Government hikes prices of tobacco leaves

MANILA, Philippines - The National Tobacco Administration (NTA) has approved higher minimum buying prices for native, Virginia and Burley tobacco for trading years 2016 to 2017.

However, there would be no floor price increase for low grade leaves of these variants to discourage farmers from producing inferior quality tobacco, the NTA said.

The new floor prices for native, Burley and Virginia tobacco for the next two trading years were approved during the biennial Tobacco Tripartite Consultative Conference last Sept. 29.

For Virginia tobacco, the floor price per kilogram for the top grades increased to P81 for Grade AA, P79 for A, P77 for B, P75 for C, P68 for D, and P67 for E.

For Burley, the per kilogram price for top-grade A rose by P7 bringing the price to P68 from the current P61. The floor price for Grade B is now P65 and P56 for C or an increase of P6 and P3, respectively.

Low grade Burley remains at P45 for D, P44 for E, P37 for F, and P28 for rejects.

The floor prices for native tobacco were increased from P66 to P70, medium from P56 to P58,  medium 2 from P46 to P48, low 1 from P38 to P40, and low 2 from P26 to P28.

The conference, hosted by the NTA every two years, was attended by tobacco farmers’ groups and tobacco manufacturing companies.  Its purpose was  to evaluate and negotiate the floor prices of unprocessed tobacco leaves.

The last tripartite conference was held in September 2013.

Floor price is the minimum price allowed by the government for the procurement of tobacco from farmers. This is based on the prevailing market conditions such as production cost, reasonable margin of profit for stakeholders and growing conditions.

NTA administrator Edgardo D. Zaragoza said the government and stakeholders achieved a “win-win situation in deciding the relevant floor prices of the locally-produced tobacco as this would ensure good quality produce and higher income for farmers.

“We take into consideration the unabated increase of prices of farm inputs in coming out with the appropriate prices of tobacco,” he said.

The setting of the minimum floor price provides tobacco farmers a guaranteed minimum return on investment of at least 25 percent for expenses incurred in production.