Tobacco price crash: HDK seeks higher procurement prices; Yaduveer pitches for foreign buyers

Even as Union Minister for Heavy Industries and Steel H.D. Kumaraswamy called upon tobacco traders to raise the average procurement price of the commodity at auction platforms in the State, Yaduveer Krishnadatta Chamaraja Wadiyar, Mysuru MP, made a pitch for inviting foreign buyers to participate in the auctions.

A meeting of the Tobacco Board held in Mysuru on March 2 — in the wake of the recent crash in prices after the Centre increased taxes on tobacco products — was attended by elected representatives, including Minister for Animal Husbandry and Sericulture K. Venkatesh and JD(S) MLAs Harish Gowda and A. Manju, representing tobacco growing regions of Periyapatna, Hunsur, and Arkalgud Assembly constituencies. They put pressure on the traders, represented by ITC Limited, Godfrey Phillips India Limited, and others to increase prices and protect the farmers’ interests.

Mr. Yaduveer urged the board to invite foreign buyers, including cigarette manufacturers from abroad, to participate directly in the auctions to break the “monopoly” of ITC Limited.

ITC Limited, which purchases about 45 to 50% of the total volume of tobacco in the State, had scaled down the quantum of its procurement in February after the Union government announced a tax hike on tobacco products.

Claiming that ITC’s “majority share” in the purchases gives the company the “power to control the market”, Mr. Yaduveer said the board should consider the farmers’ “legitimate” demand to invite foreign companies and create a “balance” in the market. Mr. Yaduveer also asked the board to ensure stability in prices.

Responding to Mr. Yaduveer’s appeal to invite foreign buyers, board executive director Vishwashree made it clear that there was no bar on foreign buyers participating directly in the auctions. The board promised to take necessary steps to involve foreign players in the auctions from next year.

Meanwhile, ITC’s representative at the meeting referred to the imposition of fresh excise taxes on cigarette sticks as well as the increase in Goods and Sales Tax (GST), making cigarettes more expensive and thereby reducing the demand.

The representative urged Mr. Kumaraswamy and other elected representatives to urge the Union government to review the “double” taxation on tobacco products.

Mr. Kumaraswamy sought a formal representation from traders with regard to their demands so that he can pursue the matter with the Centre, but said he is not making any assurance in the regard.

Mr. Yaduveer too emphasised the need for taxation on tobacco products to be reviewed in view of the influx of fake and smuggled cigarettes into the market in large quantities. These cigarettes are available at a cheaper price, defeating the purpose of imposition of taxes.

Tobacco Board chairman Yashwanth Kumar, Sunil Bose, Chamarajanagar MP, Ravi Shankar, K.R. Nagar MLA, and B.C. Srinivas, director (auctions), were present at the meeting.