Tobacco auctions in Andhra Pradesh are likely to commence from the first week of March and arrangements are being made to open auction floors in phases, according to Mr Kamalavardhana Rao, the Chairman of the Tobacco Board here. Speaking to Business Line here on Wednesday, he said the crop outlook in Andhra Pradesh was quite good this year and “there is not likely to be any surplus. The authorised crop size in the State is 158 million kg and the crop may be around 160 million kg, which is quite acceptable. Farmers have heeded to the request of the board and exercised discipline.”

However, he said, there was some crop damage in Nellore and Prakasam districts in 5,000 hectares or so due to winter rains.

“We have written to the Ministry to provide relief to the farmers. In accordance with norms, we will make arrangements for rescheduling of loans and other relief measures. In the other areas, especially in the northern light soils of West Godavari district, the crop is very good.”

Referring to Karnataka, where the auctions are going on currently, he said that so far roughly 70 million kg of tobacco had been sold on the floors in that State at an average price of Rs 95-97 per kg, which was Rs 3-4 more per kg than last year.

Roughly, 30 million kg more would have to be sold and the auctions in the State may conclude by the end of March, he said and added that farmers in the State had no cause for complaint.

In response to a question whether the same trend would continue in AP and farmers could expect a good price on the floors, especially as there was no surplus, Mr Rao said the board would always strive to secure remunerative prices for the farmers, but “it does not depend on a single factor”.

GROWERS’ VIEW

In another statement, Dr Y. Sivaji, the honorary president of the AP Tobacco Growers’ Association, said the Tobacco Board should make all efforts to open auction floors in Andhra Pradesh as soon as the crop is ready and there should not be any delay on account of Karnataka, as otherwise the farmers in the State will lose heavily. He said the association had made an appeal to the Tobacco Board to that effect.

He alleged that during the past few years the tobacco trade in India had got into the bad habit of buying crop straight from the auction floor and exporting it.

“Tobacco auctions in AP and Karnataka keep alternating, and throughout the year auctions are going on in one State or the other, as tobacco is a monsoon crop in Karnataka and a late kharif or early rabi crop in AP. It suits the trade very well, but the farmers in both States are losing. The trade is not maintaining any inventory and only after securing export orders it buys from the floors. Even the inventory costs are passed onto the farmer,” he said.

He said FDI should be allowed in tobacco processing sector for farmers to get their due, and he had made an appeal to the Union Government.

TOBACCO reaping is now at an advanced stage in Manicaland, amid reports that most farmers are harvesting proper leaves of the largely ripe irrigated crop. Agritex head for Manicaland, Mr Godfrey Mamhare, on Wednesday confirmed that tobacco harvesting in the province, which started mid-December was at an advanced stage. The crop was planted in October. He said harvesting for the dryland was expected to start mid-February. Mr Mamhare added that farmers with the dry-planted tobacco crop must concentrate their efforts on weed and pests control, suckers and toppings removal to ensure maximum crop health.

Mr Mamhare revealed that Manicaland planted 10 254ha of tobacco compared to 9 000ha last season.

“The condition of the crop is very impressive. We have one of the best tobacco crops in the country and we want to advise our farmers to continue taking maximum caring of the crop to get the best out of it.”
Mr Mamhare said the bulk of the best crop was in Makoni District which accounts for 7 794ha.
Mutare has 1 181ha; Mutasa 432ha; Nyanga 99ha; Buhera 19ha; Chiping 17ha and lastly Chimanimani with 12ha.

Buhera has hit the 23 000 hectare mark of maize compared to 11 000ha last year, the third in the province after Chimanimani (86 000ha) and Makoni 51 123ha.
“Makoni is the top district in terms of planting; and we want to urge our farmers to avoid mixing the leaves from different stages. Primings, lungs, proper leaf and tops must never be mixed at any stage, be it during the curing process or storage.

