The global financial meltdown has hit all industrial and farming segments in India, except the tobacco industry. Indian tobacco prices touched record levels, following sudden surge in exports on the back of rising demand for the commodity in the world market at a time when global tobacco production is declining at alarming levels. ?Tobacco farmers in India are set to double their revenue in the current season,? said BV Javare Gowda, member, Tobacco Board.
During the on-going auctioning season, the most popular Flue Cured Virgina (FCV) variety of tobacco on an average fetched Rs 110 per kg, up by 89% from Rs 58 a kg a year ago. The highest price for the high-grade FCV was quoted at Rs 150 a kg compared to Rs 68 a kg. Among the total tobacco production of 680 million kg in India, the FCV variety accounts for around 275 million kg and contributes considerably to forex and excise earnings. Around 50% of the FCV tobacco produced is consumed domestically, while the rest is exported to more than 100 countries.The FCV tobacco is only cultivated in Karnataka and Andhra Pradesh.
?Last season, farmers in Karnataka sold 88 million of FCV tobacco for around Rs 480 crore,? Gowda said. ?This season, they are expected to auction around 100 million kg of tobacco which is expected to fetch around Rs 1,100 crore. So far the farmers sold around 90 million bags, raking in a bumper revenue of Rs 1,000 crore in the current season,? Gowda added. ?Andhra Pradesh, which is all set to market 175 million kg in the auctioning season that starts in February, is expected to see the same kind of revenue flowing in as world tobacco production declined by 30%-40%,? Gowda explained.
According to statistics available with the Tobacco Board, in terms of quantity Indian tobacco exports increased by 13% to 1,73,484 tonne in the first nine months of 2008-09, from 1,53,991 tonne exported in the same period a year ago. Foreign exchange fetched through tobacco exports in the same period surged by 61% to Rs 2,428 crore from Rs 1,508 crore in the previous year. Un-manufactured tobacco exports surged to 1,53,064 tonne from 1,33,941 tonne while exports of tobacco products stood at 20,420 tonne, up from 20,050 tonne.
Indian tobacco has been fetching premium value in the world market following the worldwide decline of tobacco production, primarily in the European markets, following World Health Organisation (WHO)-sponsored Framework Convention for Tobacco Control (FCTC) taking steps to reduce tobacco cultivation worldwide. Global tobacco companies like British American Tobacco, Japan Tobacco, Philip Morris International and Imperial Tobacco, along with domestic companies like ITC, Godfrey Philips and Vazir Sultan buy Indian tobacco.
Among other regions, western Europe ranked first in procuring Indian tobacco by importing 51,000 tonne of un-manufactured tobacco in the first nine months of 2008-09, followed by eastern Europe at 23,331 tonne, the Middle East – 10,600 tonne, south and southeast Asia – 38, 762 tonne, Africa – 17,532 tonne, north and south America – 9,755 tonne and Australia – 2,084 tonne.
Among tobacco products, India exported 5,820 tonne of cigarettes, 542 tonne of beedies, 4,900 tonne of hookah tobacco paste, 5,356 tonne of chewing tobacco and 3,716 tonne of cut tobacco.