The Philippine government raised floor prices of various types of tobacco leaves to provide a fair price for both farmers and buyer firms.
According to the National Tobacco Administration (NTA), the tobacco prices were increased by as much as 51 percent to ensure a 25 percent increase in farmers' income. This is a result of a recently-concluded tripartite conference attended by the government regulatory agency, farmers, and buyer firms.
"We talked separately with farmers and buyers so there was no need to haggle for the prices (like in the past). We came up with floor prices that are acceptable to both parties," NTA Administrator Edgardo D. Zaragoza said in a statement issued Monday.
The new floor prices will take effect in the incoming crop year of 2012 to 2013. The prices of AA grade Virginia tobacco was pegged at 72 pesos (1.66 U.S. dollars) per kilo, up by nine percent from the previous year. Prices for other tobacco grades likewise increased.
The Philippines is one of the world's biggest tobacco growers and produces about 70 million kilograms each year. Most of the country's tobacco plants are cultivated in the northern region which include the provinces of Ilocos Norte, Ilocos Sur and Abra.
The floor prices set for tobacco is a significant issue among the over 2 million Filipino tobacco farmers who are clamoring for higher prices in order to get a decent living from growing the crop.
Earlier, tobacco farmers in three Ilocos Region provinces and Abra in the Cordillera Administrative Region proposed to the NTA to raise the price of tobacco leaves up to as much as 128 pesos (2. 95 U.S. dollars) per kilo for unclassified leaves.
The clamor for higher tobacco price resulted from consultations that the Solidarity of Peasants Against Exploitation (Stop Exploitation) conducted among farmers in the four tobacco- producing provinces.
The farmers' group said that Ilocano and Abreno tobacco farmers and farm workers usually lose in the unfair trade relations with businessmen and politicians engaged in the tobacco trade.
The farmers said government agencies and local government units offered no help despite getting millions out of RA 7171 and RA 8240.
RA 7171 of 1992 is supposed to help Virginia tobacco farmers and specified that 15 percent of Virginia-tobacco-related government revenue would be set aside for projects that would improve the farmers' income. These include building farm-to-market roads and management and subsequent ownership of agro-industrial projects. RA 8240 is the Comprehensive Tax Reform Law, which changed from ad valorem to specific taxes those excised from tobacco manufacturing.
A study conducted by Stop Exploitation shows that a farmer spends 157 work-day in a half-hectare farm for a tobacco season and spends 35,000 pesos (808.31 U.S. dollars) for production cost. Farmers said that owing to the low selling prices, they have to borrow money from loan sharks.
In a related development, the NTA reported Philippine tobacco production reached 78.5 million kilos in green weight this year, compared to the 74 million kilos produced in 2010.
Total exports could reach 35.1 million kilos, up by about 5 percent from last year's 33.45 million kilos, while total leaf importation for unmanufactured tobacco was pegged at 80 million kilos dry weight, equivalent to 133 million kilos in green weight.
Most of the country's unmanufactured tobacco are shipped to the United States, Belgium, South Africa, South Korea and Malaysia, while manufactured tobacco are sent to Thailand, South Korea, Singapore, Malaysia and Vietnam.