An overview of the Tobacco Industry
Tobacco products are being chewed, snuffed, and mostly smoked all
arounf the world.People have been consuming tobacco products for centuries.
Tobacco is also grown in many places. Originally from Americas, since 1492 it has
spread far and wide. Today , tobacco is grown in over 100 countries.
No other products has stimulated demand for tobacco as much as the cigarette. Until
the 1870s , cigarette were manly roll by hand. Today, they‟re made by machines.
Thanks to these machines, which can produce hundreds, if not thousands of sticks per
minute, cigarettes have become an article of mass consumption. In the process,
cigarettes have become the main tobacco product. Today over 80% tobacco produced
is used in the cigarettes manufacturing. The world market is dominated by a low and
steadily diminishing number of suppliers.
The tobacco industry is no longer growing at the steady pace of the years prior to the
1990. world market cigreete demand was virtulay flat in the 1990s . demand is weak
in the established markets of the OECD area. In the Noerth America it has been
declining since the early 1980s. US cigarette companies also the problems of
litigation: the are defending in hundreds of lawsuits.
But the picture is the not bad for the large tobacco companies. Profits are good. In the
1990s, the more internationally- orientted among saw huge increases in sales volume.
The y conquered the large the large shares of the East Euorpean and Russian markets
when these countries liberalized their trade and investement regimes and privatized
their former state monopolies. China, at one third of the market by voume, is the big
prize that so far has escaped them. But in china their market share can only go up.
The questionis how and how fast this will take place.
i. Tobacoo and cigarettes
Tobacco is an essential ingredient for cigrettes, cigar,
RYO(rool-your-own) tobacco, pipe tobacco, cigars, snuff and chewing tobacco. That
is not to say that the value of tobacco in cigrettes and other tobacco products I high.
Infact, in many OECD countries its share in total values is ;low compared to that of
taxes, advertising andretailing:in US, in 1997, tobacco made up only 4 precent of the
total . with taxes rising, this percentage likely to drop even further.
Most tobacco is used for cigarettes. In the early 1990s. it was estimated that at least
80 percent of tobacco leaf was used for cigarettes. Today this might well be higher as
demand for cigarettes is seen to outgrow that for other tobacco products.
2.1.1 Different type cigarettes use different types of Tobacco
There are basically four types of cigarettes: Virginia (“flue-
cured), “American” blend, dark and oriental cigrettes. The latter two i.e dark and
oriental has lost ground to the first two. Virginia “(or “English”) cigarettes are made
entirely from the flue cured Virginia tobacco. They are popular in uk its former
colonies. The American blend is currently the most popular type of cigrettes. Its
world market share continues to grow. The main tobacco componets of the American
blend are flue cured Virginia (approx.50%), Burley and Oriental (around 12%). In
addition, each cigarette brand uses a specific mix of tobacco to give its characteristics
taste and to set it apart from its competitors. Virginia flue-cured is the main source of
the tobacco today
Figure 1 world unmanufactured tobacco production by type (metric tons: 1994-
2.2 Consumption of tobacco
World wide the consumption of tobacco and production of
tobacco products increased steadily until 1990s.between the early 1970s and early
1990s tobacco production increased by around 50 percent in volume terms. Cigarette
consumption and and production increased at a slightly faster pace. Between 1990 and
1995, production of and demand for cigarettes grew at a more modest rate. Tobacco
production reacted to this weakening demabd with a lag. After 1996, consumption
appeasras to have declined.
On the whole, world demand and world production develop more oe less in parallel.
But this is clear for cigarettes than it is for tobacco. Cigarettes are unsuitable for
longerm stockholding. Their quality deteoriates rapidaly and this is a powerful
incentive for producers to adjust to changes in demand without much delay. other
things being equal, trends in world cigarette production can act as a fair indicator of
world cigarette demand.
2.3 Production and international Trade
Table x gives data on the share of major regions and countries in
the volume of world production of unmanufactured tobacco. Asia , at around 60 percent
of the total, is the main world tobacco producing region with China alone contributing
for 36 percent. China share of world production, which had risen rapidly in the 1980s,
was no higher in 1998 than it was in 1990. the share of India, south America, and
particularliy Africa have not stopped increasing. The share of Europe declined and that
of the US remained more or less the same.
