“Fortunes and unfortunates” in tobacco contract growing

By SHERWIN DE VERA
www.nordis.net

CANDON CITY — Ilocandia and the Ilocano farmers have carved a niche in the country’s economy with its billion-peso crop – the tobacco. The plant and industry, once believed to be on its twilight, has withstood time, stricter regulations and controversies. It has proved its worth and role in the country’s economy.

According to the National Tobacco Administration (NTA), tobacco remains to be the country’s biggest source of foreign currency, earning an average of $344 million in export revenues. Last season’s yield reaching 43.39 million kilos amounting to P3.18 billion.

The agency also noted that the whole industry supports the livelihood and sustenance of an estimated 2.9 million individuals, including the more than 800,000 tobacco farmers and their families.

It is one of the biggest source of government revenue. The Bureau of Internal Revenue collected P85.93 billion in 2016 and P12.14 billion for the excise tax of tobacco products this January.

With such a huge contribution, both the government and private sectors have employed interventions to keep the industry afloat.

Tobacco companies and the government promoted contract growing to address farmers’ concerns on production capital, product quality and marketing. On the other hand, traditional tobacco growers saw this as an opportunity to do away with usurious loans and cheap-paying ‘cowboys’ (middlemen). Coupled with the incentives offered local government units and assistance from NTA, the program became a hit.

For 35 years, Cesario “Luis” Garpida of Santiago, Ilocos Sur, has been planting tobacco to provide for his six kids and wife. He said besides the assistance from his in-laws, his earnings from the crop pay for the family’s needs.

“It is the only crop I know that can provide the cash that I need for the kids,” was his reply in Ilokano when asked why he chose the crop despite the low price, and being labor and capital intensive.

In all his years planting tobacco, he has tried dealing with cowboys, ULPI and NTA to come up with the required cash and materials.

“The hardest was with cowboys, besides the low price, they also charge high interest for the cash and inputs,” narrates Manong Luis. He explained that for every P1000 the interest is P250 and cowboys add P200-P300 on top of the market price of fertilizers.

He eventually settled with contract growing program, first with Fortune Tobacco Corporation, and continued with Philip Morris Fortune Tobacco Corporation, Inc. (PMFTC), after it merged with Philip Morris Philippines Manufacturing, Inc.

“With contract farming, I am assured that all my produce are bought above the floor price, free of hauling charge. Also cash and inputs are delivered without any fee and interest,” he explained.

This season, Manong Luis’ credit with PMFTC reached P121,000 for his 2.3 hectare farm. His gross sales for his harvest was P340,000. He said including his family’s labor, his net income will still be at P200,000.

However, not all farmers experience good fortune with PMFTC. Unlike Manong Luis, Ryan Reyes of Burgos, Ilocos Sur, sees contract growing as a possible debt trap.

“We are forced to depend on the company since most of us have no other source to finance our production, so we just apply with the company,” said Ryan.

He shared that once, he took home only P300 after the company deducted the balance from his sales. Last February, strong rains destroyed more than 2000 tobacco plants in his one-hectare farm.

“There is nothing we can do but pray that our crops will survive,” he said, “although, with that kind of rain, most of our harvest will be graded ‘reject’,” Ryan added.

He said technicians from PMFTC came to document the damage but never responded to their queries.

“They just said, ‘just hope that your crop will not be destroyed’ and reminded us of our debts and quota,” laments Ryan.

He said it would have been much better if they expressed support to convince the company to condone or at least impose a moratorium for the payment of their debts.

Asked if he will still plant tobacco, he said — “Yes, I’m familiar with it and see no other crop that we can easily sell to have cash for our needs.”

Both farmers sold their best leaves this season for P95/kilo. They said the P103/kilo grades are hard to come by. Coincidentally, both believe that price per kilo should be at P100-110 for them to be justly compensated.

A farmers’ organization, Solidarity of Peasants Against Exploitation (Stop Exploitation) is demanding for a higher price.

The group’s Secretary General Zaldy Alfiler said they are asking P128 per kilo of unclassified Virginia tobacco leaves. The price, according to him, compensates their expenses and sacrifices of their family.

“PMFTC can give the price we are asking for and still maintain a substantial profit. The company’s net income in 2015 is P1.04 billion and P2.59 billion in 2016 or a 149% increase. In the first half of 2017, PMFTC generated P1.86 billion or 28% higher than the first six months of 2016,” explains Alfiler.

They are also urging the NTA and the tobacco companies to review the terms and include force majeure and condonation provisions in the contract growing agreement. As well as the removal of service fees and withholding tax.

“The government and tobacco companies always say that we have a symbiotic relationship, with that, I challenge them to agree to our demands because our growth, the tobacco farmers growth, will also mean their growth,” he said. # nordis.net

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