Virginia tobacco auctions remained suspended for the third consecutive day on Saturday as farmers and traders kept away from the market demanding that the GST Council roll back the tax proposed on tobacco leaves and unmanufactured tobacco, at its meeting on Sunday.
“The meeting will be a ‘make or mar’ one for the tobacco sector,” said a group of farmers from the Ongole II auction platform before taking their produce back home.
Farmers in the Southern Black Soil (SBS) and Southern Light Soil (SLS) regions feared that the market would go down if the Centre went ahead with its decision to impose 5% GST on raw tobacco and 28% GST on unmanufactured tobacco.
“Traders and farmers will hold joint meetings in the auction platforms on Monday to chalk out their future course of action,” Indian Tobacco Association (ITA) sources said.
The low grade varieties fetched an average price of ₹90 per kg, which might fall further in the coming weeks in the absence of market support from manufacturers and traders, said Ongole II Farmers’ Association president V.V. Prasad, who was part of a delegation that called on Chief Minister N. Chandrababu Naidu on Friday to impress upon him to use his good offices with the Centre to withdraw the GST.
₹135 per kg needed
“We will not be able to break even, leave alone making profit, if the average price falls below ₹135 per kg this season as severe dry spell adversely affected productivity,” said Ongole I Farmers’ Association president S. Gurava Reddy, who was not so optimistic over the outcome of the meeting with Mr. Naidu. “The Chief Minister promised to ask the Centre to look into the demand,” he added.
“Farmer families are literally in tears without remunerative price for any crop, be it red gram, chilli, or subabul. If the governments show a viable economic alternative to tobacco, we will be happy to switch over,”, Mr. Prasad added.
“We are ready to cooperate with the traders, provided they bail us out this year,” said Ongole II Farmers’ Association secretary P. Venkateswarlu.
Tobacco Board’s role
The Tobacco Board, which regulated the crop size, had the responsibility of ensuring a decent return based on the cost of production arrived at by the Indian Tobacco Research Institute, former board member P. Bhadri Reddy said.
The board, which imposed hefty penalty for excess production, should come to the rescue of the growers when those who had given indents at the time of framing of the crop production policy did not fulfil their commitments later, said a farmer leader from Tangutur auction platform P. Veeraraghava Rao.