International trade flows in cigarettes are explained by several factors. They can be the
result of temporary supply mismatches: local producers may not produce the type or the
quality of cigarettes that the market requires. Or the demand may be growing far away
from where installed capacity is located, with out put only slowly reacting to the new
Certain countries export most of their production. In 1998, UK production was 160
billion pieces. It exported 125 billion pieces in that year. The Netherlands exported 103
billion pieces out of 116 billion pieces.
Pakistan Emergence on the world tobacco scene
3.1 The origin of Tobacco plant in Pakistan
The origin of tobacco plant in Pakistan can be traced back to the
16 century when the Mughul emperor was ruling India. Akbar was reigning
throughout the length and breath of what was formerly indo-Pakistan sub-continent and
now Pakistan. Ever since then , it was consumed and used in different forms: originally
as a preservant, then as medicine and now for consumption through smoking as hubble-
bubble, cigarettes, cigars and as snuff. Despite all the constraints tobacco still remains
important cash crop the world over. Total irrigated area in Pakistan under tobacco is
49400 hectare or 2.07%
Before the partition of the indo-pakistan and subcontinent, no tobacco in the area
constituting the present Pakistan , which could be considered suitable for cigartee
manufacturing. It was after considerable efforts that production of flue cured Virginia
tobacco was first tried in the lower Indus basin: then its production moves northowrds
to the Punjab plains and finally to the N.W.F.P which has climate and altitudes
comparable to the old tobacco belt of USA in North Carolina, South Carolina and
3.2 Development of Tobacco industry In Pakistan.
During the fifties, Pakistan imported nearly all its tobacco for meeting the demand of
its cigarette industry. However , cultivation of the flue cured Virginia was started on
experimental basis over about 20 acres in 1948. self sufficiency in tobacco for use in
low brand cigarettes was attained during 1969-71, but the country used to import large
quantities of good quality tobacco for use in superior brands of cgartees. With a view,
to improving tobacco production in the country and to reducing dependence on the
import of good quality tobacco leaf, the Pakistan tobacco Borad , in the collaboration
with tobacco companies intensified resrach and development activities and explore the
the soil and climatic conditions in the submontane areas of Mansehra, Buner, Swat and
dir districts to meet the quality requirements of cigartees for domestic use.
3.3 Export of the Pakistan Tobacco
During 2002-03 exports showed a growth rate of 34% over the previous
year, reaching US$ 6.25M. Pakistan exported 8,270 tons of tobacco valuing US$
11.08M during the year July 2003to June 2004. total earnings from export of tobacco
and its manufacturing amounted to US$ to 13.23M during the year 2002-03 and
US$4.66M during 2001-02. the exports during 2003-04 were thus 111.68%higher than
those of the same period July –June, 2002-03. if a comparable pace of growth is
maintained during the next two years through market diversification, quality
improvement, greater market access and aggressive marketing, there is hope that
Pakistan could achieve a total export in the range of US$25-30M by 2005-2007 and
volume could reach 16-20M.kg.
Pakistan tobacco manufacturing and export sector is dominated by two large
companies- the Pakistan Tobaco Company, a BAT subsidiary, and the largely locally
known Lakson Tobacco Company. Of the total exports of US$13.23M in 2003-4 these
two companies accounted for US$10.87M or 82.16%.
Of the 15 tobacco companies operating in Pakistan, the two largest companies export
nearly 83% of Pakistan total tobacco exports wheras the remaining 13, mostly small
companies make up for the remaining g 17% of the market. In value terms the latter
companies cumulatively exported tobacco and tobacco products worth US$ 2.36M
Pakistan Tobacco Board
Pakistan tobacco Board was established under an ordinance (ordinance
No.1 of 1968, dated 8th February, 1968) for the promotion of the cultivation,
manufacturing and export of tobacco and tobacco products and matters ancillary thereto.
4.1 Functions of the PTB Under Section-6, PTB ordinance, 1968
To regulate, control and promote the export of the tobacco products, and to
fix grading standards.
