<strong>China Increases Average Purchase Price of Tobacco by 5 pct</strong>

Source from:  Reuters  01/10/2014

China will raise the average purchase price of flue-cured tobacco by 5 percent, the government said on Thursday, as the world's largest tobacco consumer cracks down on the habit that health activists say is partly sustained by cheap cigarettes.

The price comes after health authorities said they would work to ban smoking in public places nationwide this year - a law that has long been in the works.

The price increase was imposed by the National Development and Reform Commission (NRDC), China's top planning authority, and China National Tobacco Corporation, the state-owned cigarette monopoly.

Flue-cured tobacco accounts for more than 90 percent of China's tobacco crop.

The NDRC and tobacco corporation said in a statement the price increase would "promote the healthy development of the tobacco industry" as well as balancing supply and demand and guiding farmers in their production targets.

Price regulators at all levels should strictly enforce the measure, and those who seek to depress tobacco prices must be "dealt with severely," they said.

China sets purchase prices for all major agricultural products in order to protect farmers' incomes and ensure that output remains steady.

Anti-smoking advocates have said raising the price of cigarettes could play a major role in deterring smoking. Cigarettes in China are among the cheapest in the world, contributing to their widespread use by low-income men.

It is unclear whether the increase in the purchase price of tobacco would be passed onto consumers.

Lawmakers have been mulling tougher anti-smoking measures for years, but the country's powerful state-backed tobacco company has opposed measures including raising cigarette prices and the use of stronger health warnings on cigarette packs, experts say.

Beijing pledged in 2008 to prohibit smoking in most public venues, including government offices, but no-smoking signs are frequently ignored.

Several cities have banned smoking in public places, but enforcement has been lax.

China is home to more than 300 million smokers, and cigarettes are ubiquitous on social occasions, particularly among men. Enditem