Swabi – Pakistan Tobacco Company (PTC) on Wednesday alleged that hundreds of non-compliant tobacco buyers were exploiting growers across Khyber Pakhtunkhwa by failing to purchase their allocated quotas on time and delaying payments, forcing farmers into distress sales and financial hardship.
The claims were made during a media briefing organised by the company in Swabi and attended by members of the Swabi Press Club and social media activists. The session sought to address what the company described as misinformation regarding taxation on tobacco farmers and the wider challenges facing the sector.
PTC officials said that more than 300 local tobacco-buying companies operating in tobacco-growing districts had contributed to market instability by delaying purchases and, in some cases, failing to clear payments owed to growers from the previous season. According to the company, the situation has left many farming families under severe financial pressure by depriving them of a key source of income.
Addressing concerns raised among growers about taxation, PTC clarified that the Federal Excise Duty (FED) of Rs390 per kilogram is a government-imposed levy applicable to tobacco manufacturers and not to farmers. “The FED has no connection with farmers’ income or the prices paid to growers, nor does it constitute a liability on the farmer,” company representatives told journalists.
Speaking on the occasion, PTC Regulatory Affairs Manager Hamza Aamir rejected claims that the advance FED had reduced manufacturers’ ability to purchase tobacco from farmers. He said that even within the lower tax tier, where the overall tax liability is approximately Rs5,050 per kilogram, the advance FED of Rs390 per kilogram accounts for less than 10 per cent of the total tax burden and is fully adjustable at the end of the tax year.
According to the company, concerns among some operators stem less from the duty itself and more from the documentation and compliance requirements associated with operating in the formal sector. PTC officials also referred to recent reports of delayed payments to farmers, noting that the Tobacco Marketing Rules contain safeguards for growers. They pointed out that Section 9 of the rules clearly specifies payment timelines and urged farmers to report violations to the relevant regulator.
Providing details of its own procurement operations, the company said its approved demand quota for 2025 stood at 26.85 million kilograms. However, it ultimately purchased 39.19 million kilograms of tobacco leaf, exceeding its quota by more than 12 million kilograms and incurring an additional expenditure of Rs6.7 billion.
The company said the additional purchases were made in compliance with regulatory directives aimed at maintaining stability in the tobacco sector and supporting growers during a period of market distress. Officials noted that surplus procurement had become a recurring issue over the past two years, resulting in inflated inventories. They said the company currently holds sufficient tobacco stocks to meet its production requirements for the coming year.
At the same time, PTC reported that tobacco leaf exports declined by 29.5 per cent year-on-year during the first quarter of 2026. It attributed the decline partly to Pakistan’s pricing structure, which it said makes locally produced tobacco leaf around one US dollar per kilogram more expensive than competing products in regional markets.
Given high inventory levels and weakening export demand, the company warned that its ability to continue absorbing surplus tobacco production was becoming increasingly constrained. PTC officials further highlighted concerns over unauthorised tobacco cultivation. They said the Pakistan Tobacco Board (PTB) had published approved grower lists through print and digital platforms in October 2025 and conducted awareness campaigns in tobacco-growing areas.
Despite these efforts, they said, non-contracted cultivation continued, underscoring the need for stricter enforcement measures at the field level. The company urged regulators to ensure that only contracted growers cultivate tobacco, that market prices reflect prevailing demand conditions, and that legislative gaps placing the burden of surplus production on formal-sector companies are addressed.
A senior leaf manager also called upon contracted farmers to help discourage unauthorised cultivation, arguing that unchecked production ultimately harms their own economic interests. The company further urged growers to seek payment of outstanding dues directly from local buyers for tobacco sold during the previous season.
“We remain committed to the well-being of our farmers,” a company representative said. “Our focus is on supporting the long-term sustainability of tobacco cultivation and the wider industry through stable and enabling policy conditions.”