To undertake and assist research connected with the tobacco industry, impart
training in tobacco testing and generally to take measures in the interst of
To render assistance for the development fo new tobacco growing araeas and
estbalishement of model farms, to organize and assist special research
connected with tobacco cultivation and generally to render assistance for
improving tobacco production.
To collect statistics on any matter relating to tobacco and tobacco industry:
To perform such other functions as the federal government may, from time to
4.2 Composition of Board As per PTB 1968 Ordinance
Members representing the federal Government(Federal Government Officers)
Members representing the four provinces (Provisinal government Officers)
Members representing the Cigarette Manufacturers Association of Pakistan
and the federation of Pakistan Chambers of Commerce and Industry.
Members representing the tobacco growers- three each from the province of
NWFP and province of Punjab: and
Such other persons as may be appointed by the Federal Government
The members hold office for two years and are eligible for re-election and
renomination(without any limit)
4.3 Committees of the Board
Tobacco development Committee.
Research Co-ordination Committee
Price and Grade Revision Committee.
Export Promotion Committee.
Departmental Promotion/ Selection Committee.
4.4 Organizational Chart
Pakistan tobacco board is a self-sustaing organization of the Federal
Government. Its finances are met through the following sources:
Cess is levied on the tobacco at a rate of 3% advalorem.
Tobacco cess is levied under section-9 of Pakistan Tobacco Boards
Ordiance, 1968 and collected under S.R.O. by the Ministry of Connerce.
Presently the cess is collected under S.R.O. No8/98 of the 7th January 1998,
which specified as under:
Cess on the tobacco purchased from within the decalred requirements
subsequently adverstised by the Pakistan Tobacco Board or under
orders of the federal government by a tobacco company and used in
the process of cigartttes manuufature shall be collected by Central
Excise Department and after the deduction the cost of collection be
paid to the Pakistan Tobacco Board: and
Cess on the tobacco other than in Clause(a) purchased by the dealers,
agents , companies , vendors, or any person or persons shall be
collected by the Pakistan Tobacco Board
II. Farm Products
This income is derived through the sale of tobacco and other crops
grown at the Research Stations of the Board in pursuance of its
III. Miscellaneous Income
The income under this head accrues from the interest on securities,
advertisements in Pak Tobacco Journal and auction of unserviceable.
4.6 Research and Development
Improved tobacco breeds introduced by the board include:
Spieght G-28, K-399, KHG-17, 18,19.
Rustica-9, rustica-14, Indian Rustica, Rustica –Jampur
Galpao, Harvel-De-Baisco, Kango Baster.
Semi- flavoured Tobacco
Semi- flavoured Tobacco FCV is produced in sub-montane
area of Mansehra and Bunir.Burley tobacco is produced in Swat and
Autum crop is presently under experimental stage as it is
severely affected by virus diseases.
Against virus diseases efforts are being made to find out/evolve
resistant variety(ies) having resistance to the tobacco Mosaic virus.
For the control of insect/pests proper plant protection measures are
adopted for the effective control of tobacco insect/pests.
4.7 Extension Service
Extension service located at pivotal points for quick transference of
new technology to growers.
Tobacco Research Station, Mardan serve as the Principle Center to
undertake major laboratory and field research in Tobacco
Breeding. Agronomy , chemistry, entomology, plant pathology and
Tobacco Research Sub-Stations at Mansehra, Kunjah(Gujrat) and
okara serve a regional testing stations for developing the tobacco
production technology according th the prevailing soil and climatic
Yield per hectare of cigarette tobacco increasedfrom 916kg(1967-
68) to 3000kg(2009), registering an increase of 160%.
Employment opportunities increased by 100% from1968 to 2009
The country is saving Rs. 7 billion per anum through input
substitution of tobacco.
Export of tobacco and its manufactures amounting to Rs.49.3
milion in 1971-72 increased to Rs.570.18 million in 2007-08.
Central Excise Duty and Sales Tax(1970-71)from Rs.0.386 million
increased to over Rs. 36.3803 billion in 2007-2008
The areaunder cigarette-type tobaccos reduced bu 28.05% where
as production increased by 86.91%, thus releasing agriculture land
for the cultivation of other crops.
