KP farmers for review of tobacco prices

Review of tobacco prices

By Tahir Ali

TOBACCO growers in Khyber Pakhtunkhwa hope to get a ‘fair’ support price for their crop following a positive response from both the federal and provincial governments to their call for a review of an earlier decision of the Pakistan Tobacco Board in this regard.

First, it was the KP Chief Minister Amir Haider Khan Hoti who recently had called a special meeting of all stakeholders — tobacco growers, dealers, companies and the Pakistan Tobacco Board (PTB) — to resolve the grievances of farmers about
the support price for their crop.

And now, following legal action and agitation by the growers, a high-powered committee sent by the federal government is talking to them to asses the cost of production (CoP) of the crop that earns billions for the federal government.

Farmers said Federal Minister for Food Security and Research Israrullah Khan Zehri had sent the committee headed by Director-General National Agriculture Research Council Dr Muhammad Sharif to suggest a new support price for tobacco, if needed.

The committee was given a warm welcome by tobacco growers in Swabi. “ It met and interviewed tobacco growers here and would do the same in Mardan, Charsadda and Mansehra,” a farmer said.

“We hope the committee will assess the actual cost of production and recommend a fair tobacco support price and the federal ministry of commerce will notify the new price for this season,” said Liaqat Yousafzai, general secretary of the Kashtkar Coordination Council.

When contacted, Dr Sharif said the CoP assessment process would continue for 10 days in various tobacco-growing districts and views of growers would be sought.

“The terms of reference of our committee are to assess the actual per kg cost of production and identify factors for stated low tobacco support price. Later on the basis of the data collected and empirical evidence, the committee would present its
findings and recommendations to the federal government,” he said.

Mr Sharif said “farmers have told us that CoP for tobacco has increased while they are receiving very low support price. We are collecting data. It will be analysed and hopefully the committee will put forward its report to the chairman Pakistan
Agriculture Research Council after six days.”

The committee doesn’t intend to take views of national and multinational tobacco companies and tobacco dealers on the CoP. But, according to a source, tobacco companies also plan to prepare a counter-report which they will present to the
government.

Mr Yousafzai said farmers in Swabi had informed the committee members that while their average CoP was around Rs240/kg, the PTB had fixed the minimum price at Rs117/kg. “We want to be paid as per the CoP and the minimum price must be fixed taking into account the increase in the minimum and weighted average prices last year, rate of inflation, global tobacco prices, surge in prices of other crops and raw materials and our profit margin,” he said.

Four months ago, the PTB had fixed minimum price of tobacco at Rs117/kg but the growers had rejected it. Later they challenged it in the Peshawar High Court and also started agitation against it.

Asked why the earlier price should be revised, Mr Yousafzai said it had to be. “The Rs117/kg price is very low, unrealistic and illegal as it was announced when the PTB had neither a chairman nor sufficient members, which was a mandatory legal
requirement. The last PTB Chairman had retired one and a half years ago and since then the board was run by its secretary.

We had challenged the lacuna in the court and its decision has come. This is why the committee was sent,” Mr Yousafzai added.

“The PTB is the root cause of all of farmers’ woes. It’s an open secret that some PTB officials have formed tobacco companies. They make sure that tobacco prices are fixed to benefit them. The committee report, we are hopeful, would expose the mutual connections between tobacco companies and some PTB officials,” he added.

Another farmer from Swabi alleged that “some PTB and commerce ministry officials own unregistered tobacco firms and were conniving with the powerful tobacco companies against growers.”

A farmer from Mardan complained that now 29 members have been appointed in the PTB on political basis mostly from Sindh.

Mr Yousafzai, who is also a member of the KP Chief Minister’s committee on tobacco, says “the committee has recommended disbandment of the PTB, awarding crop status to tobacco, and handing over it to the province after the 18th Constitutional Amendment.”

The Khyber Pakhtunkhwa assembly in December 2010 had, through a resolution, resented the alleged exploitation of growers by tobacco companies.

Tobacco pricing and grading in KP

Tobacco grading and pricing

 

By Tahir Ali Khan |

 

http://www.dawn.com/2011/07/25/tobacco-grading-and-pricing.html

 

GROWERS in Khyber Pakhtunkhwa complain of low prices offered by tobacco companies and the unmerited grading of their crop.

