There would be no problem of surplus tobacco for the growers this year as the companies would purchase whole crop at weighted average prices, said a press release of Pakistan Tobacco Board (PTB) issued here on Saturday.
The board had announced tobacco requirements of various companies for the 2005 crop in November 2004 for information of the growers to produce tobacco crop accordingly and to avoid production of surplus/short crop.
The requirement indicated for Flue-cured Virginia (FCV) tobacco was 59.842 million kg. However, the crop size is estimated to be above 65-70 million kg, meaning thereby that it is above the indicated requirements of the industry. It is estimated that the companies will purchase the whole crop at weighted average prices. Thus, for the first time, there will be no problem of surplus crop lying with the growers for which they normally used to get a price lower than the weighted average price.
Due to depleted inventories and stocks, higher production and demand for cigarettes and growth in exports, the demand of manufacturing companies this year has considerably increased over previous years.
Besides FCV and Burley tobacco, the demand for Desi/Mulki tobacco (WP) has also considerably increased, particularly on account of the poor Jampur crop and greater demand for Niswar/Hookah tobacco.
As a result of sharp increase in demand, the WP tobacco is currently fetching prices in the range of Rs 40 per kg in the local market. This is considerably higher than the indicative minimum price fixed for the crop whose average is not more than Rs 25.60 per kg. This shows that the misinformation being spread by certain vested interests for personal reasons to the effect that the companies are likely to pay prices lower than those expected by the growers is totally incorrect.
Minimum prices for FCV tobacco are only indicative floor prices and do not reflect the actual prices the growers will get under MLO 487. PTB is bound to ensure, and the companies are bound to comply with payment of, weighted average prices which are normally higher than the previous year's price and cannot in any case be lower than the previous year. As already indicated above, the whole of FCV crop of about 65-70 million kg is likely to be purchased by the manufacturing companies at the weighted average price.
As compared to 2004 crop, it is expected that the growers of FCV tobacco will be paid about Rs 1 billion (100 crore) more, thus significantly improving their income and living standards. This will ensure that the expenses incurred by the growers on the production of their crop are adequately covered. Growers are being told by certain motivated quarters not to offer their crop to the companies but rather sell it to 'mandis'.
Perhaps the hidden idea is that these mandis will then sell this tobacco at higher rates to the companies and thus make fortunes, which could be shared by them with these self-appointed and motivated vested interests.
The growers' community, however, cannot be misled by such spurious designs. They are well aware of their own interests. They know that ultimately such design and scheme is not meant for the benefit of the growers but for the interest of vested interests.
The growers have already rejected out of hand such calls. They recall that once in the past, too, in 1978, they were misled and ultimately sustained considerable financial losses and they will not be misled (once) again. At the same time, they have requested the Pakistan Tobacco Board to protect their genuine interest, which the Board has assured at all costs.-PR
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