Pakistan Tobacco Growers Demand Consultation Before WAP Abolition
- Tobacco growers in Swabi have urged the federal Ministry of National Food Security to consult farmers before abolishing the tobacco weighted average price (WAP) mechanism and introducing amendments to tobacco laws.
- Growers rejected the profit figures presented to the federal cabinet, claiming actual earnings under the Minimum Indicative Price (MIP) and WAP were significantly lower than officially reported.
- Farmer representatives said natural calamities, high cultivation costs, and limited purchases by tobacco companies severely reduced growers’ income during 2024-25.
Tobacco growers and their representatives in Swabi on Saturday unanimously called on the federal Ministry of National Food Security to hold consultations with farmers before making any decision to abolish the tobacco weighted average price (WAP) mechanism or amend existing tobacco laws.
The growers stated that the federal cabinet had been informed tobacco farmers earned a profit of 26.41 per cent under the Minimum Indicative Price (MIP) during the 2024-25 season. However, they disputed those figures, claiming farmers actually earned only about 4.81 per cent under the MIP, while profits under the WAP were approximately 5.07 per cent instead of the 67.33 per cent reportedly presented to the cabinet.
Speaking at a press conference, former Pakistan Tobacco Board (PTB) director Muhammad Ayaz Khan said the federal government was planning to amend the Tobacco Marketing Rules, 2016, along with the tobacco marketing law, Martial Law Order (MLO) 487, to eliminate the WAP mechanism that is used to determine the annual MIP for tobacco.
“Tobacco is completely different from other crops. It costs about Rs2 million per hectare to cultivate, and farmers grow it in unbearable heat,” he said.
The growers argued that the ministry had submitted misleading profit figures to the federal cabinet in an effort to justify abolishing the WAP mechanism. According to them, inflation and markup had been counted as part of farmers’ income despite being production costs, making the profit calculations inaccurate.
Mr Khan explained that the PTB had estimated tobacco production at 3,630kg per hectare during 2023-24, while production at the board’s research stations was only around 2,100kg per hectare. He said windstorms damaged the crop, reducing the average yield to approximately 2,900kg per hectare. With the WAP fixed at Rs709 per kg, gross income per hectare reached Rs2,056,100.
Based on PTB data, the cost of cultivating one hectare of tobacco stood at Rs1,750,749, leaving a net income of Rs305,351 per hectare. Spread over eight months, this represented a profit of about 17 per cent, not the 67 per cent figure that was reportedly presented to the federal cabinet, he said.
Mr Khan further stated that PTB estimated production at 3,623kg per hectare during 2024-25, while cultivation costs increased to Rs1,804,000 per hectare. Although the WAP was fixed at Rs719 per kg, tobacco companies signed agreements with farmers to purchase only 2,100kg per hectare.
He said natural calamities again affected the crop, reducing average production to nearly 2,750kg per hectare. Companies bought 2,100kg at the WAP under their agreements, while the remaining 650kg was purchased at the MIP of Rs545 per kg after the crop was declared surplus.
According to Mr Khan, farmers earned Rs1,509,900 from selling 2,100kg at Rs719 per kg and another Rs354,250 from selling 650kg at Rs545 per kg, bringing total gross income to Rs1,864,150. After deducting cultivation costs of Rs1,804,000, the net income was only Rs60,150.
“This means the profit for eight months’ work was only about 3.3pc in 2024-25, not 67pc,” he said.
Mr Khan added that the 2022-23 season was the only year in which tobacco growers earned substantial profits. Although the MIP had been fixed at Rs310 per kg, reduced supply and increased demand created competition among tobacco companies, driving the market price to nearly Rs700 per kg.
As a result, farmers earned approximately Rs1,571,000 in profit over eight months, making it one of the few seasons in which tobacco growers received reasonable returns, he said.
Iqbal Khan Shewa, patron-in-chief of the Khasthkar Ittehad Association, said the 2024-25 season was heavily affected by natural calamities that caused extensive damage to the tobacco crop. He alleged that tobacco companies refused to purchase low-grade tobacco, leaving large quantities stored in farmers’ warehouses.
“The losses pushed tobacco farmers deep into debt. If the federal government wants the facts, it should conduct an independent survey of tobacco farmers,” he said.
Frequently Asked Questions (FAQs)
What is the Tobacco Weighted Average Price (WAP)? The Tobacco Weighted Average Price (WAP) is a pricing mechanism used to calculate the annual Minimum Indicative Price (MIP) for tobacco. It is designed to ensure that tobacco growers receive a fair average price based on market conditions and purchasing patterns.
What is the Minimum Indicative Price (MIP)? The Minimum Indicative Price (MIP) is the minimum rate at which tobacco companies are expected to purchase tobacco from farmers. It is determined annually using the WAP mechanism and serves as a benchmark to protect growers’ earnings.
Why are tobacco growers opposing the abolition of WAP? Farmers believe removing the WAP mechanism would reduce price transparency and weaken their bargaining position. They also argue that the government should consult growers before making any amendments to tobacco marketing laws.
Why did growers dispute the government’s profit calculations? According to farmer representatives, the ministry included inflation and markup in income calculations, even though these are production costs rather than profits. They say this resulted in significantly overstated profit figures being presented to the federal cabinet.
Why were farmers’ earnings low during the 2024-25 season? Growers said natural calamities reduced tobacco production, cultivation costs increased substantially, and companies purchased only limited quantities at the WAP, while the remaining tobacco was bought at the lower MIP after being declared surplus. These factors significantly reduced farmers’ net income.
