Andhra tobacco growers mop up Rs 600 crore more in FY08
Around 50,000 tobacco growers in Andhra Pradesh have never had it so good with the cumulative realisations for 2007-08 skyrocketing by Rs 600 crore.
By ET Bureau |
BANGALORE: Around 50,000 growers of Flue-Cured Virginia (FCV and smoked in cigarettes) tobacco in Andhra Pradesh have never had it so good with the cumulative realisations for 2007-08 skyrocketing by Rs 600 crore.
A Tobacco Board estimate says that the cumulative realisations for the auction of the 2007-08 tobacco crop has aggregated Rs 1,400 crore. This means that each FCV grower in Andhra Pradesh earned Rs 120,000 more in 2007-08 or an additional Rs 10,000 per month, compared with the realisations from the previous crop of 2006-07.
In absolute terms, the 2007-08 FCV crop generated an average income of Rs 280,000 for each grower, working out to Rs 23,333 a month. With the average per-kg realisations at the auctions conducted by the Tobacco Board touching Rs 84.75 and with a total per-kg cost of around Rs 40, each AP grower would have netted an average annual profit of Rs 147,600 on the 2007-08 FCV crop, or a monthly profit of Rs 12,300.
The higher realisations were generated from an AP FCV crop of 165 million kg ��� down 7 million kg from the previous season���s 172 million kg. Export prices for Andhra���s FCV crop are up 60%, compared with the previous crop.
The 2007-08 FCV crop in Karnataka, whose auctions began in September and concluded in March, was around 87 million kg ��� around 8 million kg less than the previous crop. The higher prices at this year���s AP auction, which concluded in the first week of July, were triggered by the global supply-demand situation.
A key factor was the increased consumption of cigarettes in China, which is also the world���s leading cultivator of FCV tobacco. A shortfall in Brazil���s flavoured tobacco crop also helped boost the prices of Andhra Pradesh���s semi-flavoured Northern Light Soil crop. Tobacco Board chairman Dr J Suresh Babu said he expects higher prices to continue for another two to three years, thanks to the increased consumption of cigarettes in China.
During the Prime Minister���s visit to China in January, a protocol was signed for exports of Indian FCV tobacco to China. Dr Babu said growers in the two FCV-tobacco cultivating states would benefit. Auctions for the 2008-09 Karnataka crop cultivated by 50,000 growers is expected to begin in September. The authorised crop for Karnataka was increased to a record 100 million kg in the coming seaso. Andhra Pradesh���s authorised crop-size for 2008-09 will be fixed soon. In 2007-08, it was 158 million kg.
Apart from the global supply-demand situation, the additional Rs 600 crore realised by growers in Andhra Pradesh on the 2007-08 crop is attributed to the precautions taken by the Tobacco Board, which conducts the auctions.
Precautions were taken to ensure that the major buyers for Indian tobacco could not form a cartel of any kind while bidding at the auctions. The system of allocating bales if buyers pretended to show disinterest at a certain price was discontinued. As a result of these precautions, average prices realised in the recently concluded AP auction touched an all-time high of Rs 84.75 ��� up from Rs 47.47 for the previous crop.
A Tobacco Board estimate says that the cumulative realisations for the auction of the 2007-08 tobacco crop has aggregated Rs 1,400 crore. This means that each FCV grower in Andhra Pradesh earned Rs 120,000 more in 2007-08 or an additional Rs 10,000 per month, compared with the realisations from the previous crop of 2006-07.
In absolute terms, the 2007-08 FCV crop generated an average income of Rs 280,000 for each grower, working out to Rs 23,333 a month. With the average per-kg realisations at the auctions conducted by the Tobacco Board touching Rs 84.75 and with a total per-kg cost of around Rs 40, each AP grower would have netted an average annual profit of Rs 147,600 on the 2007-08 FCV crop, or a monthly profit of Rs 12,300.
The higher realisations were generated from an AP FCV crop of 165 million kg ��� down 7 million kg from the previous season���s 172 million kg. Export prices for Andhra���s FCV crop are up 60%, compared with the previous crop.
The 2007-08 FCV crop in Karnataka, whose auctions began in September and concluded in March, was around 87 million kg ��� around 8 million kg less than the previous crop. The higher prices at this year���s AP auction, which concluded in the first week of July, were triggered by the global supply-demand situation.
A key factor was the increased consumption of cigarettes in China, which is also the world���s leading cultivator of FCV tobacco. A shortfall in Brazil���s flavoured tobacco crop also helped boost the prices of Andhra Pradesh���s semi-flavoured Northern Light Soil crop. Tobacco Board chairman Dr J Suresh Babu said he expects higher prices to continue for another two to three years, thanks to the increased consumption of cigarettes in China.
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During the Prime Minister���s visit to China in January, a protocol was signed for exports of Indian FCV tobacco to China. Dr Babu said growers in the two FCV-tobacco cultivating states would benefit. Auctions for the 2008-09 Karnataka crop cultivated by 50,000 growers is expected to begin in September. The authorised crop for Karnataka was increased to a record 100 million kg in the coming seaso. Andhra Pradesh���s authorised crop-size for 2008-09 will be fixed soon. In 2007-08, it was 158 million kg.
Apart from the global supply-demand situation, the additional Rs 600 crore realised by growers in Andhra Pradesh on the 2007-08 crop is attributed to the precautions taken by the Tobacco Board, which conducts the auctions.
Precautions were taken to ensure that the major buyers for Indian tobacco could not form a cartel of any kind while bidding at the auctions. The system of allocating bales if buyers pretended to show disinterest at a certain price was discontinued. As a result of these precautions, average prices realised in the recently concluded AP auction touched an all-time high of Rs 84.75 ��� up from Rs 47.47 for the previous crop.
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