Philippine Government Increases Tobacco Prices

The Philippine government increased floor prices of various sorts of tobacco leaves in order to assure a reasonable pricing for both farmers and buyer firms.

Tobacco prices were raised by as much as 51% to guarantee a 25% raise in farmer’s profit, according to the National Tobacco Administration (NTA). This is a result of a currently lead conference with the presence of government regulatory agencies and farmers. “We discussed with farmers the price issue so there was no need to argue about the prices as in the past. We established floor prices that are acceptable to both parties,” NTA Administrator Edgardo D. Zaragoza stated in an interview.

The new floor tobacco prices will cone into effect in the coming crop year of 2012 to 2013. The price of Virginia tobacco was established at P72 ($1.66) per kilo, higher by 9% from the previous year. The Philippines is one of the world’s largest tobacco growers and yields about 70 million kilograms annually.

The floor prices determined for tobacco is an important issue among the over 2 million Filipino tobacco growers who are demanding higher prices in order to have a decent living from growing the yield. A few months ago, tobacco growers from three main Ilocos Region provinces and Abra in the Cordillera Administrative Region called the NTA to increase the of tobacco for as much as P128 ($2.95) per kilo for unsorted leaves.

The growers declared that they lose a substantial sum of money in the unfair trade relations with businessmen and politicians occupying with the tobacco trade. According to farmers, government agencies didn’t offer any help despite acquiring millions out of RA 7171 and RA 8240. RA 7171 of 1992 is intended to help Virginia tobacco growers and underlined that 15% of Virginia-tobacco-related government profit would be allocated for projects that would improve the farmers’ financial situation. RA 8240 is the Comprehensive Tax Reform Law, which changed according to the value to particular taxes those charged from tobacco production.

On the average a farmer spends P35, 000 ($808.31) for production cost during one tobacco year. Farmers stated that due to the low selling prices, they are forced to borrow money from loan sharks. The NTA declared that Philippine tobacco production attained 78.5 million kilos this year, in comparison to the 74 million kilos produced in 2010. The full export constituted 35.1 million kilos, higher by about 5% from the previous year’s 33.45 million kilos, while full leaf importation of raw tobacco was pegged at 80 million kilos. The main part of the country’s row tobacco is shipped to Belgium, Malaysia, United States, South Africa and South Korea, while the processed tobacco is sent to Singapore, South Korea, Thailand and Vietnam.