“This is to avert grading complications as well as to improve the quality of the leaves during the curing process,” explained Mr Mamhare.
He said about 52 tobacco farms whose curing is solely dependant on electricity were grouped into four clusters, namely Headlands, Rusape, Nyazura, Odzi-Nyamazura and Odzi-Grange so that power outages in these areas are minimised.

However, Mr Mamhare warned other farmers of the danger of cutting down trees to cure the golden leaf.
He said farmers must resort to other sources of fuel like coal, electricity or plantations that do not accelerate land degradation and deforestation in their respective communities.
Tobacco farming is synonymous with serious environmental damage as thousands of hectares of forest are cut down each year for the tobacco industry.

Substantial amounts of wood are used for fuel in tobacco curing, drying the leaves of the plant.
In some dry climates, it is possible to leave the curing to the elements, but in Zimbabwe wood-burning is mostly used.

“We do not want to see a situation where plenty of forests and woodlands are cut down to cure the tobacco crop. Farmers must use coal or electricity for their curing purposes, and not indiscriminately cut down indigenous trees. We must conserve our forests and farmers whose barns are designed for woodfuel must buy timber from forestry companies and spare the indigenous trees,” said Mr Mamhare.

Tobacco farmers usually prefer indigenous trees like Mutondo, Mupfuti, Musasa and Muunze trees, which have become endangered species.
The farmers prefer woodfuel because it is cheap and readily available in their communities without taking cognisance of the ecological consequences of their actions.

Tobacco growers breathed a sigh of relief as they returned to their crops after the much-awaited announcement of tobacco support price. Sentiments of hesitation and uncertainty about the returns raced amongst growers, which hampered the finalising of tobacco contracts between farmers and the companies. The announcement is expected every year towards the end of October. However, CY11 saw a delay of over a month as the authorities were striving hard to reach a price with the consensus of all stakeholders – the farmers, tobacco exporting and manufacturing companies, and the Pakistan Tobacco Board (PTB).

The minimum support price of Rs117/kg Virginia tobacco which is the most commonly produced type of tobacco in Khyber Pakhtoonkhwa, saw an increase of about 13 percent compared to last year.

It is meant to provide relief primarily to the farmers against the low side fluctuations in price.

.

But is this price enough? Firstly, the announcement had a disappointing effect to some extent as the prices were below the expected Rs200-250 per kg.

Though the support price this year is higher than last year, and has registered a growth of 13 percent, the increase is insufficient to absorb the rising cost of raw material, inputs and technology.

A second damper to the positive effects of tobacco support price is the strong advice of PTB to the farmers to cultivate only the recommended variety.

Khyber Pakhtoonkhwa accounts for 98.9 percent of total tobacco crop production in Pakistan and 80 percent of the yield is of non-recommended variety (NRV).

PTB has also urged the growers to not cultivate any crop without entering into a contract with the tobacco exporting and manufacturing company.

This is primarily to create a balance between supply and demand.

This is one issue that the industry has been facing as farmers do not enter into contracts with the companies and produce excess supply leading to depressed prices.

In order to induce farmers to grow the recommended hybrid variety amid the rising cost of raw materials and input, prices heftier that these would be much appreciated.

While the market waits to see the real effects of the new support price, it seems that a higher price is the only way to stop the farmers from producing NRV as companies continue to enter into sales contract with the farmers.

PHILIP MORRIS Fortune Tobacco Corp. (PMFTC) is mulling an expansion of its plantations in the Visayas, the first foray into the region for the industry. “We are looking at the possibility of expanding our growing here. We are thinking of Visayas, such as Bacolod and Bohol. It would be a first, for a tobacco company to go to Visayas,” PMFTC President Chris Nelson said in a media briefing yesterday. The company is also looking at new areas in Mindoro, beyond their existing plantations there.

Mindanao, however, is not in the immediate plans despite its “great potential for agriculture” since security, peace and order remain key considerations, he explained.

The possible expansion will likely be seen next year as PMFTC is still studying the suitability of the soil and the climate in the identified areas.

