Tag: India

  • Farmers Rally Against Contracting Plan

    Farmers Rally Against Contracting Plan

    Photo: Tobacco Reporter archive

    A plan to introduce tobacco contract farming has run into fierce opposition among leaf growers in India, reports The Times of India. During a massive gathering in Guntur on the occasion World Tobacco Growers’ Day, farmers demanded that the central government abandon its proposals, saying that contracting would put growers at risk of exploitation.

    “It’s going to have a disastrous effect on the livelihood of millions of growers,” predicted Gadde Seshagiri Rao, former vice president of the Tobacco Board.

    Virginia tobacco farmers association president Karatam Venkata said the existing auction system works well because it provides growers with assured payment though the Tobacco Board while contract farming results in delayed payments. In contract farming, he added, farmers’ livelihoods would be at the mercy of traders.

    Growers also praised the fairness and transparency of the auction system, which they said provided greater market stability than contracting. The tobacco farmers were particularly incensed that the government had made its proposal without consulting them.

    Contract farming has been gaining momentum globally at the expense of auction sales as leaf traders faced with ever-stricter compliance requirements seek greater control over the production process.

  • Tobacco Board Ups Andhra Crop Size

    Tobacco Board Ups Andhra Crop Size

    Photo: Tobacco Reporter archive

    The Tobacco Board of India has fixed the 2021–2022 crop size for Andhra Pradesh at 130 million kg, reports The Times of India, nearly 15 million kg more than last year’s crop size.

    The decision to authorize a larger crop was driven by the reasonably decent prices offered by traders for the most recent tobacco crop.

    In April, the board increased the 2021–2022 crop size for Karnataka to 97 million kg from last year’s 88 million kg.

    The board trimmed the crop sizes for Andhra Pradesh and Karnataka in the wake of Covid-19. But with traders buying the entire stock, the board decided to revive production.

    The board also elected K. Vasudeva Rao as vice chair for a one-year term during the crop size meeting.

  • ITC’s Cigarette Business Recovers from Low Base

    ITC’s Cigarette Business Recovers from Low Base

    Photo: Seemanta Dutta | Dreamstime.com

    ITC reported net revenue of INR12,217 crore in the first quarter of its fiscal year 2022, up 37 percent over the corresponding period of the previous year, reports Money Control. Net profit rose 28.6 percent to INR3,013.5 crore.

    Revenue from ITC’s mainstay cigarette segment jumped 33 percent during the first quarter in comparison to INR3,854 crore a year ago.

    The growth in topline was led by the company’s cigarette, FMCG and paper segments. The jump came on a low base as the first quarter of fiscal 2021 suffered from a significant decline in sales due to the onset of Covid-19 and a nationwide lockdown.

    By contrast, the second wave of the pandemic had limited impact on the segments.

    After severe disruptions in May, there has been week-on-week improvement in market conditions from mid-June, according to ITC, with most markets returning to normalcy and witnessing faster recovery compared to the first wave.

    “The pace of volume recovery is better, compared to the previous wave of Covid-19, aided by improved mobility, distribution expansion and new launches,” said Mehul Desai, analyst at Anand Rathi Shares and Stock Brokers. “Also, restrictions were not as severe as previous lockdowns.”

    ITC introduced several new cigarette variants, including Gold Flake Excel, Wills Navy Cut Filter and Berkeley Hero, during the quarter.

    The FMCG category, which includes several essential products, has helped the company tide over a difficult year. Its revenue from the segment stood at INR3,726 crore during the quarter as compared to INR3,375 crore in the year-ago period.

    Despite continued growth in FMCG, ITC continues to draw the highest share of its revenue from cigarettes, a matter of concern for analysts.

  • India: ITC Shares Fall With Covid Restrictions

    India: ITC Shares Fall With Covid Restrictions

    Photo: Seemanta Dutta | Dreamstime.com

    Shares of ITC fell nearly 3 percent after the company warned that lockdown restrictions could cause supply chain disruptions soon, according to Reuters.

    ITC’s statement came as its cigarette business barely staged a recovery from last year’s lockdown, according to Reuters. March quarter revenue rose 14 percent to INR58.50 billion ($799.1 million). Cigarette volumes were short of pre-Covid-19 levels toward the end of the year.

