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Fixation of Tobacco Prices.

Under sub-section(1) of Section 8 of the Pakistan Tobacco Board Ordinance, 1968 (reproduced below), minimum prices are fixed and notified by the Federal Government for various types! grades of tobacco in the country.

"8 Fixation of Prices:

(1) The Federal Government may, by notification in the official Gazette, fix the minimum prices below which and the maximum prices above which, tobacco of various grades shall not be bought or sold for consumption within Pakistan or for export; and different prices may be fixed in respect of different areas".

Methodology for the Fixation of Minimum Prices of Tobacco

(2). For the fixation of minimum prices of tobacco, the Pakistan Tobacco Board has constituted two Special Committees-one each for NWFP and the Punjab to work out cost of production of tobacco by visiting tobacco growing areas and interviewing tobacco growers selected randomly in these two provinces. The reports of these two Special Committee, when become available, are considered indepth by the Price and Grade Revision Committees consisting of the representatives of tobacco growers, tobacco industry, Industries Division, Government of Pakistan, Agricultural Prices Commission, Pakistan Tobacco Board and headed by the Agricultural Development Commissioner, Government of Pakistan. This Committee formulates its recommendations for decision of the Board. And, recommendations of the Board are submitted to the Ministry of Commerce for final decision and notification of minimum prices for various types/grades of tobacco in the Gazette.

(3). For the fixation of minimum prices of tobacco, following parameters are taken into account:

* Increase in cost of production of tobacco.

* Minimum prices and weighted average prices of tobacco.

* World tobacco trends.

* Rate of inflation in the country.

* Increases allowed in prices of other agricultural commodities.

* Wholesale price index of raw materials for the industry.

Minimum Prices Fixed for Tobacco Crop 1999

(4). Following minimum gradewise prices recommended by the Pakistan Tobacco Board for various types of tobacco's 1999 crop have been approved by the Federal Government and duly notified in the Official Gazette:

Protection to Weighted Average Prices

(5). Apart from the above, the weighted average prices of flue-cured Virginia and white patta tobaccoes stand protected under the provisions of provincial laws in NWFP (reproduced below) as follow:

Flue-cured Virginia Tobacco: The weighted average price of tobacco for the crop of any year to be paid by a tobacco company to the tobacco growers shall not be lower than the weighted average price paid to them for the crop of the immediately preceding year.

White Patta Tobacco: The weighted average prices to be paid by the tobacco companies and tobacco dealers, agents and mandiwalas during 1985 crop shall not be less than paisa 750 per kg. The price for subsequent years will be as announced in a Gazette Notification by the Provincial Government.

(6). The methodology of tobacco price fixation, mentioned above, adequately safeguards the tobacco growers interests and grade assignment.
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Author:Faraz, Khan
Publication:Economic Review
Article Type:Brief Article
Geographic Code:9PAKI
Date:Apr 1, 2001
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