An integrated marketing system has been evolved and introduced,
eliminating mal-practices and exploitation of tobacco growers.
In order to vouchsafe the timely payment to tobacco growers,
“Deferred Payment Leaf Voucher Scheme” has been introduced
under the aegis of defunct Pakistan Banking Council.
Through special measures huge quantities of surplus tobacco were
disposed off and the tobacco growers were saved from financial
Marketing of the Tobacco Products
Under section 6(a) of the Pakistan tobacco boards ordinance, 1968
diferent types of tobacco have been classified into grades with full description therfo
notified in the Government Gazette. Tobacco marketing in the NWFP is regulated
through Provincial Law(MLO 487 and tobacco Marketing Control rules, 1993 framed
under) while in Punjab it is regulated through Code of Ethics and decisions taken by the
Borad from time to time.
5.1 Marketing Methodology of PTB
For proper regulations of tobacco marketing, the Pakistan tobacco
board ascertains the requirements of various tobacco companies for different types of
tobacco for the ensuing crop abd publicizes the same at the time when nurseries are being
laid out. The underlying idea is to crate an awarness of the manufactures requirement
amongstthe growers so as to aim at a crop size bearing a relationship with the demand.
The tobacco companies are bound to execute agreements with the tobacco growers in
prescribed format for their toal demand of both types of Virginia as well as Burley
Methodology of Marketing of Virginia type of Tobaccos
5.2 International standards for the Marketing of Tobacco Products
The Imperial tobacco Group PLC believes that tobacco products are for adults.
The group is committed to promoting and selling its products responsibly , within the
laws and voluntary agreements in which it operates.
This international standard for the marketing of tobacco products reinforces this
commitment and sets out clear rules and principles to ensure that the company
advertising and promotional activities are directed only to the adult smokers in all
5.2.1 The Standard
Tobacco brand adverstising will not be aimed at a or particularly appeal to
those under 18 years of age or encourage non somokers to smoke or
discourages smokres from giving up smoking.
The content of tobacco brand advertising will not be aimed at a
particularly appael to those under 18 years of age and it should not feature
a clelebrity or contain a celebrity endorsement where that clebrity is
beleieved to appeal more to young people under 18 year sof age than to
the population as whole or suggest that smoking enhances popularity,
sporting, professional or sexual success or it should not suggest that most
people are smokers or suggest that smoking is a healthy activity.
Any person appearing in tobacco brand advertising shall be and shall
appear to be- aged 25 years or above
5.2.2 Printed Media
No tobacco brand advertising will be placed in printed media unless
satisfactory evidence has been provided that at least 75% of the readers are
Where tobacco brand advertising is permitted in printed media, each
adevertisement will contain an appropriate health warning as specified by
local law or voulnatry agreement. Where not specified, all new advertising
will carry a clearly visible warning in the most appropriate local language,
using the wording of the EU additional warning, “Smokres die younger”
including the attribution
5.2.3 Outdoor advertising
No tobacco brand advertising will be placed on outdoor signs or
billboaords which are closer than 100meters to the main entrance of
schools used predominally by those ubder 18 years of age. This does
not include outdoor signs at the point of sale.
Where tobacco brand advertising is permitted on outdoor signs and
billboards, each adverstisemt will contain an appropriate health
warning as specified by local law or voulantry agreement.where not
specified, all new advertising will cary a clearly warning in the
appropriate local language, using the wording of the EU additional
warinig “Smokres di youger”including the attribution.
5.2.4 Point of Sale Material
Where tobacco brand is permitted at point of sale,each advertisement
will contain an appropriate health warning as specified by local law or
voluntary agreement . Where not specified,all new point of sale
material, the advertising display area of which exceeds 250 square
centimeters, will carry a clearly visible warning in the local language,
using the wording of the EU additional warning “smokers die
younger” including the attribution. Branded items that aregiven to
consumers are expected from this rule.
5.2.5. Radio, Television and Cinema Advertising
Where tobacco brand advertising is permittedon radio or television, it
will be broadcasted only during those hours abd when the
programming is directed primarly at those aged 18 or over.
Where tobacco brand advertising is permitted in cinemas, it will not be
shown when the audience is likely to comprise mainly young people
under the age of 18.