“We are also still surveying the number of farmers who want to plant tobacco, so we don’t know the exact hectarage yet. But we will need a contiguous area to make it more commercially viable,” Mr. Nelson said.

While the expansion is still in the planning stage, PMFTC enjoys “great support” from Congress and the local government units. Most of the company’s tobacco plantations are in Ilocos and Isabela in Northern Luzon.

On a related note, Mr. Nelson reiterated PMFTC’s opposition to renewed moves to reform the excise tax regime on “sin” products like tobacco and alcohol, after it was identified as a priority measure by President Benigno S.C. Aquino III.

“Roughly 2.7 million people derive employment from the tobacco industry. An increase in taxes would have a devastating impact on them and the economy,” he explained.

The current proposals in Congress aim to impose a single rate of about P30 per pack of cigarettes. This could eat into the demand for tobacco and consequently, the demand for tobacco leaves purchased from farmers, Mr. Nelson said.

The PMFTC chief also cast doubt on the plans of the Finance department to earmark part of the “sin” tax revenues to help tobacco farmers shift to other crops.

A department-backed sin tax measure is seen to yield P60 billion in revenues for the government, a portion of which is planned to shore up the health budget.

Unlike many other businesses, Tobacco farmers can’t blame the economy for their woes. Tobacco brings in about $5,000 per acre compared to corn at about $500 per acre. If local farmers could, they’d probably only grow tobacco. The only problem is, no one would buy it. Doug Wilson, UK’s Agriculture Extension agent said, “These guys all have contracts with the tobacco companies. They know before they set this tobacco out what their selling price is going to be, if they meet the grade.”

Domestic demand for tobacco has basically plateaued over the last ten years. While demand has increased overseas, so has supply, causing local farmers to grow less.
“We got a lot of demand out of Asia now, China and other developing countries,” Wilson says.
And that demand gives farmers the hopes of even bigger crops next year.
“We can’t control the habits of people in other parts of the world and if they want to smoke cigarettes, they want to chew tobacco, we are going to produce it for them,” he said.
Producing tobacco, for whomever wants it and helping out the local economy, too.
“They hire people. They spend money and if they spend money for equipment, fertilizer, chemicals, that money goes into the community,” Wilson said.

As the American tobacco industry has fallen with the overwhelming evidence of smoking’s negative health implications, the rise in international tobacco production competition, the mounting social taboo of smoking, as well a shift away from the government’s Depression-era tobacco quota system of subsidies, tobacco farmers have had to come up with new ways to earn a living. This situation has, ironically, constructively contributed to the sustainable agriculture movement, causing some tobacco farmers to convert their land and livelihoods into more sustainable enterprises that move away from growing tobacco.

Sami Grover of Treehugger framed the transition for tobacco farmers in a positive light concluding, “…it seems that the crises faced by many traditional agricultural sectors are also an opportunity for innovation. Given the potential for agroecology to increase global food production, it seems that the notion of ‘get big or get out’ is starting to feel a little out dated. ‘Get nimble, or get out’ might be more appropriate.”

Organizations like the Rural Advancement Foundation International (RAFI-USA) has played a significant role in facilitating this very type of innovation. Take for example, the previously tobacco-centered farming community of Rockingham County, NC, which has come up with creative solutions that foster more enduring, sustainable local businesses that provide a substitute to tobacco production.

Many farmers there have received assistance from RAFI’s Tobacco Communities Reinvestment Fund (TCRF), a program that helps farmers build alternative sources of agricultural income via cost-share grants. The goal, they say, is to “keep farmers in farming.” North Carolina farmers are eligible for $10,000 individual grants or $30,000 collaborative farmer project community grants. Priority is given to initiatives that offer opportunities for a new generation of farmers as well as those who made income from tobacco during the time of the Master Settlement Agreement.

Piedmont Local Food (PLF) has been in partnership with RAFI through their TCRF program for two years, working as an online farmers market that brings in local growers and creates new markets such as restaurants and buying clubs for these farmers to sell their goods.

