India is expected to export a record USD 600 million of tobacco in 2008/09, as a shortfall in global output boosted demand and pushed up prices to new highs.

"Prices have risen about 70 per cent from 2007 and importers are also buying at these levels. At this price, exports will touch USD 600 million (in 2008/09)," J. Suresh Babu, chairman of the country's Tobacco Board, recently told Reuters.
For the year ending March 2008, tobacco exports rose 32 per cent to USD 503 million, he said.
The average price of Flue-cured Virginia (FCV), a premier grade used for cigarette-making, has risen more than 78 per cent to INR 84.67 (EUR 1.26) per kg, from INR 47.47 (EUR 0.71) a year ago.
A shortfall in other major producing countries led to an increase in prices: Not only was the Brazilian crop down some 70 million kg in 2007, but major exporter China was not shipping out tobacco after exporting 100 million kg the previous year. Zimbabwe’s crop has also plummeted.
However, rising exports and higher prices are hurting Indian cigarette makers such as Kolkata-based ITC and Godfrey Phillips India Ltd. "They (Indian companies) have to buy at higher prices along with the exporters. The cost of cigarette manufacturing will go up," said Bellam Kotaiah, president of the Indian Tobacco Association. (pi)