Support price for tobacco

Published November 11, 2013

WHILE Pakistan Tobacco Board is busy collecting data from tobacco growers in Khyber Pakhtunkhwa to fix support price before the upcoming cultivation season, farmers are sceptical about the utility of the exercise.

The PTB’s survey teams were visiting villages in district Swabi last week to interview tobacco growers. They have already met growers in other tobacco-growing districts in KP, including Mardan and Charsadda.

The survey teams are collecting information from the growers to find out the expenditure they incur on tobacco crop, and the yield they achieved in the last cropping season.

The information, once collected from all the tobacco-growing districts in the country, including Mianwali and Sialkot in Punjab, will be used to arrive at the cost of production.

After determining the per kilogramme cost of production in the previous cropping season, the prevalent rate of inflation will be applied to determine the support price, as is the normal pratice.

The PTB, an autonomous government body, is mandated to carry out the exercise every year. It also involves representatives of cigarette companies and together they fix the support price. The Board is required to announce the support price before the tobacco cultivation begins in December.While growers are sharing information with the PTB in the hope of a better support price, their leaders are not optimistic.

The support price for July 2013 harvesting season was fixed at minimum Rs141 per kg for low quality White Patta tobacco and maximum Rs152 per kilogramme for the fine quality Virginia tobacco. Growers were not happy with the support price and protested in the hope to get the price revised.

This year, farmers are again gearing up to get a good price. Their district level organisations have conducted workshops where growers were trained to calculate their crop’s cost of production. The training was meant to equip them with knowledge before the PTB survey teams conducted the interviews.

Growers want the support price for the 2014 harvesting season to be fixed at minimum Rs200 per kg. They fear the PTB would not announce a ‘fair’ price.

“The middlemen, who bought the produce last July and stored it in their warehouses, are now selling it for Rs180-Rs190 per kilogramme to cigarette manufacturing companies,” said tobacco grower Abdul Samad from Nowshera.

The cigarette manufacturing companies procure Virginia and White Patta in considerable quantity directly from the growers.

“While the companies paid us Rs141 per kg for our produce, now they are procuring the same crop from middlemen at a much higher price,” complained the President of Kisaan Board, Khyber Pakhtunkhwa, Khalid Khan.

Farmers believe that given the prevalent market prices, the support price should be fixed at or over Rs200 per kilogramme. They think their demand is justified in view of increase in prices of farm inputs.

“Besides, increase in the rupee’s exchange rate impacts everything from the price of diesel to rates of pesticides as majority of our inputs are imported,” said Samad.

The prices of DAP and urea, he maintained, went up considerably during the past couple of years after the federal government withdrew subsidies. Similarly, the price of diesel also shot up, he added.

According to Abdul Samad, the Pakistan Agriculture Research Council conducted a study to evaluate tobacco’s cost of production two years ago. After meeting around 1,100 tobacco growers in KP, its team reported that the per kilogramme cost of production stood at Rs159.5 in 2011.

Khan said the average per hectare yield of tobacco came to 2,800kgs in KP, but the PTB’s data showed the average yield at 3,800kgs per hectare.

“They do so to keep the support price low,” said Samad.

Many growers cultivate tobacco on farms taken on rent/Ijara. Samad claimed the seasonal rent comes to Rs25,000 - Rs30,000 per jareeb.

However, according to him, the PTB records Rs13,000 per jareeb for calculating the cost of production, which results in low support price.

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