Where tobacco brand advertising is permitted on radio, on television
or in cinemas, each advertisement will contain an appropriate health
warning as specified by local law or voluntary agreement. Where not
specified, all new tobacco brand advertising will carry a learlyvisible
warning in the appropriate language, using the wording of the EU
additional warning “Smokers die younger” including the attribution.
5.2.5 Product placement
No payement shall be made to solicit the placement of Tobaccos
products, brands or advertisements in any film, television, programme
or any other public performance or entertainment medium for viewing
by the gereal public.
5.2.6 Internet Advertisement
There will be no tobacco brand advertising on the internet unless
satisfactory pre-site acces adult verification methods are in place and
the content or service of the internet site are directed at those countries
where such advertisements are not prohibited by law. In the case of
internet ad baners on online media, it is sufficient that satisfactory
evidence has been provided that at least 75% of the users are adults.
Where satisfactory adult verification has been obtained, all tobacco
brand advertisements must contain a health warinig appropriate to the
country of destination of the internet site, as specified by local law or
voulnary agreement. Where not specified, a clearly visible warning
will be used in the appropriate local language, using the wording of the
additional EU additional warning “smokers die younger” including the
5.2.6 Videos tapes, Audio tapes,CDs,DVDs, and Computer Games.
No tobacco brand advertising will be included in material published
on video tapes, audio tapes, CDs,DVDs, Computer games or any
other similar medium unless satisfactory measures are taken in
place to ensure that the item is intended only to be provided to
Where tobacoo brand advertising is permitted in material published
on video tapes, CDs, DVDs, computer games or any other similar
medium unless satisfactory measures taken place.
5.2.7 Promotional Events and Activities
Where tobacco brand promotional events and activities are
permitted , they will be conducted so as to comply with this
Sampling of tobacco products will be restricted to existing smokers
aged 18 years of age
Access to tobacco products promotional events will be restricted to
No tobacco product promotional activity or event will be aimed at
or particulary appeal to anyone under the 18 years of age.
All personel employed directly or indirectly only to those verified
to be aged 18 years of age.
All personnel employed in the tobacco brand promotional events
directly or indirectly , including sampling, shall be aged 21 years
Tobacco brand promotional items bearing tobacco brand names or
logos shall not be sold or given away to those under 18 years of
Tobacco brand promotional clothing will only be avalaible in the
All tobacco brand promotional offers shall be directed only to adult
smokers. Where such an offer permits an adult smoker to be
accompanied by other persons at an event or activity, those
accompanyin g the adult smokers must themselves be adults.
5.2.8 Direct Mail
The marketing of tobacco products by direct mail will be only
directed to verified adult smokers. All reasonables measures will be
taken to ensure that those under 18 years of age are executed from all
direct mailing lists.
All new direct mail will carry a clearly visible warning in the most
appropriate local language, using the wording of the EU additional
warning” Smokers die Younger” including the attribution.
5.2.9 Health Warnings on the Packaging of Tobacco Products
A clearly visible health warning will appear on packs of all tobaccos
products manufactured and/or marketed by tobacco companies as well
as any outer packaging intended to be presented to the consumer. This
warning will confirm to the relevant law or voluntsry agreement of the
contry or market for which the product has been manufactured,
including duty free arrears. Where there is no existing local law or
voluntary agreement, the wording of the EU additional waring
“somokers die younger” including the attribution will be used.
5.2.10 Product Market Research
Tobacco product market research will only be commissioned amongst
5.3 Marketing of Tobacco under MLO 487 in N.W.F.P
Notwithstanding anything to the contrary contained in any law for the time
being in force, or any decree or order passed by any court, or any agreement or
contract entered into or made before the coming into force of this Martial Law
Order, the marketing of tobacco between tobacco growers and every person,
including a Company, engaged in the purchase of tobacco in Zone „B‟ shall be
regulated in the manner hereinafter specified.