 

At present, 200-250kg of barn-cured tobacco of different grades fetches around Rs30,000-35,000 which is much lower than warranted by the escalating cost of production, says a Swabi farmer Abdur Razzaq.

 

Tobacco, as per law, is the only cash crop whose weighted average price (Wap) must increase by a certain ratio each year.

 

“Though prices are supposed to be fixed in ‘consultation’ with farmers taking into account the cost of production and other factors, tobacco companies use their clout to fix prices of their own choice. They usually try to buy double the quantity of their annual purchase targets at the lowest possible price,” he said.

 

This season, as per assessment of tobacco growers, the average cost of production stood at Rs167 per kg. “The Wap should have been fixed at Rs200 per kg to benefit the growers, but buyers are offering between Rs125-78 per kg for different grades of recommended varieties and Rs104-95 per kg for non-recommended varieties. This shows how unrealistic is the price fixed by the Pakistan Tobacco Board (PTB). The shrinking profit margin has particularly hit the small farmers,” he said.

 

Last year the companies had purchased tobacco from growers at Rs103-105 per kg against the Wap of Rs98 fixed by the PTB.

 

“Tobacco companies earn huge profit as, according to an estimate, they prepare over 1,000 cigarettes per kg of tobacco. The influential firms are working as a cartel to increase their margins. But farmers are suffering for lack of cooperation and ignorance,” he said.

 

Had the companies not agreed to purchase the harvested non-recommended tobacco variety, called Swati locally, at the average support price of Rs104.30 per kg for the year, around 40 million kg of this variety would have no buyers and that would have exposed around 80 per cent farmers –that grow Swati in Mardan, Swabi and Charsadda – to huge financial losses. But thanks to the farmers’ efforts that the appalling scenario has been averted,” he said.

 

Asfandyar Khan, another farmer says “Farmers have greatly benefited from Swati variety as it has increased their output by about 50 per cent, saved them from the problem of grading as almost all of its leaves are of No.1 quality.”

 

Until recently, these companies were urging farmers to grow the Swati variety and why private buyers are taking it” he asked.

 

He said farmers were also unhappy over the deliberate and unfair down-grading of their tobacco. “The companies sort out the best leaves and reject the rest which is eventually purchased by private buyers. The importance of grading can be judged from the fact that for the top eight grades of recommended tobacco varieties, the average maximum and minimum prices per kg in descending order are between Rs125 and Rs107, Rs123-105, Rs119-103, Rs115-101, Rs105-94, Rs100-92, Rs90-83 and Rs82-78,” Asfandyar said.

 

As per the law (MLO No.487) and their written agreements with farmers, tobacco companies are to be fined if they fail to purchase the entire tobacco crop from growers but they often delay procurement or abruptly end purchasing the commodity.

 

“They ask us to bring our produce but they buy a little of it of their choice and close the depot. This is done precisely to make growers

run from pillar to post to sell their ‘sub-standard’ tobacco on low prices to private buyers who seem to be the agents of these companies,” he added.

 

Tobacco companies and the PTB each year warn farmers not to cultivate the non-recommended varieties as these won’t be purchased by them, but only 10-20 per cent farmers cultivate the recommended high-yielding varieties of Speight G28, K399, RGH4 and TM 2008 and the other 80 per cent go for the Swati variety. This could either be due to their ignorance or the urge for better profit on part of the farmers.

 

Tobacco employs over three million persons directly or indirectly, contributes billions to national exchequer in taxes and saves billions likely to be spent on imports of cigarettes besides earning millions of dollars in exports.

 

KP produces between 65-85 million kg of tobacco but the output can be enhanced to 300 m/kg per year. With a possible production of 300 million kg, Khyber Pukhtoonkwa can earn $537mn annually from tobacco export. But the potential has yet to be realised. “KP grows about 98 per cent of Virginia tobacco but its membership in the PTB is equal to that of Punjab. It should be given representation proportionate to its output,” he added.

 

Following is the text of the article I had sent to Dawn.

Low tobacco prices and grading and purchasing problems

By Tahir Ali Khan

Tobacco farmers in Khyber Pakhtunkhwa are disappointed over low tobacco prices offered by tobacco companies as well as what they call unmerited grading of their tobacco crop.

