The Economic Coordination Committee (ECC) of the Cabinet is likely to approve notification of an increase in minimum indicative prices (MIPs) for tobacco crop 2024 and cess rates for 2024-25.
Sources said that the Ministry of National Food Security and Research (MNF&R) in a summary to the ECC stated that the Pakistan Tobacco Board (PTB) has been established under the Pakistan Tobacco Board Ordinance, 1968, mainly to regulate, control and promote the export of tobacco, tobacco products, undertake research in tobacco and develop new tobacco growing areas.
As per the PTB Ordinance, the MIPs for different grades of various types of tobacco are to be notified by the federal government. The MIPs are recommended by the prices and grade revision committees (PGR) of the board on the basis of the cost of production determined by the government committees under the PTB’s bye-law.
Two committees (one for Khyber Pakhtunkhwa and the other for Punjab) for the determination of the cost of price were constituted in pursuance of the PTB’s bye-law.
The cost of production committee for the Punjab finalised per kg cost price of DAC tobacco while the cost of production committee of Khyber Pakhtunkhwa agreed upon the cost for producing tobacco per hectare. However, consensus on the cost of production per kg was not arrived due to disagreement of stakeholders on per hectare yield.
The price and grade revision committee finalized per kg cost of production and recommended the MIPs for various types of tobacco for different areas in its meetings held on 16th November 2023. The ministry also stated that one of the functions of PTB, under PTB Ordinance, 1968, is the collection of cess imposed on tobacco produced in Pakistan.
The cess rates, not exceeding three per cent ad valorem, are to be notified by the federal government by notification in the official gazette. The current cess rates are required to be revised for the year 2023-24 in line with the increase in MIPs of all varieties of tobacco.
The MIPs of various types of tobacco were notified by the federal government through SRO dated 29th December 2022, whereas, the current cess rates were notified by the federal government through dated 11th August 2023. The Ministry of National Food has recommended that the MIPs for 2024 and cess rates for 2024-25 of tobacco crop for approval.
The ministry has sought Flue Cured Virginia (FCV); (i) plain area minimum rate at Rs. 505 per kg with cess rate of Rs. 15.15/kg; (ii) sub-mountainous area Rs. 573 with cess rate of Rs. 15.15 kg.
The ministry has proposed that Dar Air-Cured tobacco (DAC) MIP at Rs. 378/kg and cess rate at Rs. 11.34/kg, white pam (WP) per kg MIP at Rs. 245/kg with cess rate at Rs. 7.34/kg, Burley minimum indicative price at Rs. 295 per kg and cess rate Rs. 8.85 per kg, naswar/snuff/ hookah and other Rustica tobacco and its products MIP Rs. 245 and cess rate Rs. 7.35 per kg, Sun Cured Virginia (SCV) MIP Rs. 331 with cess rate Rs. 9.93 per kg.
The proposal does not entail any financial obligation on the part of the federal government and the proposal contained in the summary is submitted for approval of the ECC of the federal cabinet.
