Mohammad Ali, a tobacco grower from Swabi, reports a devastating impact on their crops due to frequent hailstorms. Since planting the crop in February, they have experienced a total of 9 hailstorms, with almost every rainfall accompanied by hail. This has particularly affected the tobacco crop, resulting in broken and damaged leaves.
In Dagai village, Mohammad Ali has cultivated 15 acres (6 hectares) of tobacco, where the process of leaf picking and kiln drying has begun. However, the consecutive hailstorms have significantly reduced the yield of the crop, causing damage to a large portion of the leaves. According to Muhammad Ali, approximately 40 to 45 percent of the tobacco crop in the Swabi district has been impacted by these hailstorms.
The Pakistan Tobacco Board reveals that 97 percent of the flu-cured Virginia or FCV tobacco used in cigarettes in the country is produced in Khyber Pakhtunkhwa (KP), with more than 50 percent being grown in the Swabi district alone. This year, out of the 26,000 hectares under tobacco cultivation in KP, 12,000 hectares are dedicated to Swabi.
The board has received a demand of 85 million kg from tobacco companies, while the estimated total production is 119 million kg. Besides Swabi, tobacco is also grown on a large scale in Mardan, Charsadda, Mansehra, and Buner.
According to the Federal Board of Revenue data, Pakistan collected Rs. 160 billion in taxes from the tobacco industry in the last financial year, with a target of Rs. 200 billion set for this year.
Moreover, KP’s Excise and Taxation Department has collected up to Rs. 50 crores from the tobacco sector in the form of tobacco development cess. The FCV tax levied on tobacco is 3%, while the tax on white Patta amounts to Rs. 2.5. Additionally, a tax of Rs. 2 is imposed on snuff.
The data from the Pakistan Tobacco Board reveals a decline in tobacco production in recent years. In 2014, the country’s total tobacco production was 129 million kg, which decreased to 108 million kg last year. Although the board has estimated the production at 119 million kg this year, farmers assert that the hailstorms have significantly impacted the production, and they urge the board to revise its data accordingly.
Effects of Climate Change on Tobacco Crops
While the decline in tobacco production is attributed to various factors, experts are now pointing toward climate change as a significant contributor.
Liaquat Yousafzai, chairman of the Tobacco Growers Association Pakistan and a tobacco cultivator in Swabi, highlights the deviation in temperature as a primary concern. The tobacco crop requires temperatures between 38 to 40 degrees Celsius in May and early June, which were not met this year. This not only reduces overall yield but also affects the quality of the tobacco.
Yousafzai emphasizes that if hailstorms persist in the future, farmers will have no choice but to abandon the crop. However, he notes that those farmers who planted the crop in March rather than February suffered less damage from hailstorms because their tobacco plants had fewer leaves in April and May.
Dr. Akmal Khan, an agricultural expert and retired professor from Peshawar Agricultural University, supports Yousafzai’s viewpoint. He explains that the chemical reaction between nicotine and sugar in tobacco is disrupted by extreme temperature fluctuations, negatively impacting crop quality.
Dr. Khan further adds that Swabi has experienced an increase in hailstorms, which can be attributed to the effects of climate change. The district has witnessed a shift in the concentration of clouds and rainfall from Kashmir to Swabi and surrounding areas. Historical data also reveals a higher frequency of hailstorms and flash floods in Swabi compared to other districts.
Expressing concern for the future, Dr. Akmal predicts that the monsoon rains that typically occur in July and August in Swabi may shift to April, May, or even March due to climate change. Such a shift would be disastrous for the tobacco crop. Agricultural experts are advising farmers to delay planting tobacco crops as a strategy to mitigate the effects of climate change.
However, Bilal Anwar Malik, the Director of Research and Development at the Pakistan Tobacco Board, downplays the immediate impact of temperature fluctuations on tobacco quality.
He suggests that while there may not be an immediate difference, prolonged exposure to unfavorable temperatures could eventually affect marketing prospects. Malik argues that the decline in tobacco production, particularly in Khyber Pakhtunkhwa, is primarily driven by a decrease in demand rather than climate change. According to him, tobacco is grown to meet the required quantity, and the reduced production is a response to declining demand.
How much tobacco should be grown? A different story
In the tobacco industry of Khyber Pakhtunkhwa, more than 60 companies are actively involved, with the majority focused on exporting tobacco to foreign countries. Additionally, three major companies, namely Pakistan Tobacco Company, Khyber Tobacco Company, and Philip Morris International, are engaged in both exports and cigarette production.
At the beginning of each year, these companies obtain quotas from the Pakistan Tobacco Board based on their annual requirements. Subsequently, they procure tobacco from the market according to their allocated quotas. Prior to cultivating tobacco, farmers must enter into formal agreements with the tobacco companies, specifying the quantity of tobacco they will grow for purchase. If farmers exceed the agreed-upon amount, finding a buyer becomes challenging.