At present rate of tobacco, an average barn comprising around 200-250kg of different grades of tobacco fetches the farmers only around Rs30-35 thousand which is much less than warranted on the back of escalated cost of production, Abdur Razzaq, a farmer from Swabi, said.

He said per kilogram cost of production for tobacco this season stood at Rs167 as per their assessment. “The Wap should have been fixed Rs200 per kg to benefit the growers, but companies are offering farmers between Rs125-78 per kg for different grades of recommended varieties and between Rs104- 95 per kg for non-recommended ones. The shrinking of profit margin has particularly hit the small farmers.” he added.

Tobacco, as per law, is the only cash crop whose weighted average price (Wap) must increase by a certain ratio each year but farmers have been traditionally denied good returns for their crop.

“Though theoretically tobacco prices are fixed in ‘consultation’ with farmers after different surveys and taking into account the cost of production and other factors, tobacco companies using their clout and unity are managing prices of their own choice and benefit. The companies usually purchase double the quantity of their annual purchase targets but at much lesser price than due,’ he said.

“Tobacco companies earn huge profit as according to an estimate they prepare over 1000 cigarettes from one kilogram of tobacco. They are united and can manipulate prices that suit them but farmers are suffering for disunity and ignorance in their ranks,” he added.

“That tobacco companies are offering up to Rs125 against the WAP of Rs104 speaks volumes of how unrealistic the price fixed by the Pakistan tobacco board (Ptb) is. Last year they had purchased tobacco from growers at Rs103-Rs105 per kilogram against the Wap of Rs98 fixed by the Ptb,” he said.

According to him, had the tobacco companies not finally agreed to purchase the harvested non-recommended tobacco variety, called Swati, at the average support price of Rs104.30 per kg for the year, around 40mn kg of this variety would have no buyers and that would have deprived around 80 per cent farmers –that grow Swati in Mardan, Swabi and Charsadda- of billions of rupees but thanks to the struggle by farmers, that nightmare has been averted. But the price offered for the variety is still insufficient,” he said.

Asfandyar Khan, another farmer, seconded his thoughts. “Farmers have greatly benefited from Swati in that it has increased their output by about 50 per cent, saved them from the problem of grading as almost all of its leaves are of N0.1 quality, made curing facile and brought almost to nil the wastage of leaves during curing, thus increasing their incomes. It is astonishing the companies first refuse to buy and then fixed a meagre price for Swati as until very recently, it were these companies that had urged farmers to grow the variety. If it has bad quality and taste, then why the private buyers are offering up to Rs128 per kg for it and asking the growers to bring as much as they can,” he said.

He said farmers were also unhappy over the deliberate and unfair down-grading of their tobacco. “The companies sort out the best leaves and reject the rest which is eventually purchased by the private buyers. The importance of grading can be judged from the fact that for the top eight grades of recommended tobacco varieties the average maximum and minimum prices per kg in descending order are between Rs125 to Rs107, Rs123-105, Rs119-Rs103, Rs115-101, Rs105-94, Rs100-92, Rs90-83 and Rs82-78. For Swati the maximum and minimum prices offered by companies is Rs104 and Rs95 while private buyers offer as much as Rs125 to Rs128 for this kind of tobacco,”

Asfandyar said as per the law (MLO No.487) and their written agreements with farmers, tobacco companies are to be fined if they failed to purchase the entire tobacco crop from growers but they often delay procurement or abruptly end purchase of the commodity.

According to another farmer who wished anonymity, ‘the companies request us to bring our tobacco produce but when we go there, they buy a little quantity of their choice and then close the depot. This is done precisely to make growers run from pillar to sell their ‘sub-standard’ tobacco on low prices to private buyers who seem to be the agents of these companies.”

Tobacco companies and PTB each year warn farmers not to cultivate the non-recommended tobacco types as these won’t be bought but only about 10-20 per cent farmers cultivate the recommended varieties of Speight G28, K399, RGH4 and TM 2008 and the other 80 per cent go for the Swati variety. What could the farmers be expected to do if the latter has great profit for them.

Importance of tobacco cannot be denied as it employs over three million persons directly or indirectly, contributes dozens of billions to national exchequer in different taxes and saves billions likely to be spent on imports of cigarettes besides earning millions in exports.

