02 juillet 2009
Tobacco prices at producer level
Almost all tobacco produced is sold unprocessed either to private traders or to TEKEL. Private sector purchases are generally export oriented, dependent on foreign orders. TEKEL’s purchases are for both domestic cigarette production and for export as leaf tobacco. Hence, the prices received by farmers are a weighted average of the prices paid by TEKEL and the private sector. Over the last decade, TEKEL’s share in the purchase of unprocessed tobacco has fluctuated between 48 percent and 83 percent.
Each year, support prices are announced for tobacco of a certain standard (80 percent yield). However, the actual prices paid to the farmers are below the announced prices, since, on average, the quality is substandard. As the private sector buys better quality tobacco, their average purchasing price is higher than that of TEKEL. Figure 6.9 presents the trends in average support prices for tobacco over the last two decades, together with the trends for wheat and cotton, which are grown in the same regions and are the major possible alternative crops to tobacco. The trends are presented as US$prices of the crops, indexed to 1970 = 100.
Over the last three decades the average price of unprocessed tobacco has more than tripled, as have the prices for wheat and cotton. Except for a few years, the prices of the three products have tended to move in the same direction. It has mirrored the trend in overall prices received by farmers in the period. Prices all increased in the early 1970s, fell through the late 1970s and early 1980s, and have generally increased since.