AP CM presses ITC, Godfrey Phillips, VST to resume tobacco buying amid surplus glut

CM Naidu urged 28 companies to accelerate procurement against a 142 million kg crop versus just 95.50 million kg indented, insisting prices hold above the ₹200/kg MSP. The oversupply squeeze puts pressure on major buyers ITC, Godfrey Phillips India and VST Industries.

— Source publishedThu, 9 Jul, 2026, 20:20 IST·First seen Thu, 9 Jul, 2026, 20:32 IST·Source The Hindu BusinessLine

What happened

ITC Limited · AP CM Naidu urged tobacco companies including ITC, Godfrey Phillips and VST Industries to resume purchases amid oversupply, criticising slow

Key facts

  • MSP ₹200/kg
  • 28 companies
  • 95.50 million kg indents
  • 142 million kg produced

Why this matters

Sustained oversupply and state-mandated procurement could reshape leaf-sourcing economics, signaling potential for contract renegotiation or supply-agreement restructuring among the 28 buyers.

What to watch

  • Auction realization prints relative to ₹200/kg MSP
  • Any formal buying-quota commitment from the three majors
  • Farmer agitation or protest signals in AP tobacco belt
  • Tobacco Board/state intervention-purchase announcement
  • Export demand shifts that could absorb surplus leaf
  • ITC, Godfrey Phillips, VST issue measured statements citing quality-linked procurement rather than blanket commitments
  • Tobacco Board mediates buyer-grower auction schedules to stagger surplus release
  • State government signals possible support-purchase mechanism to backstop MSP
  • Companies quietly recalibrate FY procurement budgets and inventory carry costs

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