PTB announces minimum price of tobacco crop at Rs 121/kg
04 August, 2012
ISLAMABAD: Pakistan Tobacco Board (PTB) announced the minimum price of tobacco crop at Rs 121 per kilogramme (kg).
The key issue whether the PTB, which works under the supervision of the Ministry of Commerce (MoC) followed due process of law while taking this decision.
The crucial issue was placed before the National Assembly’s Standing Committee for Commerce and proposal discussed by some members in the Committee was that government should consider using the revenue generated through cigarette manufacturers to provide subsidies to tobacco farmers.
The members of the Committee heard relevant parties and their points of view. Some members expressed concern due to mis-management many economic sectors in the country were either going under (Railways, Pakistan Steel, PIA) or investment was fast shifting abroad (textile). This was leading to further unemployment in the country, which was fuelling public unrest.
The issue of increasing price of tobacco crop was also discussed at length. It was, however, pointed out that in the last 2 years exports of tobacco crop had increased by 300 percent.
These exports were increasing because prices of Pakistani crop are competitive in international markets, adding exports were helping the farmers, as they were able to earn livelihood not only through domestic sales but also through exports.
Currently the price of tobacco crop in Bangladesh is Rs 106 kg. The minimum price of Pakistan tobacco crop is Rs 121 kg, whereas the market price is nearly Rs 140 kg. Any further price increase would jeopardise any chances of tobacco farmers earning livelihood though exports of tobacco crop.
The matter of domestic demand of tobacco crop was also discussed. It is pertinent to note that tobacco is the only crop in Pakistan in which price is required by law never to go below the price paid last year.
The actual market price currently in the market place is around Rs 140 kg, depending on quality of the crop. In some cases, the price even goes beyond Rs 145 kg. Hence, the interests of farmers were well protected by the legal mechanism put in place.
Multiple fora looked at the matter in depth. These included senior officers within the MoC followed by the Minister of State for Commerce himself who held detailed meetings with all stakeholders involved in the matter.
During last five years, the prices of tobacco crop increased upto 100 percent. If price of tobacco crop was increased any further, domestic demand for the crop would also decrease, thereby hurting, instead of protecting, the interests of the farmers.
Thousands of farmers grow more than 100 million kg of tobacco crop in Pakistan, which generates income of more than Rs 11-12 billion for them annually.
Some of the regional economies in the country are dependent on tobacco growing, generating vital cash crop in some of those areas, which are worst affected by the war on terror. In such places it is the only means of livelihood for thousands of people.
The revenue of Rs 75 billion annually generated by federal government through taxes on cigarette manufacturers. Even a minuscule amount out of these millions of dollars collected through taxes could go a long way to help subsidise the farmers and reduce their cost of production and thus increase their incomes.
At each of these fora it was found the PTB followed all the relevant rules and procedures at the time of determining the minimum price of tobacco crop.