Such a predicament was encountered by farmers in 2021 when they produced an excess crop beyond the agreed-upon quantity. As a result, the companies and the Pakistan Tobacco Board deemed the surplus of 2.6 million kilograms, out of the total production of 118 million kilograms, unnecessary. During periods of surplus tobacco production, companies typically purchase the excess at the government-fixed minimum rate, resulting in reduced profits for farmers.
The marketing officer of the Pakistan Tobacco Board highlights the adverse impact of excess tobacco production on farmers, emphasizing that it leads to lower profitability due to the minimal purchase rates enforced by the companies during such circumstances.
Fixation of tobacco rates and threat of farmer boycott
The Pakistan Tobacco Board has set a minimum rate of Rs 310 per kilogram for tobacco this year. A committee comprising the board, companies, and farmers determines the rate after considering various factors such as costs, inflation, and an expenditure survey conducted by landlords. While the rate is not fixed, it represents the minimum price, with the maximum rate depending on marketing and tobacco quality for other companies and growers.
Different grades of tobacco are assigned different rates, with the top grade priced at Rs 329 per kilogram in the plains and Rs 372 in hilly areas like Mansehra and Buner. The weakest quality has been set at Rs 165 (plains) and Rs 208 (hills) per kilogram, while the average rate is Rs 310 per kilogram.
Although the average rate has increased by Rs 65 per kilogram compared to last year, farmers argue that it is insufficient. They claim that the rate does not account for the actual inflation rate or crop damage caused by hailstorms. Rising costs of fertilizers, pesticides, wood for kilns, and labor have significantly increased farmers’ expenses. The hailstorms further decreased the weight of the affected crop’s leaves. As a result, farmers believe that the financial benefit from the crop at the declared price would be negligible.
In response to the fixed rate, tobacco farmers threatened to boycott the sale of their crops unless the price was revised. Initially demanding a minimum rate of Rs 600 per kilogram, farmers found some relief when Pakistan Tobacco Company raised the rate to Rs 425 and Philip Morris offered Rs 400 per kilogram. Consequently, farmers started selling their tobacco to these companies. However, there have been no announcements from other companies regarding rate revisions.
Farmers’ demands for support and relief
Liaquat Yousafzai, Chairman of the Tobacco Growers Association of Pakistan, highlights the significant tax revenue collected by the government from the tobacco industry and urges the allocation of at least ten percent of it to support the farmers who have suffered losses due to the hailstorms. He emphasizes the need for financial assistance so that farmers can continue growing tobacco in the next year.
Yousafzai further points out that the provincial government also receives a substantial amount of tobacco development cess annually, but there has been a lack of substantial support or cooperation for the affected farmers.
In response, the board’s deputy director of marketing expresses skepticism about the extent of the hailstorm damage reported by the farmers. While the final results of the board’s field survey are yet to be disclosed, the initial estimate suggests that hailstorms have caused damage ranging from one to one and a half percent of the tobacco crop.
He clarifies that although hailstorms have occurred multiple times, their impact has been specific to certain areas, and it does not imply that the entire tobacco crop in the district has been affected.
According to data obtained from the Swabi Additional Deputy Commissioner for Rehabilitation and Resettlement office, less than 300 individuals, including 290 farmers, have filed claims for damages. As per the Khyber Pakhtunkhwa Natural Disaster Management Agency PDM, compensation for crops affected by natural disasters, including tobacco, will be provided at a rate of Rs. 5,000 per acre, with a maximum limit of Rs. 50,000 per farmer.
In addition to government support, tobacco farmers are also demanding financial assistance from the companies purchasing their crops and the waiver of loans they have taken.
Pakistan’s Growing Tobacco Export Market
Pakistan has established its presence in the global tobacco market by exporting to over forty countries in 2022. As the eighth largest tobacco producer globally, Pakistan plays a significant role in the industry. China holds the top position as the largest producer, followed by Brazil. The Pakistan Tobacco Board reports that Pakistan earned $77.4 million from tobacco exports last year, with a total export volume of 23 million kilograms.
Interestingly, while domestic tobacco demand has declined, there has been a 100% increase in the demand for Pakistani tobacco in the international market this year. According to an official from the Pakistan Tobacco Board, Pakistan is set to export 46 million kilograms of tobacco to foreign countries in the current year.
Mohammad Ali, a farmer, highlights the link between cotton and tobacco, explaining that one cotton cigarette requires a total of 8 kilograms of tobacco. Companies spend up to 25,000 rupees to purchase these 8 kilograms, covering taxes, manufacturing, and marketing costs. However, they sell cigarettes for over 50,000 to 60,000 rupees. Ali expresses his concern, stating, “In other words, the tobacco that is purchased from us for 300 rupees is sold in the market for 8,000 rupees.”
He adds that the government and companies earn billions of rupees annually through tobacco exports, while the farmers’ share remains minimal. This situation, coupled with the impact of climate change and the cruel policies of the government and companies, may lead tobacco farmers in the entire province, including Swabi, to abandon this crop.