    “ITC’s cigarette division posted a strong outperformance versus peers during the year, indicating market share gains. However, fresh restrictions in urban and rural markets may delay cigarette volume recovery going ahead,” the Reuters article states.

    Limited lockdowns were reintroduced following surges in Covid-19 infections in April and May. Analysts at Prabhudas Lilladher stated that the lockdowns are only “temporary hiccups,” according to Reuters, and they expect the first quarter to pick up.

  • Tobacco Auctions Suspended Due to Covid

    Tobacco Auctions Suspended Due to Covid

    Photo: Taco Tuinstra

    The Tobacco Board of India has suspended auction sales for a week due to the rapid spread of Covid-19 cases, reports The Times of India.

    “With the situation going from bad to worse, we have decided to put off the auctions in view of the welfare of all those involved in the process, including growers, traders and officials,” said Tobacco Board Executive Director Addanki Sridhar Babu.

    Sixty-eight employees of the Tobacco Board have reportedly tested positive for Covid-19, and one died due to the coronavirus during the auction season.

    To date, Indian farmers have sold about 27 million kg against the expected total production of 110 million kg during the current season. Although the board authorized growers to produce about 115 million kg, production fell short due to weather conditions. Nonetheless, board officials noted that farmers produced “fine” quality leaf.

    Growers fetched an average price of INR161.80 ($2.21) per kg compared with INR142 per kg last season.

    The board will decide on May 24 whether to resume auction sales.

  • Indian Farmers Worried About Tobacco Prices

    Indian Farmers Worried About Tobacco Prices

    Photo: Tobacco Reporter archive

    Tobacco farmers in Andhra Pradesh are concerned about declining tobacco prices, reports The Hindu.

    When the auctions opened, buyers were offering more than INR180 ($2.44) per kg for bright grade varieties in the country’s most prominent tobacco-growing province. Now, the same varieties are fetching INR170 per kg at best, a group of farmers at the Vellampalli auction platform said.

    To date, only 7.26 million kg have been traded against an estimated production of more than 70 million kg in the traditional tobacco-growing areas under the purview of the Southern Light Soils (SLS) and the Southern Black Soil (SBS) auction platforms. Tobacco production was also impacted by unseasonal rains in the Nellore and Prakasam districts.

    In SBS auction platforms, the average price realized for the 3.55 million kg marketed so far has dropped to INR170.95 kg now. In SLS auction platforms, the 3.71 million kg marketed to date fetched an average price of INR173.30 per kg, according to the Tobacco Board.

    Vellampalli II Tobacco Growers’ Association President N. Chimpriya called for intervention by the State Trading Corp., pointing to the foreign exchange traditionally earned by the tobacco sector.

    Last year, Indian tobacco farmers incurred significant losses due to a prolonged Covid-19 lockdown. Tobacco growers fear disruption this year, too, as India struggles with a steep surge in infections.

  • Board Authorizes 97 Million kg for Karnataka

    Board Authorizes 97 Million kg for Karnataka

    Photo: Tobacco Reporter archive

    The Tobacco Board of India has authorized a 2021–2022 crop of 97 million kg for Karnataka, 9 million kg more than in the previous growing season, reports The Times of India.

    “We have decided to fix the crop size of Karnataka at 97 million kg keeping in view the demands of growers as well as traders,” said board Chairman Raghunatha Babu, adding that the board had also taken into consideration global demand.

    The board had originally authorized a 99 million kg crop for Karnataka in 2020–2021. However, after considering the seriousness of the Covid-19 pandemic, it reduced the crop size to 88 million kg.

    Some analysts expressed surprise at the crop size increase, given that global demand for tobacco has slipped in the wake of the pandemic.

    Tobacco growers who switched to producing ginger following the crop size reduction reportedly suffered heavy losses, increasing pressure on the board to increase the crop size for 2021–2022.

    Meanwhile, tobacco growers in Andhra Pradesh threatened to stall auctions from Monday if there is no marked improvement in the prices offered for their produce, according to a report in The Hindu.

