Tobacco prices to hike in Andhra Pradesh amidst crop decline in Brazil, Indonesia

Tobacco farmers in Andhra Pradesh are poised to benefit from a significant decrease in crop yield in major tobacco-producing countries such as Brazil, Zimbabwe, and Indonesia, due to extreme weather conditions like drought and unexpected rainfall. Local auction tobacco prices in Andhra Pradesh have skyrocketed to near-record levels and are expected to rise even further in the upcoming weeks.

At present, prices have hit Rs 280 to Rs 290 per kg and are predicted to cross Rs 300 per kg, marking a 30% increase from what farmers initially anticipated. The sudden surge in auction prices has been driven by the entry of local and small-scale players placing competitive bids.

Even though there are worries about potential difficulties arising from production exceeding the Indian Tobacco Board’s target of 140 million kg, Andhra farmers stand to gain, with the board forecasting total production to hit between 160 and 170 million kg.

Trade experts link the price increase to crop damage in Brazil and Zimbabwe. Brazil’s production fell to 440 million kg from a projected 550 million kg, while Zimbabwe’s yield reduced to approximately 245 million kg from an anticipated 300 million kg. Indonesia, another tobacco-growing country, has experienced crop failures due to drought. China, another key producer, has imposed export restrictions on tobacco to protect its domestic cigarette industry in light of global stock shortages. This move has further escalated price increases in tobacco-growing nations.

It is expected that the demand-supply imbalance is likely to keep the rise in tobacco prices going for another year in Andhra Pradesh. Indian growers are set to gain from this, local players have stepped up their involvement in auctions to seize opportunities in the international market.

Stay tuned to Yo! Vizag website and Instagram for more city news updates.