ISLAMABAD: Local tobacco companies are exploiting farmers by purchasing tobacco at a much lower rate than the Minimum Indicative Price of tobacco.
Experts told Business Recorder that nearly a month after the Pakistan Tobacco Board (PTB) directed tobacco companies to procure an additional 40 million kilograms of surplus tobacco from growers in Khyber Pakhtunkhwa and Punjab, widespread non-compliance with the order has left thousands of farmers facing mounting financial losses and uncertainty over their unsold produce.
The September 9 dated PTB directive sought to stabilize the market following reports of excess crop stockpiles, with the aim of providing relief to farmers who were unable to sell their harvest at fair prices. However, industry data and field assessments indicate that while some major companies have fulfilled both their original and surplus allocations, most local firms have either delayed or refused to begin purchases.
This uneven implementation has undermined the order’s objective. Companies that complied with their surplus obligations are reportedly stretched in terms of liquidity and storage capacity, while non-compliant entities continue to evade regulatory scrutiny. The resulting imbalance has distorted market dynamics, exacerbating the challenges for farmers and compliant firms alike.
“We were told the PTB surplus order would ensure that all farmers could sell their remaining tobacco, but no company representative has visited our area since the announcement,” said farmers from Swabi region, who still holds thousands of kilograms of flue-cured Virginia tobacco. “We are unable to store the crop any longer, and the market prices have dropped well below production cost.”
On top of this, local companies are exploiting farmers by purchasing tobacco at a much lower rate than the Minimum Indicative Price. Furthermore they have failed to honor payment terms for their purchases, leaving farmers further exacerbated. In other regions, farmers report similar grievances. They said that while growers followed PTB guidelines and met the quality benchmarks, the market has failed to respond. “Tobacco has always been our family’s livelihood, but this year, we are being forced to sell at throwaway prices to middlemen. The government’s silence is deeply worrying,” they added.
Industry experts believe that issuing surplus orders without a monitoring framework or penalties for defaulters has left farmers exposed. The Board must either ensure accountability or risk losing the confidence of the very stakeholders it is meant to safeguard.
Furthermore, Industry experts warn that the PTB may consider issuing a second surplus order to address the continuing glut, but such a measure may have limited impact without stricter oversight mechanisms. Companies that complied with the initial directive are reportedly unwilling or unable to absorb additional volumes due to financial constraints and warehouse limitations.
The ongoing issue comes at a time when the legal tobacco industry is already under stress due to falling domestic demand, reduced liquidity, and broader macroeconomic challenges.
For farmers across KP, however, the crisis remains immediate and pressing — with many still waiting for buyers and fearing that their hard-earned crop may go to waste.
Copyright Business Recorder, 2025
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