    Due to the rising number of Covid-19 cases and uncertain global demand situation, exporters have adopted a wait-and-see approach, citing a lack of confirmed orders.

    “We were hoping to recoup the losses incurred last year as the virus-induced lockdown coincided with the peak marketing season, said farmers’ representative Mareddy Subba Reddy.

    “We will not hesitate to stall the auction from next week if the market continues to remain lackluster, said V.V. Prasad, a farmer’s welfare association leader at the Ongole II auction platform.

    To date, Andhra Pradesh famers have marketed only 12.5 million kg of their 70 million kg crop. The 6.5 million kg Southern Light Soils tobacco sold earned a price of INR167 ($2.23) per kg while the 6 million kg Southern Black Soils tobacco sold for INR165 per kg, according to the Tobacco Board.

  • Modi Asked to Withdraw Indian Tobacco Bill

    Modi Asked to Withdraw Indian Tobacco Bill

    Photo: Tobacco Reporter archive

    A prominent Indian farmers group has asked Prime Minister Narendra Modi to withdraw a proposal to amend the law regarding cigarettes and other tobacco products, saying it will create hardship for tobacco growers, reports CNBC.

    Proposed by the Ministry of Health, the Cigarettes and Other Tobacco Products Act (COTPA) Amendment Bill 2020 disallows retail sales of loose cigarettes, prohibits sales of tobacco products to persons below 21 years and restricts in-shop advertising and promotion, amongst other provisions.

    The Federation of All India Farmer Associations (FAIFA), which represents farmers and farm workers of commercial crops across Andhra Pradesh, Telangana, Karnataka and Gujarat, said the bill will significantly boost the illicit cigarette business in India.

    FAIFA President Javare Gowda said the amendments will ”terrorize retailers and traders and they would not want to engage in the sale of legal cigarettes. Criminal syndicates, he cautioned, will gain ground and flood the Indian market with illicit cigarettes.

    Since these illicit cigarettes do not use tobacco produced by Indian farmers, the result would be loss of earnings and livelihood of millions of tobacco farmers who are dependent on the crop in the country, he added.

  • India Mulls Crackdown on Tobacco

    India Mulls Crackdown on Tobacco

    Photo: Taco Tuinstra

    India’s health ministry wants to ban public smoking, prohibit the sale of loose cigarettes and increase the minimum smoking age from 18 to 21, reports The Economic Times.

    Earlier this week, the Union Health Ministry published the draft Cigarettes and Other Tobacco Products Amendment Act, which if implemented in its entirety could have long-term ramifications for the cigarette industry.

    However, some analysts believe the government’s draft policy is ambitious and may not be fully implemented.

    “In India, there are rules out there for many things, but implementation will be a major challenge,” said Abneesh Roy, executive vice-president at Edelweiss Securities.

    Tobacco companies operating in India’s $12 billion cigarette market are likely to raise objections before the public consultation period of the proposal ends on Jan. 31.

    “Some of the measures are very extreme and problematic,” one tobacco industry executive told Reuters. A second executive said concerns around the impact on employment and how farmers could be affected will also be shared with the government.

    India had proposed sweeping changes to its tobacco-control law in 2015 as well but the proposal was dropped following protests from the tobacco industry.

    Shares of market leader ITC tanked 2.9 percent on Wednesday to INR205.35 ($2.80) on the national stock exchange. Prior to this correction, shares of the soap-to-tobacco maker had risen 30 percent since November as analysts saw signs of recovery in the cigarette and non-cigarette fast-moving consumer goods businesses.

  • India Bans Per-Stick Bidi and Cigarette Sales

    India Bans Per-Stick Bidi and Cigarette Sales

    Photo: Denis Shevyakov

    The state health department in India has banned the sale of loose cigarettes and bidis to help stop the spread of Covid-19 and to discourage smoking, reports Mumbai Mirror.
     
    Vendors will have to sell full packs rather than single sticks. The police department and local self-government bodies are tasked with enforcing the ban.
     
    Tobacco laws state that 85 percent of tobacco packaging must be health warnings, but when consumers are buying single sticks, they are not seeing these warnings. Officials are hoping requiring the sale of whole packs will discourage smokers; many tobacco consumers in India cannot afford whole packs.