By SHERWIN DE VERA
This is the second of Northern Dispatch’s three part feature on the tobacco industry for the start of cropping season. Read the first article.
CANDON CITY — The change in the Ilocos landscape during October to April, along the Manila North Road, does not go unnoticed for frequent travelers in the region. Roadside farms, used to be the domain of tobacco are now occupied by corn and peanuts. While in some villages, tomatoes are now cultivated on the lands where the region’s “green gold” once flourished.
Despite the aggressive campaign of the National Tobacco Administration (NTA), local government units (LGU) and companies, tobacco farmers and production are shrinking in numbers.
From its steady increase since 2009, production in Ilocos, the tobacco capital of the country, is again suffering a steady decline from 23, 221 metric tons (MT) in 2015 to 21,972 and 20,503 MT in 2016 and 2017 respectively.
The plant that transformed the Ilocos provinces and some of its towns, that used to suffer from scarcity of funds, into first income class LGUs, is now struggling to survive.
In Candon, despite the city government’s P10, 000 cash aid and fertilizer subsidy, Councilor Robert Tudayan admitted that farmers continue to abandon tobacco or reduce the area planted with the crop.
In fact, he is among those who reduced the farm area dedicated for tobacco cultivation this season.
“We suffered some loss last cropping season. Our leaves were graded low with some being classified as ‘salty’. So from six hectares I decided to reduce the area planted to three hectares,” he said.
The official shared his observation on the “lack of regular monitoring and guidance from company and state technicians” if the farmers are following the recommended technology.
He stressed that mechanisms must be established to ensure the implementation of suggested cultivation and curing techniques “so that there is no reason for the [traders] to say that our products are of low quality because we did not follow the proper the procedure.”
“When I started to venture into tobacco, I was with [Universal Leaf Philippines, Inc.] but we didn’t agree on the price so I sold my harvest to the cowboys,” the councilor recounted.
His bad experience led him to self-finance production. He found cowboys who gave reasonable price for the dried tobacco leaves.
However, Tudayan shared that spread of contract farming made his preferred cowboys stop buying, pushing him back to contract farming.
This season, he placed his production under the contract growing program of Philip Morris Fortune Tobacco Corporation (PMFTC).
Meanwhile, in the town of Nagbukel, corn plants are slowly filling farmlands vacated by native tobacco.
“Most farmers in our barangay are slowly reducing the land allotted for tobacco to plant corn,” said Rolly Bumactao, a farmer and village secretary of Poblacion East.
He explained that planting another crop is part of their “safety net” for the “quick changing price” of native tobacco.
“I used to plant my one and a half hectare farm with tobacco, this year, I’ll copy my brother’s practice of allotting a space for corn,” he said.
Bumactao also confessed that free corn seeds and fertilizer subsidies provided by the provincial government also influenced him and his brother.
In the neighboring town of Narvacan, farmers in barangay Marozzo are also gradually changing their crops.
In 2014, village council member Leonardo Sabalo started to plant some tomatoes, while cultivating Virginia tobacco. But three years ago, he let go of tobacco and took the tomato contract growing offered by the National Food Corporation.
“I built my house from my earnings planting tobacco. It was the crop that my grandfather and father planted, my crop since childhood but I can no longer continue,” he said.
Sabalo explained that when the provincial government started to provide free corn seeds, farmers in their village began cultivating corn in place of tobacco in parts of their farms. Then the growership for tomato arrived, pulling more farmers to abandon tobacco.
Reasons for leaving
For Bumactao and Sabalo, the low price of tobacco is the main reason for most farmers who are shifting to other crops.
“Before the trading season, companies and their agents speak of high price but once the buying starts they rapidly drop the price,” Bumactao lamented.
Last year, he expected his harvest to sell at P96/kilo but the company bought the leaves for P75/kilo.
“Company graders rummaged through our bales, looking for low-grade tobacco and reasons to lower the price,” he said.
