Pakistan Tobacco Board (PTB) has found that some officials of Federal Ministry of Food and Security and growers association are conducting an un-authorised exercise to work out the cost of production of tobacco crop in the area of Swabi and Mardan.
Sources told Business Recorder here on Tuesday that the PTB in a letter has taken up the issue with the Ministry of Food as well as Ministry of Commerce to stop the ongoing activity before it gives rise to an undesirable situation beyond the control of the tobacco board.
According to the details, the fixation of minimum prices for tobacco crop is the responsibility of Pakistan Tobacco Board as per provision of PTB Ordinance, 1968 and MLO 487. For up-coming crop of 2012, the PTB has already announced indicative minimum prices for tobacco based on the cost of production exercise in November/December, 2011.
The said exercise has been conducted by the Cost of Production Committee members under the supervision of PBT. The key members of the committee are growers' representatives, PTB Members, representative from Agriculture Prices Institute, Members of Parliament (both National and Provincial) representatives of industry and officials of PTB.
According to PTB, the timely price announcement of the up-coming crop could help the farmers to plan their plantation. The same exercise also provides an opportunity to the local cigarette industry and exports buyers to plan and arrange their funds for purchase of tobacco as per their requirements, sources said.
The PTB further contented that the ongoing un-official exercise carried out by the officials of Ministry of Food is un-authorised and will only result in market disturbance. It is, therefore, requested to take it up with the Ministry of Food and Security Department and get the activity stopped before it goes rise to an undesirable situation beyond control.
When contacted, experts said that some cigarette manufacturers are supporting farmers on the issue of higher prices but that is understandable as local industry is highly unregulated and tax evasion is rampant. Local manufacturers are expected to fan such mischief as they consider themselves free of any checks.
The PTB fixed a price of Rs 117/kg but that price was not accepted by farmers' representatives. Only a couple of weeks ago a joint meeting of Pakistan Tobacco Board, representatives of agriculture department and representatives of tobacco farmers' association was held at Agriculture Information Centre in Peshawar in which some farmers' representatives opposed Rs 117 kg tobacco price that had been fixed by Pakistan Tobacco Board and demanded a minimum rate of Rs 200 /kg.
The meeting also demanded the federal government to give control of Rs 60 billion excise duty to provincial agriculture department, they maintained. Experts believe intermittent increase in tobacco price leads to squeezing local farmers out of global competition. This activism strangely coincides with PaK-India talks on the free trade agreement eliminating any items on the negative list. The arbitrary increase in tobacco price also threatens govt revenue from cigarette excise as proposed leaf price revision will, in fact impact consumer cigarette pricing the same way and magnitude as recently adopted excise increase which is likely to further the cause of cheap illicit offerings in the market.