KP produces between 65-85 million-kg though it can produce up to 300 m/kg per year. With a possible production of 300 million kg, Khyber Pukhtoonkwa can earn $537mn or Rs45bn annually from the export of tobacco, but the potential has not been realised. India`s exported the country`s surplus yield to 80 countries and earned Rs130 billion annually.

 

undermined tobacco research

Tobacco field in northern Poland

Image via Wikipedia

Tobacco research undermined

By Tahir Ali Khan

Dawn April 4, 2011

http://www.dawn.com/2011/04/04/tobacco-research-undermined.html

THE country’s biggest tobacco research station in Mardan, severely handicapped by shortage of staff, is unable to offer much of the required expertise to farmers of the tobacco-rich region.

 

At least 60 per cent posts of research officers at the station, run by the Pakistan Tobacco Board (PTB), are lying vacant. No appointments and postings have been made against the posts of retiring officials.

 

Shortage of research and development staff at the PTB such as assistant development officers (ADOs) and field assistants in different districts is undermining its research and development activities and consequently liaison with tobacco farmers.

 

The government should not only fulfill the manpower needs of the facility but also provide development staff at the grass root/farm level, farmers demand.

 

The research station performs various functions and works to ensure production of quality tobacco crop in the region. “We have soil testing, plant pathology and breeding, and agronomy laboratories at the station. Experiments are conducted here on different crop varieties using different ratios of fertiliser, both imported and local, insects/pests and disease control methods apart from holding workshops, seminars and field days for training and educating farmers and other stakeholders,” said Ghulam Farid Marwat, manager at the station.

 

Soil testing is carried out both at the station and at farm level. Soil sample from different areas of the country are collected regularly, and analysed and the findings of the tests are conveyed to farmers.

 

The station is also working on green manure project in Mansehra in Khyber Pakhtunkhwa and Okara in Punjab.

 

“For producing green manure, Egyptian clover (Barseem) is mixed in the land. We have used half the quantity of NPK (fertiliser blended with ingredients of nitrogen, phosphorus and potassium) generally used in fields and have obtained better results.

 

The tobacco per hectare yield (PHY) increased from 2,600kg to 3,550kg with the improvement in soil condition. The technology and guidance would soon be transferred to farmers,” he said.

 

The focus of PTB and the research station is on quality as well as quantity of the crop as smokers worldwide prefer quality tobacco leaves and products.

 

“Farmers are needed to grow only the recommended varieties- Speight G28, K399, RGH4 and TM 2008. Tobacco companies do not buy tobacco other than these varieties. The new variety developed by PTB -TM 2008- has the potential to increase per hectare yield by over 20 per cent than the non-recommended varieties,” Marwat said.

 

To a question, he said, whereas only about 20 per cent farmers in the past used to cultivate the recommended tobacco varieties, now most of them cultivate the recommended varieties. “This would help produce better quality tobacco crop generating more income for farmers and the country by boosting exporting of tobacco and its by-products,” he hoped.

 

To minimise the use of wood in tobacco curing and avoiding deforestation, the facility has also built a solar-barn with the help of Peshawar University of Engineering and Technology. This energy is being used in curing tobacco.

 

“This has saved about 50 per cent fuel. The facility will be transferred to farmers in coming years. With the help of one time investment, farmers will save a lot in fuel expenses as well as the environment from pollution,” he said.

 

The station is also working on a project of growing mushroom. After the curing season, the curing barns of tobacco farmers lie unused for months which will now be used for growing mushroom. The idea will be expanded at farm level later and farmers would be guided and provided technical know-how. This will create income opportunities for farmers on the one hand and ensure availability of a protein-rich food for the people on the other.

 

Though the station works in close collaboration with tobacco growers in solving their problems and developing the crop, the liaison among growers, the station and the PTB seems to be weak and needs practical steps to strengthen it further.

 

The facility should have more land under tobacco seeds cultivation as against the present 16 acres. Obviously, the facility is providing limited quantity of free seeds to selected growers due to meagre production of seeds and has left the task to tobacco companies.

 

Besides Mardan’s tobacco farm, there are four other sub-research stations for developing tobacco crop – two each in Punjab and Khyber Pakhtunkhwa and one model farm in Buner which will be functional in next two years. Tobacco research stations are planned in Pishin, Balochistan, and Jampur Punjab in near future.