The intensive labor needed for tobacco, then selling it at a low price also disheartened Sabalo.
He said even with the recent incentive of P5/kilo for Virginia tobacco produced given by the local government can no longer convince him to return to the crop.
“Producing tobacco is tedious work yet we only received less than the work and sacrifice we put into it,” according to the village leader.
But besides the low price and labor-intensive nature of tobacco production, Tudayan recognized that local governments are also falling short of addressing the perennial issues raised by tobacco farmers on price, grading system and government assistance.
“There is no real protection given to farmers. There should be officials from the local government, the province assisting them in dialogues with trading centers and tobacco companies,” he said.
Officials of the tobacco agency believed the tax reforms and the nation-wide smoking ban is pulling down the demand for tobacco. An argument also used by tobacco companies to haggle against proposals for floor price increase.
Atty. Rohbert Ambros, the head of NTA’s Regulation Department, points to the passage of tax reform measures that affected the industry is causing the problem.
The Tax Reform for Acceleration and Inclusion (TRAIN) law passed last year imposed a P5.00 increase for all cigarette brands. Lower rate increase has still to follow up to 2024. After this, the 14% annual increase under the Sin Tax Reform Law (RA 10351) will resume to take effect.
Meanwhile, NTA Administrator Robert Seares believes Executive Order No. 6 issued on May 2017 by the president, which forbids smoking in public places, further reduced cigarette consumption thus affecting leaf demand.
In September, he bared that in the last three years, the number of farmers across the country dropped by 17% and area planted with tobacco suffered a 15% decreased.
The agency’s figures from 2013 to 2017, the number of farmers planting the crop and area plunged to 34,465 from 53,959 individuals and to 22,704 from 37,021 hectares. These drops translate to about 30% decrease in volume harvested and 21% lost production value.
However, a regional farmers’ alliance asserts the decline in the tobacco industry is the result of the government’s flawed policy.
“This is part of the general downward trend in the county’s agriculture sector due to trade liberalization,” said Antonino Pugyao, chair of Solidarity of Peasants Against Exploitation (Stop Exploitation).
The peasant leader cited state figures that after the entry of the Philippines to the World Trade Organization in 1995, tobacco production dropped rapidly.
Data from Philippine Statistics Authority showed that two years after, tobacco production in the region started to decline, failing to reach the pre WTO production volume up to present. Average production from 1990 to 1994 is 77,400 MT while from 1995 to 2017 is 36,100 MT.
“Imported tobacco are flooding our market,” he said, adding, “the question is, why are they even allowing companies to export our products then import tobacco to fill the gap?” Pugyao asked.
NTA record shows that in 2017, the country exported more than 40 million kilograms and imported about 54 million kilos of unmanufactured tobacco.
He pointed that unmanufactured tobacco in 2017 were imported by companies at an average price of P240/kilo while local leaves for export are priced at P209/kilo at present peso-dollar exchange rate resulting a trade deficit of P31/kilo.
Pugyao also underscored that it’s the tobacco companies’ greed for profit that is actually driving the prices down. He said despite the taxes imposed, tobacco and cigarette corporations are still raking billions of profit.
He cited reports on the Lucio Tan Group’s tobacco business, with incomes for the first half of 2018 reaching P4.88 billion and another P4.72 billion from 49.6 share in PMFTC.
“The agency’s price computation and assurance of 25% return of investment (ROI) is also deceptive,” he added.
Under the NTA’s formula, “non-cash” expenses like the farmer’s labor and his family members’ participation in the production are not included which the group considers “unfair and exploitative.”
According to NTA administrator Robert Seares, Sr. the projected 25% ROI can only be achieved if “the farmers’ cost of his labor is not included” in the total cost of production.
“This is so because the labor costs rendered by the farmers themselves are considered part of their “equity” in producing their own tobacco crop,” the NTA chief explained. # nordis.net