Tobacco crop price nearly doubled over last five years

The price of tobacco crop in the country has nearly doubled over the last five years, encouraging even more farmers in Khyber Pakhtunkhwa to expand the crop cultivation, agriculture experts and analysts said on Monday.
But they showed concerns over the soaring minimum support price of the crop, which hit Rs 117 per kg mark in 2012 from Rs 67 in 2008, saying the rising trend would ultimately offset the farmers financial gains for the country had small market in the face of huge tobacco yield.
They said the minimum support price for the crop was fixed by Pakistan Tobacco Board under Section 8 of the Ordinance 1968. They said the tobacco growers fetched over Rs 122 per kg for their yield in 2011, which was more than the notified rates, adding that such a growing price trend continued to attract about 1,00,000 farmers every year to go for tobacco cultivation.
In 2011, they pointed out that the total payments made to the farmers for their crop had exceeded Rs 12 billion mark. "This income supports livelihoods for more than 5,00,000 people in the country," they said. They said if tobacco price continued to soar at the same pace as it had been witnessed during the last few years would shrink the crop demand on the local market for being its costlier, as a result, farmers would be unable to fetch high rates for their commodities.
"The mounting price trend for tobacco at the end of the day is expected to force the companies to reduce the commodity purchase," they said, adding that the local tobacco market had nearly reached its capacity in terms of price hike. "Such a scenario will have a direct impact on the growth and viability of growing tobacco for thousands of farmers and may create socio-economic problems," said the experts and analysts said. Citing the Section 4 of Martial Law Order No: 487 issued in 1985, they said the law shielded the price stability of tobacco crop once it was fixed, which should not be lower than that of paid to farmers during the preceding year.
They said under different rules which the government mandated, the farmers were provided with information on the requirement of the tobacco companies, and also about minimum support price for the crop for the next year. "This helps the farmers make a calculated and informed decision as to whether they want to grow the crop and what margins they were expecting to get," they said.
They pointed out that there was committee for calculating cost of production which Pakistan Tobacco Board and representatives from Agriculture Price Commission, Agriculture Policy Institute, Provincial Agricultural Department, Federal Ministry of Industries, Grower Members on PTB Board, Tobacco farmers, PTB officials and the Cigarette Manufacturers Association. Commissioner Special Crops/Chairman API, Ministry of Food and Security heads the committee.
According to them, the committee is responsible to calculate the cost of production on the actual input costs. The committee conducts interviews of tobacco growers. In 2011, more than 250 farmers were interviewed and their recommendations and suggestions were used to determine the price. The formula used in calculation of the tobacco prices incorporates the inflation factor and farmers profit as well.
Crop Commissioner finally reviews and approves the entire process which the external and independent mechanism also scrutinise, according to the experts and Estimates of the government's Agricultural Department indicate that more farmers have grown tobacco crop in 2012 as compared to the commodity cultivation in 2011, showing the farmers are expecting a higher return for their crop thus they continue to grow tobacco, they mentioned.