The extended tobacco auction in Karnataka concluded across the four platforms in Mysuru earlier this week with the output crossing 106 million kg against the ceiling of 100 million kg.
The auction of tobacco, which had been suspended in March after the lockdown was declared, resumed on May 20. By June 9, the entire quantum of unsold tobacco was cleared. “102.5 million kg of tobacco had been sold when the lockdown was declared. The extended session saw a transaction of another 3.5 million kg of tobacco, taking the total to 106 million kg,” Manjunath, regional manager of Tobacco Board in Mysuru, told The Hindu.
As per the Tobacco Board norms, a penalty of ₹2 per kg and 7.5% of the proceeds of the sale will be imposed for excess cultivation. If the excess tobacco crosses 10% of the authorised quantum, the penalty will be increased to 15% of the sale proceeds. The penalty amount is contributed to the Tobacco Fund.
Mr. Manjunath, however, made it clear that the prices of tobacco remained stable even during the extended session. “The tobacco purchased during the extended session commanded more or less the same price at ₹126.4 per kg,” he said.
Since the extended auction session was restricted to four platforms, three in Periyapatna and one in Chilkunda, only representatives of companies from Karnataka participated. All of them were quarantined, tested and allowed to participate in the bidding only after their results were negative, Mr. Manjunath said.
Meanwhile, president of Karnataka VFC Tobacco Growers’ Federation Javare Gowda said this year’s average price of tobacco was ₹10 less than last year’s ₹136 per kg. Tobacco yield last year plummeted to 93 million kg against the crop size of 99 million kg, keeping the prices stable.
For 2020-21, the Tobacco Board had fixed crop size of 88 million kg in Karnataka, revised from the earlier 99 million kg, in view of the likely dip in global demand for the commodity in view of COVID-19.
Referring to the collapse in prices of tobacco in neighbouring Andhra Pradesh last month, Mr Gowda has urged the farmers to restrict to restrict their produce to the limit fixed by the Board. Farmers in parts of Andhra Pradesh had even resorted to burning bales of tobacco when the prices fell at the auction platforms.
The federation urged farmers in Karnataka to restrict tobacco cultivation to 1,552 kg per license holder so that the total output does not cross 88 million kg and maintain the demand for the commodity in the international markets. More than 80% of the tobacco grown in the State is exported to cigarette manufacturing companies abroad.