One NC farmer who received a TCRF community grant was Paul Marshall of River Birch Vineyards, who organized the Triad Fruit Growers and set up a processing facility for local fruit producers to make juices and value-added fruit products to sell on the local market.

Worth Kimmel of Pine Trough Branch Farm, was a recipient of an individual grant and used the money to install a solar powered pump and fencing system that aids the rotational intensive grazing of his cattle.

The USDA’s Tobacco Transition Payment Program, also known as the “tobacco buyout”, which started in 2004 pays tobacco producers and quota holders through 2014 to transition to other agricultural production or out of the tobacco industry (these payments don’t come from taxpayer dollars, but rather from tobacco manufacturers and importers).

Tobacco auctions on 11 floors in Prakasam district have been disrupted as farmers have kept away, but auctions are continuing on nine floors in other districts, according to Mr C.V Subba Rao, the Executive Director of the Tobacco Board. Farmers did not want to participate due to low prices. He told reporters here on Tuesday that efforts were being made to resume transactions. “We are in touch with the trade and we have explained the point of view of the farmers to the trade as well as the peculiar circumstances which led to the crisis in the district.”

“Heavy rains in the district damaged the crop twice and farmers had to go in for plantation twice. It increased the cost of cultivation and the yields had also gone down, compounding the problem. To an extent, the leaf chemistry was also affected,” he said.

He said that in view of these problems, the Tobacco Board had requested the trade to support the farmers. “We are awaiting the response of the trade. Meanwhile, the State Government has also released Rs 20 crore to two co-operatives to enter the market and shore up the price level,” he said.

Mr Rao said that the trade had submitted that export orders had not been received till now and therefore the situation in the international market was not very encouraging. He said 57.71 million kg of tobacco had so far been sold on the floors in Andhra Pradesh at an average price of Rs 112.19 a kg against 91.17 million kg during corresponding period last year at an average price of Rs. 98.63 a kg.

Mr Subba Rao said that on the whole the situation was not as gloomy as projected, but there was definitely a problem in Prakasam district. “We are making all efforts to resolve it and bring some relief to the farmers in that district hit by natural calamities,” he said.

Meanwhile, Mr Kandula Narayana Reddy, legislator from Markapur (Ongole), has launched a hunger strike along with some other farmers in Podili, demanding remunerative prices for tobacco farmers. “The Tobacco Board promised farmers that they would get Rs 124 a kg. But they were getting just Rs 90-93, far less than the cost of production,” he told Business Line over phone from the dharna site.

“We have asked the Board to help cooperative societies to buy tobacco in order to encourage competition in tobacco purchases. But they sanctioned Rs 10 crore for this purpose, which is inadequate.

The Board should use the Rs 250-crore fund it has under its disposal to stimulate competition,” he said.

In the absence of competition, corporate houses were unilaterally fixing prices, leaving the farmers in losses.

A father of a friend is dying of lung cancer. He remembers the bad old days when tobacco manufacturers used very persuasive advertising to get people, some of them youths, to smoke. An elegant car, well-dressed man, a pretty lady, lights of the city, a cigarette in the mouth! He wishes fervently he had not fallen for that glamour. Things have now changed. Now cigarette companies, as a rule, never promote or encourage young (or indeed older) people to consume tobacco products.

Tobacco advertising is widely banned, and manufacturers have fallen in line. Indeed on cigarette packets dire warnings are printed, pointing out that smoking can kill. Thus those who choose to smoke are well aware where their choice can lead.

But there are, as is always the case, various stakeholders involved. Here, governments and their treasuries, tobacco farmers and their families, and the tobacco companies. All need a fair hearing regarding issues concerning the industry, particularly regarding regulation. Farmers, for example, are acquainted with safety measures by the companies they partner, and who provide the required protective gear.

Also, for example, using child labour is heavily discouraged, as is the use of natural forests for fuel. Over the past decade or so, farmers have enough wood fuel by planting their own trees, aided mainly by tobacco manufactures.

