The commerce minister Ramkrishna Hegde had taken this decision in response to representations received by the ministry from the Chief Minister of Andhra Pradesh and members of Parliament representing tobacco growers. It was brought to the notice of the minister that prices of tobacco at the auction platforms have come down precipitously causing great loss to the farmers.

The government is also exploring possibilities of increasing tobacco exports to Russia under debt repayment route. The Reserve Bank of India (RBI) has also been asked to advise banks to extend additional credit to manufacturers and traders of tobacco to help them continue their purchases till the export situation improves.

Cigarette manufacturers, who are the majortobacco producers, have also been asked to fulfil their commitment given to the Tobacco Board at the beginning of the planting season. Recently, there has been an alarming slide in tobacco prices at the auction centres in Andhra Pradesh, with average prices falling below Rs 40 a kilogram.

This had prompted the farmers to give a call for boycotting the auction floors if no market intervention was implemented. Andhra Pradesh Rythu Sangham general secretary V Srinivas Rao had recently at a press meet stated that if the prices were not remunerative, farmers would desist from planting the crop.

Thus, it was for the trade to arrive at an accurate and honest assessment of international requirements, give out correct projection and stick to the commitment on the auction floors. Erratic pricing would not be conducive to inculcate discipline among farmers, he said.

According to the Tobacco Board, 290 lakh kilogram of tobacco had been sold at the 21 auction floors of Andhra Pradesh at an average price of Rs 41.70and 400 lakh kilogram of tobacco in Karnataka at an average price of Rs 33 a kg.

Trade sources said farmers in Karnataka had grown an excess of 150 lakh kilogram against the authorised crop target of 400 lakh kilogram and the surplus was being auctioned on the floors.