Setting price for new tobacco crop   
By Tahir Ali 

October 10, 2011


THE Pakistan Tobacco Board has initiated consultations with farmers to determine the cost of tobacco production and its procurement prices for the upcoming year.

Committees, comprising representatives from main tobacco companies, PTB, Agriculture Policy Institute, Crop Commissioner and growers, have been formed to assess and determine the cost of production (CoP) and the minimum tobacco price: the price for surplus tobacco above the purchase target of companies, and weighted average price (Wap) — the legally bound price for the annual tobacco purchase targets of the companies — for the coming year.

Secretary PTB Numan Bashir said that detailed discussions between growers and tobacco companies had been organised in Mansehra and the process was underway in Swabi these days. Surveys and interviews in the Virginia-tobacco-rich districts of Mardan, Buner and Swat will also be organised soon.

The PTB announces the minimum price for tobacco before the start of the cultivation season till December each year. It also calculates on quarterly basis the Wap on the basis of daily purchase reports submitted by tobacco companies.

For fixation of minimum prices, increase in CoP, the minimum and weighted average prices of tobacco the preceding year, rate of inflation, global crop trends and increases in prices of other agricultural commodities and raw materials are taken into account. But farmers say they have never been paid fair prices.

A segment of farmers say: “Apart from the fact that farmers were not given sufficient time to prepare for the meetings, the exclusion of genuine farmers’ representatives and presence of the cronies of tobacco companies in the committees,( who are not even tobacco growers as was the case in Swabi), the CoP meetings were of no benefit to farmers,” said Asfand Yar Khan, a farmer from Swabi.

“Then the production cost spelled out by farmers is not accepted and is reduced. The illiterate farmers cannot fill the complex CoP sheets themselves and are filled by the PTB officials or representatives of tobacco companies. The farmers just put their thumb impressions over these forms while hardly a few could sign them, though without knowing the contents,” he said.

“Our cost of production has increased but the companies are not ready, and the PTB is not forcing them, to offer proportionate increase in prices. A hectare of tobacco crop fetched me Rs3,24,500 last season while my expenses stood at Rs300,000. Per kg price of tobacco was in the range of Rs100-112 last year though it should have been over Rs160,” Khan said.

“The hybrid seeds supplied by tobacco firms, against the claims, have decreased the yield from 3,200 kg per hectare to 2,100kg per hectare. Companies ask us to shorten the stem and enlarge leaves but as farmers are mostly untrained, they are unable to use NPK instead of nitrate, and because of volatile weather, the yield falls considerably. This explains why farmers opt for non-recommended varieties (NRVs) that have more yield and mature early and facilitates maize cultivation in time.

As per MLO 487, farmers should be informed about official Mp and Wap before the end of October but it is delayed till December to their detriment,” he argued.

Khyber Pakhtunkhwa Assembly in December last year had unanimously criticised the alleged exploitation of growers by tobacco companies. Abdul Akbar Khan, mover of the resolution, had said that the PTB fixed prices in collaboration with companies without considering the growers’ point of view.

Another farmer Abdur Raziq from Swabi, says delayed payment by firms exposes growers to financial difficulties. “I had purchased tobacco from farmers on deferred payment and sold it to a company but it hasn’t paid my dues so far. But what could I say when farmers’ arrears outstanding since Ramazan are yet to be paid,” he informed.

Mr Bashir, PTB secretary, agreed that since prices of various inputs like wood, fertiliser, pesticides, labour etc. have jumped up, prices of tobacco should also be increased.

“We are assessing the production cost. Hopefully, prices will register significant raise as per expectations of the growers. Last year, Wap was Rs112.64 per kg. Companies even offered up to Rs125 for both recommended tobacco and NRVs. As per law, no one can purchase tobacco at less than the Wap,” he said.

“To solve the problem of NRVs, the PTB is importing new high yielding and early maturing tobacco seeds from Brazil this year.
These will fulfill the basic demand of farmers. The seeds would be tested in the tobacco research stations and if found compatible with our environment, would be distributed free of cost among farmers from next year,” Mr Bashir said.

Regarding favouritism in appointment of farmers as CoP committee members, he said the PTB supervised the appointment and working of committees and was there to ensure that merit was not compromised in the entire process.


Courtesy: The DAWN