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					                          Chapter 2

            An overview of the Tobacco Industry



  2.    Introduction

                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-
 96)




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
situation.

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.




                              Chapter 3

             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
  th
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
Georgia.

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
 during 2003-2004.



                            Chapter 4


                      Pakistan Tobacco Board




 4 Introduction

                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
            tobacco industry.


           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:
            and


           To perform such other functions as the federal government may, from time to
            time direct.

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.
          Finance Committee.

          Research Co-ordination Committee

          Price and Grade Revision Committee.

          Export Promotion Committee.

          Departmental Promotion/ Selection Committee.

4.4 Organizational Chart




4.5 Finance

          Pakistan tobacco board is a self-sustaing organization of the Federal
Government. Its finances are met through the following sources:



           I. Cess

                     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
                    research activities.



        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:

                        Flue-cured Virginia

                                Spieght G-28, K-399, KHG-17, 18,19.

                        Rustica

                                Rustica-9, rustica-14, Indian Rustica, Rustica –Jampur

                        Dark-air cured

                                  Galpao, Harvel-De-Baisco, Kango Baster.

                        Burley

                               Burley-64

                        Semi- flavoured Tobacco
                       Semi- flavoured Tobacco FCV is produced in sub-montane
              area of Mansehra and Bunir.Burley tobacco is produced in Swat and
              Chakdara.

                 Autumn Crop

                          Autum crop is presently under experimental stage as it is
              severely affected by virus diseases.

                 Plant Protection

               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
                  Physiology.
                 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
                  conditions.




4.8    Achievements


                 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
                       distress.




                               Chapter 5

                      Marketing of the Tobacco Products



5. Marketing

                  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
tobacco.




            Methodology of Marketing of Virginia type of Tobaccos


                               In Pakistan
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
circumstances.

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
               adults
              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
                 attribution.

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
                     adults
                    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
                     standard.
                    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
                     adults
                    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
                     or over.
                    Tobacco brand promotional items bearing tobacco brand names or
                     logos shall not be sold or given away to those under 18 years of
                     age.
                    Tobacco brand promotional clothing will only be avalaible in the
                     adult sizes
                    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
                     adult smokers.



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
      agreements.

(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
      Tobacco Companies.

(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)

(1)

(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
       year.

 (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
                commission;
       (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
               purchase;

       (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
               may be.

(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
       Provincial Government.

(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
5.3.4 General

(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
      holders.

(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:
5.4.1 Definitions

       (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
        agreements.

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
                days.

        (b)     Payment in respect of tobacco purchased during the 2nd fortnight …. Within 15
                days.

        (c)     Payment in respect of tobacco purchased during the 3rd fortnight …. Within 21
                days.

        (d)     Payment in respect of tobacco purchased after the 3rd fortnight …. Within 30
                days.

        (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.

				
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