5.3.1 Flue-cured Virginia Tobacco
(1) Every Tobacco Company, for the purpose of purchase of its
targeted requirements of flue-cured Virginia tobacco, will execute
agreements with the growers of tobacco by the 31st December in
respect of the ensuring crop of tobacco. A copy of each such
agreement will be supplied to the growers concerned and a list of
all such agreements will be furnished to the Pakistan Tobacco
Board as soon as may be possible after the execution of the
(2) Every Tobacco Company and other purchaser of flue-cured
Virginia tobacco shall strictly follow the grade classification of
tobacco as laid down by the Pakistan Tobacco Board vide its
Notification No.SRO 522(1)/81 dated the 3rd June, 1981.
(3) Every Tobacco Company and other purchaser of flue-cured
Virginia tobacco shall prominently display at the purchase Depots
the leaf sample of each grade and its minimum price notified by
the Federal Government.
(4) 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.
(5) There shall be constituted a Vigilance Committee at the purchase
depot consisting of:
(a) A representative of the Pakistan Tobacco Board or the
Provincial Agriculture Department;
(b) A representative of the tobacco growers, nominated by the
Provincial Agriculture Department; and
(c) A representative of the Tobacco Companies nominated by the
(6) The Vigilance Committees shall check the grades assigned to various
ypes of tobacco used for the manufacture of cigarettes and shall also
ensure that no purchaser unnecessarily rejects, or pays price for, tobacco
at rates lower than the minimum notified rates. It shall also resolve the
differences or disputes between the tobacco growers and tobacco
companies, if any, arising out of sale and purchase transactions of
tobacco between the parties.
(7) The decision of the Vigilance Committee shall be taken by majority and
shall be binding on the parties.
(8) The Pakistan Tobacco Board will fix dates for the purchase of middle
and top portion leaves keeping in view the purchase periods of such
leaves during the past three years.
(9) The tobacco growers will confine the bale weight from 50 to 60 kgs and
that six bales will be offered by a growers on his turn.
5.3.2 White Patta (Mulki Tobacco)
(a) All Tobacco Companies shall purchase at least 35 percent of their purchase
targets of white patta tobacco indicated for any year direct from the tobacco growers;
provided that where a Tobacco Company, during the crop of the immediately preceding
year, had obtained 50 percent or more of its targeted requirements of white patta tobacco
direct from the tobacco growers, it shall in no case reduce its direct purchase from
growers below 50 percent of its indicated purchase target for the crop of any subsequent
(b) For the direct purchase of white patta tobacco every Tobacco Company will chalk out a
proper purchase programme, exhibit the same at the Buying Courtyards a fortnight earlier
and also inform the concerned growers about it.
(c) Every Tobacco Company shall make available to the Pakistan Tobacco Board, not later
than the 15th May of each year, a list, in duplicate, of the tobacco growers from whom
white patta tobacco is to be directly purchased by it.
(d) A copy of the list mentioned in sub-clause (c) shall be supplied by the Pakistan Tobacco
Board to the Special Committee of Growers constituted by the Board for the purpose of
verification of the genuineness of tobacco growers from whom direct purchase is made by
the Tobacco Company.
5.3.3 The Mandiwalas
Agents and Suppliers engaged in the business of tobacco shall purchase tobacco
brought at their business premises by the tobacco growers in the manner specified in this
Order and shall provide all facilities in the sale of their stock as were provided to them in
the past. In particular the Mandiwalas, Agents and Suppliers shall ensure that:-
(a) The rate of commission charged by them from the sellers and the
buyers does not exceed 6-1/2 percent and 1-3/4 percent respectively, that is to say,
the total commission to be charged from both the parties shall not exceed 8-1/4
percent, and that no other charge, whatsoever, is claimed over and above the said
(b) The payment of dues is made by them to the growers within a period of ninety
days from the date of sale transaction;
(c) No arbitrary deduction of weight on any account is made by them at the time of
(d) Such printed vouchers as may be prescribed by the Pakistan Tobacco Board are
issued by them to the sellers and that no weights/ measures other than the
standard weights and measures are used in the transaction;
(e) An accurate and up-to-date account of all purchases and sales transacted, the
payments made to the growers in liquidation of their dues and the sale price paid
to the growers for the purchase of tobacco, duly supported by printed vouchers
and receipts, are at all times maintained and are made available, during business
hours to the officials of the Board and members of Martial Law Inspection Team
for inspection; and
(f) Statements of purchases and sales, the weighted average price paid and the
payments made to the growers, on fortnightly basis from June to September, and,
on monthly basis thereafter, are furnished to the Pakistan Tobacco Board in such
form or manner as it may, from time to time, prescribe for the purpose and that
such statements reach the Board‟s office before the 5th and 20th of each month in
respect of transactions undertaken in the preceding fortnight or month as the case
(3) The Tobacco Companies which purchase tobacco through the Mandiwalas, Agents and
Suppliers, over and above the quantity purchased directly from the tobacco growers shall
execute agreements with them by the first June of each year, at the latest. The agreements
shall clearly specify in unequivocal and unambiguous terms the quantity of white patta
contracted, its grade or grades, the minimum price settled for each grade and fortnightly
lifting programme along with payment schedule which shall not exceed 60 days from the
date the lifting of purchased stock commences.
