seem to be being driven by volume demand, or lack of it. By the 98-day point of last year’s sales, double the 63.51 million kg of this year’s sales had been auctioned.
Earlier this year, growers, worried at the slow pace of sales, called on the Chief Minister to hold a meeting with traders.
Growers’ concerns will have been heightened by the fact that the Andhra crop on offer is not a big one. The authorised crop size was 136 million kg, but the production estimate puts it at about 125 million kg.