Tobacco

Marketing
  • The first attempt to develop scientific system of marketing of agricultural produce in the country was initiated with the passing of the Agricultural Produce (Grading and Marking) Act, 1937. simultaneously, the Tobacco Grading and Marketing Rules were also framed and notified.
  • With a view to ensuring quality of Indian tobacco exported to foreign markets, the Govt. of India in 1945-46 prohibited the export of important varieties of tobacco unless it was graded and marked under the Agmark seal and in accordance with the standards laid down in the Tobacco Grading and Marking Rules, 1937 and was certified to that effect by the Agricultural Marketing Adviser to the Govt. of India.
  • Thus, the grading and Agmarking of tobacco for export purposes became compulsory since 1945-46. The pre-shipment inspection of graded tobacco is done by the Directorate of Marketing and Inspection.
  • With a view to prevent unhealthy competition among the exporters, the Govt. of India introduced in 1963 the system of fixing minimum and maximum export prices for certain varieties of tobacco including Virginia tobacco.
  • The system of fixing ceiling prices was, however, withdrawn in 1965.
  • The minimum export prices for tobacco are notified every year by the Ministry of Commerce, Govt. of India.
  • An exporter is not allowed to sell in the export market any grade of tobacco below the minimum price fixed for that grade.
  • The price certificate which has to accompany each export consignment is now issued by the Tobacco Board, a statutory organisation set up under the Ministry of Commerce.
  • Prior to 1984, the marketing of tobacco was monopolised by the private trade and industry.
  • The growers used to take their tobacco to the buying points of private companies after curing, in katcha graded from, which had no scientific basis and the offers made by the buyers almost used to be final.
  • The growers were helpless and they could not take their tobacco elsewhere on account of additional transport and handling cost. Under such marketing system, there was hardly any competition among the buyers.
  • The farmers were at a disadvantageous position and consequently they were unable to reap the full benefits from their crop.
  • However, significant improvements have been introduced in the marketing of tobacco during the last decade.
  • For Virginia tobacco, production and marketing have been statutorily regulated by the Tobacco Board established by an Act of Parliament under the Ministry of Commerce which started functioning with its headquarters at Guntur (A.P) from 1.1.1976.
  • The main functions of the Board are regulation of production of Virginia tobacco, ensuring fair and remunerative prices to the growers, maintenance and improvement of existing markets and development of new markets for Indian tobacco outside the country.
  • A significant breakthrough in marketing reforms was achieved by the Tobacco Board with the introduction of auction sale of V.F.C. tobacco first in Karnataka followed by Andhra Pradesh during 1984-85 crop season.
  • The rules and regulations governing the procedure of auction system include inter alia standardisation of grading V.F.C. tobacco at the farm level, payment to growers within a stipulated time and announcement of minimum support prices.
  • For auction sale of V.F.C. tobacco, the Board has established 20 auction platforms in Andhra Pradesh and 7 auction platforms in Karnataka in different centres of V.F.C tobacco producing areas.
  • It has also been made obligatory on the part of the growers to grade their produce as per standard grades introduced by the Tobacco Board i.e. plant position grades for light soil tobacco and farm grades for black soil tobacco details of which are given and sell it in the auction yards of the Board.
  • The growers tobacco received in properly graded from is sold in the auctions to the highest bidder.
  • For the purpose of starting the bid and for purchasing of left over stocks, if any, by the Tobacco Board, Minimum Support Prices (MSP) for various grades of VFC tobacco are notified every year well in advance of the marketing season.
  • The Govt. of India in the Ministry of Commerce announces every year the minimum support prices based on the recommendations of the Commission of Agricultural Costs and Prices for the two basic grades of F2 grade of black soil tobacco and L2 grade of light soil tobacco.
  • Based on these prices, minimum support prices for other grades are fixed by the Tobacco Board taking into account the normal market price differentials between the grades and announced well in advance of the season.
  • Since 1988-89, the Tobacco Board has introduced the concept of minimum guaranteed prices (MGP) under which system the traders will indicate before plantation, the MGP they will be willing to pay to the growers for VFC tobacco in the ensuring auctions.
  • The minimum guaranteed prices are higher than the minimum support prices and are remunerative to growers. The MGP is applicable for a normal crop.
  • However, this is only a gentleman's agreement which does not have any statutory backing.
  • Payment of sale proceeds of VFC tobacco is made to the growers as stipulated in Regulation 26 of Tobacco Board Regulations i.e the sale value of VFC tobacco is paid by two post dated cheques.
  • The introduction of auction system for VFC tobacco has been welcomed by the growers as well as traders, exporters and manufacturers. Besides fetching the best possible price to the growers, the auction system of sale facilitates prompt payments to the growers for their produce.
  • It has proved to be generally good and benefical to the growers in all respects

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