AP tobacco auctions face uncertainty as Karnataka crop cut signals weak demand

Guntur: Responding to a slump in both global and domestic markets, the Tobacco Board has trimmed Karnataka's authorised crop size to 90 million kg for the upcoming season, down from 100 million kg last year. The move comes amid falling prices in ongoing auctions and mounting concerns over demand.Prices in Karnataka auctions have already dipped nearly 15% over the past two weeks, prompting serious deliberations within the board. At a governing council meeting chaired by Yashwanth Kumar Chidipothu, members described the crop cut as a "guarded decision" after extensive discussion.Board directors weighed farmers' representations, trade indents, stock levels, and the broader global tobacco outlook before finalising the 90 million kg figure. "It is a guarded decision in view of prevailing market conditions at both global and domestic levels," Yashwanth Kumar said, stressing caution to prevent a deeper price crash.Market anxiety is further compounded by expectations that Andhra Pradesh stocks will begin arriving in significant volumes next month. With auctions there scheduled to start in March, apprehensions remain that prices could soften further if supply outpaces demand.Adding to the pressure is the Centre's recent steep excise duty hike on cigarette manufacturing. Traders have turned cautious, anticipating reduced consumption and weaker leaf demand. Industry sources said the revised duty framework has already pushed buyers onto the back foot.Karnataka's tobacco crop, traditionally regarded as premium quality, usually commands higher prices in domestic and export markets. But the recent downward trend has raised alarm. "If Karnataka's premium leaf itself is not drawing adequate demand, Andhra Pradesh could face a serious crisis next season," a senior Board official warned.The meeting, attended by board executive director Viswasree, director (auctions) BC Srinivas, and other senior officials, focused on safeguarding farmer interests while ensuring market stability in an uncertain global environment. MPs Putta Mahesh and K Lakshman joined virtually.