(4) 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
(5) The Tobacco Companies shall undertake transfer of purchased stock from Mandiwalas
and Tobacco Dealers from the 1st of August and this process shall be completed by the
30th of November, each year. Transfer of stocks shall be so undertaken that the stocks are
lifted in each fortnight proportionately.
(6) The tobacco suppliers and Tobacco Companies will mutually decide whether the
inspection of white patta stocks meant for sale will be made at the supplier‟s
warehouses/mandies or at the Tobacco Company‟s own purchase depots. In the former
case the suppliers will not be entitled to any transport charges, while in the latter case he
shall be entitled to transport charges from the premises of the supplier to the purchase
depot of the Tobacco Company at mutually agreed rates.
(7) The suppliers will make payment to the Commission Agent/Mandiwalas within 60 days
(1) The purchase targets intimated to the Pakistan Tobacco Board by the Tobacco Companies
shall not be altered in any form without prior approval of the Board. The Tobacco
Companies will also discourage purchases from azad growers that are non-agreement
(2) All Tobacco Companies shall commence purchases of tobacco from the date as fixed by
the Pakistan Tobacco Board.
(3) It shall be binding upon the Tobacco Companies to purchase tobacco in accordance with
their indicated purchase targets.
(4) All Tobacco Companies, Mandiwalas and Tobacco Dealers shall prominently display
sign boards outside their established purchase depots, mandies and other business
premises which shall remain open for the purchase and sale transactions on all working
days, except Fridays or other public holidays and during such hours as may be prescribed
by the Pakistan Tobacco Board for this purpose. The closure of business, more than two
days at a time, shall require intimation to the District Magistrate concerned and the
Board, stating the reason in support thereof.
(5) All Tobacco Companies shall use dial weighing scales at their purchase depots. Where
the existing platform weighing scales cannot be replaced within a single year, the change
over shall taken place according to a phased programme which may be determined and
approved by the Pakistan Tobacco Board.
(6) The tobacco spilled over from the bales opened for inspection at the purchase depots,
mandies and auction floors shall remain the property of the concerned tobacco growers
who may collect it for disposal in the manner he deems fit.
(7) All officers of the Pakistan Tobacco Board and Agriculture Department not below Grade-
17, Magistrates of the First Class and Police Officers not below the rank of Deputy
Superintendent of Police shall be entitled to inspect the purchase depots, mandies, auction
floors and accounts of purchase and sale transactions with a view to ensuring that the
provisions of this MLO are being fully complied with.
(8) The Tobacco Companies shall submit to the Pakistan Tobacco Board purchase
summaries on daily basis during the marketing season.
5.4 TOBACCO MARKETING CONTROL RULES, 1993
1. (1) these rules may be called the Tobacco Marketing Control Rules, 1993.
(2) These shall come into force at once.
