China Raises State Purchase Price of Leaf Tobacco

Source from:  TobaccoChina Online 04/08/2009

The National Development and Reform Commission, the Ministry of Finance and the State Tobacco Monopoly Administration (STMA) jointly issued a notice on April 1 to announce an average 10 percent increase in the State purchase price of flue-cured leaf tobacco in China in the year 2009, which is, however, lower than the average price growth of 20 percent in 2008. According to the notice, the average State purchase price of burley will go up 13 percent in 2009 while the average State purchase price of Oriental tobacco will rise by 15 percent in the year. The notice says that the increase of the average State purchase price of flue-cured tobacco in China is mainly intended to protect the interests of farmers, and in light of the situation of continued growth in the prices of raw materials. The notice provides that the average standard for subsidies will not exceed 13 percent of the average State purchase price for every 50 kilograms of flue-cured tobacco as set by the State, and that the actual amount of subsidies will not exceed a total of 5 billion yuan (715 million U.S. dollars). Li Baojiang, deputy director of the Economic Office of the Economic Research Institute of the STMA, said that the subsidies will mainly be used for building infrastructure facilities for tobacco production, including the construction of irrigation projects, curing barns, etc in tobacco-growing zones. "Upon completion of construction, all the projects built will be turned over to local Villagers' Committees and local tobacco farmers, and will be owned by them," Li said. It was reported that in the 2005-2008 period, the tobacco industry of China has invested a total of 20.48 billion yuan (2.92 billion U.S. dollars) in the construction of infrastructure facilities for tobacco production. In an address to the 2009 annual leaf tobacco work conference held earlier in the year, STMA Director-General Jiang Chengkang said that with the approval of the Ministry of Finance, the unit amount of investment in tobacco plantations per mu (per 0.067 hectare) will increase to 2,000 yuan (286 U.S. dollars) in 2009, and that the tobacco industry will invest an extra 40 billion yuan (5.7 billion U.S. dollars) in the construction of infrastructure facilities for tobacco production on the basis of the existing investment. Enditem