The fault in our crops – Growing too much of one, none of another

A single cup of chai costs Rs 50 now. If a person consumes three cups a day, every day, the number multiplies to Rs4,500 a month. In a country where the minimum wage is Rs15,000, tea drinking can consume a whopping 30pc of income.

Once considered a small pleasure of life, the quintessential ‘chai ka cup’ made with tea leaves, sugar, and milk is quickly becoming a luxury. And it isn’t the only guilty pleasure that is fast evading the pockets of most people. Back in February this year, the tobacco industry was jolted when a huge increase in duties on cigarettes resulted in the product becoming more expensive by as much as 250% overnight.

While the more expensive imported cigarettes have gone far out of reach, even the cheaper local brands are selling at around Rs 11-12 per cigarette. That means for a person smoking five cigarettes a day, the bill comes out to around Rs 55 a day. This adds up to Rs 1650 a month, giving a ‘chai-sutta’ bill of just over Rs 6000 a month — which is nearly half the minimum wage in Pakistan.

So how are the manufacturers of these everyday pleasures that have turned into luxuries responding? On the one hand there is tea. Not grown in Pakistan, almost entirely imported, and with a uniquely inelastic demand the product will see no respite in prices since it has to be brought in from abroad. Meanwhile cigarettes are an entirely different game. Pakistan produces most of its own tobacco and at very high yields, yet the prices of cigarettes going up have to do entirely with levies and sin taxes. Profit explores.