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Reduced procurement of local tobacco concerns Commerce Ministry

Reduced procurement of local tobacco concerns Commerce Ministry

Commerce minister orders Pakistan Tobacco Board representatives to safeguard interests of tobacco growers



ISLAMABAD: Showing grave concerns over the reduced procurement of local tobacco by cigarette manufacturing companies, the Commerce Ministry has pressed the Pakistan Tobacco Board (PTB) to take measures to secure interests of tobacco growers.

A source told Customs Today that a delegation of tobacco growers hailing from District Buner, Khyber Pakhtunkhwa (KP) led by PTB representatives met Commerce Minister Khurram Dastgir Khan and apprised him about problems faced by the growers.

The PTB was established under an Ordinance in February 1968 for the promotion of the cultivation, manufacture and export of tobacco and tobacco products and matters ancillary thereto. KP produces around 78% of Pakistan’s tobacco crop that generates more than 37,000 full-time employments in the province.

The source said the minister paid due heed to the reservations expressed by the delegation and directed the PTB representatives to ensure preservation of interests of the tobacco growers. The delegation told the minister that Philip Morris had denied procuring tobacco produced by growers of Buner which was tantamount to loss of billions of rupees to the growers.

Philip Morris (Pakistan) Limited, an affiliate of Philip Morris International Inc. (PMI), is a public listed company on the Karachi and Lahore stock exchanges. The principal activity of the company is the manufacture and sale of cigarettes for Pakistan’s domestic market.

“The company took plea that growers produced fine quality of tobacco, which was costlier and had reduced profit margin as well as competitiveness in the market because all brands of smuggled cigarettes were quietly available at cheaper rates in the country,” the source observed.

The source said that up to 70s, poppy cultivation was frequent in Buner, but then government offered tobacco as an alternative crop to the growers and committed to procure entire yield from them. Resultantly, a large number of populations shifted to tobacco growing from poppy cultivation and relevant industries also flourished. Presently, 33,000 growers are associated with tobacco crop.

The source said the PTB informed the meeting that a quota of 250,000 kg tobacco procurement had been revived, which was 490,000 kg last year. However, the growers demanded that at least quota of 300,000 kg tobacco should be revived. They also demanded that the ministry take up the issue of illicit trade of smuggled cigarette with relevant departments and ministries to check the menace of smuggling. The minister ensured the delegation to talk to relevant authorities in this regard.

In Pakistan two types of tobacco are grown: indigenous variety and Virginia variety. The origin of former type of tobacco dates back to the early 1600s when it was introduced in this part from Europe by the Portuguese. The later type, however, is of recent derivation and be in accord with the creation of Pakistan when FCV tobacco was grown on a limited scale during 1948. Pakistan is now producing both types of tobacco, namely Nicotiana tabacum and Nicotiana Rustica. Total tobacco cultivation area in Khyber Pakhtunkhwa (KPK) is 36,016 hectares that produces 93,080 tonnes of tobacco with value of Rs 10.09 billion. Major districts, where tobacco is mainly produced are Swabi, Mardan, Charsadda, Buner and Mansehra.

One of four cigarettes sold in Pakistan is illicit, according to the Pakistan Tobacco Company’s (PTC) annual report.

The sale of illicit cigarettes in the country has increased over 60% in the last five years, the report said, estimating the government could lose up to Rs 100 billion, close to $1 billion, in potential revenues by 2017 due to tax evasion. Illicit tobacco trade includes the supply, distribution and sale of smuggled or counterfeit cigarettes or tobacco products on which applicable duties and taxes have not been paid in the country of consumption, Pakistan in this case.

Even, in last month, a steward of Pakistan International Airline (PIA) was arrested at London airport for cigarette smuggling.