2. In these rules, unless there is any thing repugnant to the subject or context:
(a) “Board” means the Pakistan Tobacco Board constituted under section 3 of the
Pakistan Tobacco Board Ordinance, 1968(I of 1968);
(b) “Government” means the Government of the North-West Frontier Province;
(c) “grower” means a person engaged in the cultivation and production of tobacco;
(d) “Mandi” means the premises established by the tobacco dealers at different
places for the purchase and storage of tobacco;
(e) “purchase depot” means the premises established by the tobacco companies at
different places in tobacco growing areas for the purchase of tobacco used in
manufacturing of cigarettes;
(f) “supplier” means a person who purchases tobacco either from tobacco growers or
dealers/agents and supplies it to the tobacco companies in prized form;
(g) “tobacco” means the commodity made of leaves of the plants Nicotiana tabacum
and Nicotiana rustica, commonly known as tobacco and used in the manufacture
of cigarettes or for consumption by any other modes such as Chillum, hookah,
gazari and bidis ;
(h) “tobacco company” including a firm or agency or Association or group of
individuals engaged in the purchase, redrying and processing of tobacco used in
the manufacture of cigarettes and its marketing;
(i) tobacco dealer” means a trader engaged in the purchase and sale of tobacco and
includes a commission agent ; and
(j) “Weighted average price” means the average price weighted by the quantities of
all graded tobacco purchased by a tobacco company or a tobacco dealer.
5.4.2 Intimation regarding purchase targets
Every tobacco company intending to purchase tobacco during a crop year shall
indicate to the Board its total requirements of the tobacco from the ensuing crop,
by the 31st day of October in each year. The Board will publicize the indicated
requirements for various types of tobacco, in appropriate manner, before the
commencement of planting season.
5.4.3 Execution of agreements
Every tobacco company for the purchase of their targeted requirements of Virginia
tobacco shall execute agreements with the growers on the form prescribed by the Board
by the 31st day of December in respect of the ensuing crop of tobacco. A copy of each
such agreement will be supplied to the grower concerned and a list of all such agreement
will be furnished to the Board as soon as may be possible after the execution of the
5.4.4 Scrutiny of agreements
The Board shall constitute Committees of growers for scrutiny of agreements
executed by each tobacco company in order to verify its genuineness.
5.4.4 Payment of dues to the growers for tobacco
(1) The payment of dues to the growers by the tobacco companies as a result of sale
transaction of Virginia tobacco during a purchase season shall be made through
designated Banks and in accordance with the following schedule :
(a) Payment in respect of tobacco purchased during the 1st fortnight …. Within 7
(b) Payment in respect of tobacco purchased during the 2nd fortnight …. Within 15
(c) Payment in respect of tobacco purchased during the 3rd fortnight …. Within 21
(d) Payment in respect of tobacco purchased after the 3rd fortnight …. Within 30
(2) The tobacco companies shall follow the same schedule of payment as provided in
sub-rule (1) in their transaction of white patta tobacco with the growers.
5.4.5 Commencement of purchase season
(1) The Board shall constitute Committee comprising of its own official and representatives
of Provincial Agriculture Department, tobacco companies and tobacco growers to fix a
date or dates for the commencement of tobacco purchases after surveying the condition
of standing crop in different areas.
(2) All tobacco companies and tobacco dealers shall commence purchases of tobacco from
the date or dates as may be fixed by the Board in the manner specified in sub-rule (1).
5.4.5 Closure of purchase season
No tobacco company or tobacco dealer shall close its purchase depots or business
premises till such time it has purchased its full targeted demand of various types of
tobacco, or in case of a surplus production, the additional quantity of particular type of
tobacco which may be allocated by the Board to the individual tobacco
companies/dealers proportionate to their purchase targets.
5.4.6 Maintenance of record of purchases/price and submission of return to the Board
(1) Every tobacco company and dealer shall maintain complete and up-to-date record of
purchases made, prices paid at the depot, and quantities of tobacco transferred from the
purchase depot to the warehouses or redrying plants.
(2) The tobacco companies and tobacco dealers shall submit to the Board and concerned
Vigilance Committees purchase summaries on the form prescribed by the Board on daily
basis during the marketing season.
5.4.7 Labour charges not to be claimed
No tobacco company shall claim labour charges from the tobacco growers which are
brought in fulfillment of the contractual obligations and as per programme indicated
by the tobacco companies.
5.4.7 Interpretation of rules
sAll matters connected with the interpretation of these rules shall be referred to the
Chairman, Pakistan Tobacco Board, whose decision shall be final.