“Raising taxes on tobacco products could damage its export”

“Ray of Hope” in the bleak economic conditions in the country seems to be the most taxed agricultural products - tobacco - which showed a surprising almost 300 per cent increase in exports over the past two years.

Statistics published in the annual report of the Pakistan Tobacco Board (PTB), shows that tobacco exports increased from four million pounds is phenomenal in 2009 to 14 million kg in 2011. There was also a marked increase in 2010, when exports rose to five million pounds, bringing foreign currency revenues of $ 36 million of the government. But he went spiraling up in 2011, when tobacco is the country’s exports totaled $ 105 million, a record increase in the export of PTB was established back in 1968.

Agricultural and trade experts expressed the view that the “key” for this extraordinary increase in tobacco exports was a “competitive price” of tobacco production in Pakistan.

However, they warned that any extravagant price increases on tobacco products in Pakistan will have serious negative consequences for the country’s exports of tobacco and can see the change of export potential of this new crop of tobacco country. “If prices go beyond a certain point, the yield would be uncompetitive and export of the peak,” they warned. Experts dealing with the theme of the harvest of tobacco and tobacco exports, when they wrote the opinion, said that as far as the domestic tobacco farmers, then they win because this is exported.

“These farmers are under the protection regime established pursuant MLO PTB-487, which is in place since 1985. Tobacco enjoy four unique protection under these rules, which guarantee that they will always receive the price of their products or equal to the previous year, or above, that “they pointed out.

“Now this is a unique provision of the law and has no analogues in any other product, industry or agriculture. Do short or excess production, the price of tobacco crop is not affected, and they continue stable and continues to grow every year,” they added. They also noted that tobacco is a unique culture, because the cigarette manufacturers to disclose and publish the requirements for the harvest season in October. This gives a clear idea of the farmers, most of the crops they should grow up in December, and they can manage their land holdings, respectively, changing crop pattern in accordance with their requirements.

“This phenomenon is healthy, because when properly handled this change in the structure of the harvest can always lead to the preservation and improvement of soil fertility,” agricultural experts. “Harvest Commissioner does declare that” the minimum price for tobacco, but almost always that we get 10 or sometimes even 15 percent more than a set of “minimum price” the government from tobacco companies, “said representatives of the manufacturers.

Another assurance that the Government proposes that these tobacco growers in the fact that 100 percent of its products must be purchased in the tobacco industry. “In this culture is perishable, farmers are forced to shift their product as fast as they can. But unlike the producers of other crops, which, if it hits the market access and the price gets destabilized, tobacco growers, do not bother to to run and find buyers because it is stipulated in the law that cigarette manufacturers are required by law to purchase all the surplus crops from farmers. Thus, it is a very comforting situation for us, “said representatives of tobacco manufacturers.

Now, according to economic experts, the price of tobacco products in Pakistan is comparable to regional and competitive prices in the international market. This pricing mechanism puts farmers here in Pakistan for the benefit of export crops as well. And that is why such a dramatic increase in tobacco exports has witnessed over the past three years, while tobacco exports have tripled over the next five years.

He was apprehended, that any change in pricing patterns can make a non-competitive prices, which could lead to a reduction in domestic consumption and exports. In the current scenario of any move to abolish the existing pricing mechanism only a disaster for tobacco growers, and will be hard to tip the scales created and maintained a successful system of pricing for the past many years.

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