Price crash: Anxiety over slow liquidation of tobacco on auction platforms

Tobacco farmers across the region are gripped by anxiety over the slow liquidation of their produce, triggered by a sharp slump in prices and poor demand on auction platforms across the State.

Although the auction season commences in September–October and concludes by March every year, over 24 million kg of tobacco remains unsold on auction platforms in April this year. This is despite a relatively lower output of 85 million kg against the estimated crop size of 100 million kg for the 2025–26 season.

The poor offtake on auction platforms has further added to the woes of farmers, who were already reeling under the impact of the steep fall in prices. Bright-grade tobacco, which fetched as high as ₹320 per kg at the start of the season in October 2025, saw prices dip below ₹250 per kg by February. The decline followed a reduction in procurement by traders after the imposition of excise duty and an increase in Goods and Services Tax (GST) on tobacco products.

While prices of bright-grade tobacco have shown marginal stabilisation, rates for medium- and low-grade varieties have slid further below ₹200 per kg, triggering widespread resentment among the farmers.

“Alongside domestic taxation pressures, global supply has increased owing to a good harvest in key tobacco-producing countries such as Zimbabwe and South Africa,” said Vikram Raj Urs, general secretary of the Federation of VFC Tobacco Growers Association of Karnataka.

In protest against the price crash, agitated farmers have been forcing the closure of auction platforms in several parts of the Mysuru region every now and then.

In response, the Tobacco Board convened a special meeting in Mysuru in the first week of March this year. The meeting was attended by Union Minister for Heavy Industries and Steel H.D. Kumaraswamy, Tobacco Board chairman Yashwanth Kumar Chidipothu, Yaduveer Krishnadatta Chamaraja Wadiyar, Mysuru MP, and Animal Husbandry and Sericulture Minister K. Venkatesh, who represents the tobacco-growing hub of Periyapatna in the Legislative Assembly. However, farmers have yet to realise the prices witnessed at the beginning of the auction season.

Traders participating in the meeting also cited logistical challenges in exporting the tobacco on account of the disruptions in shipping tobacco consignments and disruptions arising from the ongoing conflict in West Asia involving the United States-Israel and Iran.

While the Tobacco Board has assured farmers that the auction season will be extended until the entire stock is liquidated, Mr. Urs indicated that the extension may have to continue indefinitely given the weak global demand.

He noted that tobacco farmers in the region have not experienced such a severe downturn in several decades.

Although the Tobacco Board has reduced the crop target for 2026–27 to 90 million kg from 100 million kg last year, Mr. Urs argued that production should ideally be restricted to around 40 million kg to restore demand-supply balance and stabilise prices.

Despite the bleak outlook, many farmers have already commenced sowing for the next season. “There is an urgent need to sensitise farmers to significantly scale down cultivation. While announcing a crop holiday may not be feasible at this stage, the area under tobacco cultivation should be reduced and farmers encouraged to diversify into alternative crops,” Mr. Urs said.