 

Secretary PTB Numan Bashir confirmed that PTB and the station were facing paucity of research and development staff and feared that it might impact liaison with farmers at root level.

 

“Most of the field assistants and ADOs have served for over 30 years now and have retired or are on the verge of retirement. For the moment, we have given additional charge to officers in some areas. Inductions will be made soon after go-ahead from the higher authorities,” he added.

Woes of Tobacco growers

Woes of tobacco growers
By Tahir Ali
DAWN-Monday, 11 Oct, 2010

TOBACCO growers in Khyber Pakhtunkhwa have suffered this year because of lower than expected price of their bumper crop and the devastation caused by the floods. They say they may reduce tobacco cultivation next year for want of right price.

According to Haji Niamat Shah Roghani, vice-president of Anjuman-e-Kashtkaran, KP, the estimated cost of tobacco production for the current year is Rs165 per kg while the weighted average price (Wap) of per kilogramme notified by the Pakistan Tobacco Board is Rs98.

“The price should have been around Rs200 per kg as cost of farm inputs has increased exorbitantly. Because of increase in production cost, the farmers are not getting good returns. Last year companies purchased tobacco from growers at Rs100 per kg as against the Wap of Rs82 per kg. This year, the Wap is Rs98 but companies are buying the commodity at Rs103-115/kg,” he said.

“As per the law (MLO No.487), tobacco firms are bound to purchase the entire tobacco crop from growers. Companies often delay procurement. This hurts the farmers who don’t have storage facility. Tobacco companies should start purchases in time. Also, they usually announce closure of purchase centres without procuring farmers’ yield. This compels them to sell their produce at throw away price to companies or the middlemen,” he said.

“Farmers are also being deprived of their possible gains by the commission agents. Rather than purchasing through the middlemen, companies should buy tobacco directly from growers. The delay in payments to growers, on an average by six months, leaves them unable to prepare their fields for the next crop,” Roghani added.

On an average 74.5 million kg tobacco is annually produced in the country. Khyber Pakhtunkhwa alone can produce 300 million kg annually provided the government and tobacco companies support the farmers through good prices, free or subsidised inputs and soft loans,” he added.

Abdul Akbar Khan, senior president and chairman Kissan Board Pakistan, said due to less tobacco yield last year, tobacco companies had encouraged farmers to grow more tobacco. Farmers had a bumper crop this year but the companies did not offer good prices.

“While last year, the companies had extended price well over Rs18-20 per kg above the Wap, this year they only went above it for a few rupees. The cost of per hectare yield has gone up manifold but tobacco firms are not ready to offer competitive prices. Farmers will be left with no option but to reduce the crop production or bring down tobacco acreage next year,” he added.

The companies’ demand for this year was 65-66 million kg. “They have purchased double that quantity but at the minimum price which is a great injustice to the farmers. While the companies sorted out the best tobacco leaves in the earlier stages, they left out the rest which is being purchased at lower rates by companies’ agents

To a question he said, the companies do announce their demand before the start of growing season each year, but illiteracy among farmers, lack of coordination among the growers and tobacco companies and PTB leaves them unaware to their advantage.

He said while the cost of per hectare production of tobacco was fixed on the basis of 3000kg per hectare yield, companies made purchase agreements with farmers on the basis of 21,000kg PHY which goes against the interest of growers.

Khan said the recent floods had damaged about one million kg tobacco crop in Charsadda alone inflicting Rs4.4billion loss to farmers. The tobacco growers in the flood- hit areas must be compensated for their losses,” he added.

He said lack of sound agriculture policy had made things worst for the farmers, It has often resulted in a problem of plenty or shortage. A sound agriculture policy would ensure that the extreme fluctuations in prices of the commodities are not experienced,” he added.

“Two big tobacco companies are paying less prices to farmers. While smaller companies are offering competitive prices. Why this can’t be done by big ones,” Roaghni asked.

“Tobacco industry employs over three million people directly or indirectly. It contributes billions of rupees to the national kitty in different taxes. It also saves dozens of billions by saving imports of cigarettes besides earning millions in exports.

“But the money is not being spent on the development of tobacco growing areas or on supporting the tobacco growers,” said Roghani and urged a special fund for the development of tobacco specific areas of the province.

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