Mumbai: India’s tobacco exports are likely to rise 12% o a record 251,000 tonnes in 2009-10 as farmers expanded area under the leaf crop to cash in on higher prices, a senior government official said on Friday.

“There is surplus tobacco in India right now compared to last year. So surplus can go to export market only, because domestic market can not absorb it,” J Suresh Babu, chairman of the Tobacco Board, said.

“We are estimating 12% growth in volumes,” he added.

In 2008-09, the country had shipped 224,404 tonnes of tobacco. India is the second biggest producer of tobacco after China and the fourth-biggest exporter of unmanufactured tobacco.

“In value terms growth would be marginal. Exports realisation is coming down,” Babu said.

“Supplies have improved from all major producers ... international market is trying to cut down Flue-cured Virginia (FCV) tobacco price. In first three months of 2009-10 average export price was $4.2 per kg compared to last year’s $4.7 ,” he added.

In 2009-10, tobacco exports in value term may rise to $750 millon compared to $736.94 millon a year ago, he said.

The country’s output of FCV, a premier grade tobacco used for cigarette-making, in 2008-09 is likely to top 314 million kg, up 24.6% on year, as higher prices prompted farmers to increase acreage above stipulated limits, he said.

Tobacco Board issues licences to farmers to cultivate FCV, mainly produced in the southern states of Karnataka and Andhra Pradesh.

The average price of the FCV in Andhra Pradesh platform has risen to Rs107 ($2.2) per kg from Rs84 a year ago.

“Prices are very good so farmers are tempted to go for tobacco. This negative thing is also happening.... next year (2009-10) we can see higher output,” Babu said.

The Indian government is trying to reduce area under the crop in line with developed countries to cut tobacco consumption.

Out of total output of FCV, India is likely to export around 60% in 2009-10, while the rest is consumed at home, Babu said.

Global tobacco companies British American Tobacco (BAT), Japan Tobacco Inc., Philip Morris International and Imperial Tobacco Plc are the main buyers of Indian leaf.

Reports are indicating that Japan Tobacco is reluctant to buy at higher levels but BAT has increased its purchases from the country, he said.

ITC, Godfrey Phillips India Ltd and Vazir Sultan Tobacco are leading Indian buyers.