As the world celebrates No Tobacco Day on May 31, the farmers and their dependants face a big threat to their livelihoods as activists call for ever stronger restrictions on the industry. Some of the concerns are valid, but they must be balanced with the legitimate need for farmers to look after themselves and their families.

I am a non-smoker. But having worked for a quarter century as a Board Director of British American Tobacco, Uganda, I am fully witness to the improvement in their daily bread of those 30,000 farmers and their families, with which BAT works as partner.

I have visited all the main growing areas and seen with my own eyes. Let us apply fair balance.

You can order cigarettes from the best European tobacco shop online. Just buy cigarettes that you like.

Half a dozen disgruntled tobacco farmers blocked shipments from leaving a Tillsonburg processing plant Thursday, demanding they get paid $6.6 million before they allow it to leave. Despite the word of True Blend tobacco company co-owner Grant Sanders, who claims the farmers are being paid, four farmers sitting in trucks outside the Highway 3 plant claim they haven’t received a cent since Sept. 23, 2010.

“We haven’t been paid by True Blend,” said one of the farmers, who refused to give his name.

He said the 64 farmers owed millions of dollars for supplying tobacco should have been paid within five days of delivery, but nearly five months later they’ve seen none of the money.

The farmer and his peers said they have no idea why they haven’t been paid.

“That money has gone somewhere, but we don’t know where,” he said. “Money has been made on the sale of our tobacco, but none of it has reached us.”

Since last fall, at least a few of the farmers owed by True Blend have showed up at the plant on a near daily basis to demand payment.

On Thursday, they told the drivers of two trucks about to leave the plant with a load of processed tobacco to stay put.

“None of them are leaving until we get our money,” said the farmer as he smoked a cigarette in the driver’s seat of a silver truck.

Behind them, at the north end of the large white processing plant, a tractor trailer sat idling, apparently respecting the farmers’ wishes.

Another farmer pointed to another trailer sitting at the edge of the wet, muddy lot outside True Blend. He said the truck is full of tobacco, but left there as a result of their protest.

Contrary to rumours circulating in the community, the farmers say there was no physical altercation that took place during their day-long blockade of the plant.

“We know some of the people who work here,” said a farmer in the backseat. “We’re not after them. They’re just workers. We just want to get paid.”

The farmers say they told the workers not to load another trailer, a demand they supposedly honoured.

“No one wants to cross an imaginary picket line,” said the first farmer.

The tobacco growers insisted they will be back on Friday unless they get paid.

“We’re screwed if we don’t get paid,” he said.

Meanwhile, in an interview on Wednesday, Sanders claimed the “farmers are getting paid” on behalf of his True Blend co-owners Brian Poreba and Victor Osztrovics.

While the operation has faced technical and financial hardships this past season, the facility is now up and running, Sanders said. He claims that millions of dollars have been paid out so far.

However, True Blend growers were told to seek legal counsel during a special meeting held by the Ontario Flue-Cured Tobacco Marketing Board on Monday, according to chair Fred Neukamm.

The impacted growers may decide to collectively launch a lawsuit to recoup some of their losses.

The new contract system has tied the hands of the tobacco board. Under the new system, individual contracts are struck up between each buyer and each grower, Neukamm explained. This limits the ability of the board to collectively represent growers when contracts go awry.

While the board has a performance bond with the buyer, some farmers may not be interested in cashing it. The reportedly $2 million bond would hardly put a dent in their losses, farmers said. Cashing it could also supposedly pose problems for the company.

“It is widely believed that it would cause insolvency and bankruptcy,” Neukamm said.

When asked if True Blend is facing bankruptcy, Sanders denied the claim.

“Absolutely not,” he said. “They (True Blend) have tremendous equity coming in on time.”

Neukamm wouldn’t confirm if True Blend has applied for licensing for this coming season. However, he said that it was “very unlikely” that any buyer who failed to meet its commitments from a prior year would have its licence renewed.