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NTA exploring export markets for tobacco ahead of smoking ban

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tobacco leaves
This May 3, 2013 photo shows a worker preparing tobacco leaves for curing at a homemade barn in Candon town, Ilocos Sur. -- AFP

THE tobacco harvest is expected to dwindle this year as farmers shift to other crops in preparation for the nationwide smoking ban, and regulators are exploring alternative markets including export destinations, where prices are firming up due to interest in alternatives to smoking that are still based on tobacco.

The National Tobacco Administration (NTA) said a trend towards electronics-based cigarette products represents an opportunity for growers, including a Philip Morris International offering known as I Quit Ordinary Smoking, which heats tobacco but does not burn it. The product is thought to be a workaround against stricter indoor-smoking rules worldwide.

“We’re looking forward to exporting. There are developments in the tobacco industry away from conventional smoking in favor of electronic devices that are still based on tobacco,” NTA Deputy Administrator for Operations Robert R. Bonoan said.

NTA projects a tobacco leaf harvest this year of 40 million kilos, which would represent a 17.05% drop on the 2017 total if realized.

The NTA cited the nationwide anti-smoking campaign as the main factor compelling farmers to switch to corn and high-value crops.

However, it believes the presidential directive has only had a “minimal impact” on consumption as demand is being filled by imports and smuggled cigarettes.

“Smokers are addicted. We cannot prevent them from smoking,” NTA Administrator Robert L. Seares said in a Friday press briefing.

NTA Regulation Department Manager Rohbert A. Ambros, citing the findings of the Health Department, said that although there has been a drop in 25- to 35-year-old smokers, those aged under 25 are on the rise.

“We don’t see any reduction in production by the manufacturing sector,” Mr. Ambros said. In addition, farmers are expected to be drawn back to tobacco planting.

Meanwhile, the tax reform is increasing fuel prices, raising production costs.

Its impact was not factored in September 2017 when the floor prices were set for all three tobacco types — Virginia, Burley and Native — for the 2018 and 2019 trading years.

As such, the agency said it may invoke emergency powers to reset the floor prices for the next two years while also seeking to amend existing terms.

“We will call a special meeting with all stakeholders for that,” Mr. Bonoan said.

For Virginia tobacco, which makes up almost 60% of the total tobacco production by planting area, the floor price per kilogram increased to P82 for Grade AA, P81 for A, P80 for B, P78 for C, P70 for D, P69 for E, P60 for F1, and P57 for F2. The former prices are P81 for AA, P79 for A, P77 for B, P75 for C, P68 for D, P67 for E, P59 for F1, and P56 for F2.

For Burley, the top-grade A rose by P2, bringing the price per kilo to P70 from the current P68. The floor prices for grades B, C, D, E, and F are now P67, P58, P47, P46, and P38, respectively, an increase of P2, except for Grade F which increased by P1, from the current price per kilo.

The floor prices of Native were increased as follows: High-grade, from P70 to P71; Medium 1, from P58 to P60; and Medium 2, from P48 to P50.

“We are also contemplating whether the biannual tripartite meeting will be made annual to allow for price adjustments,” he added.

Tobacco is the only industrial crop for which a minimum floor price is set by the government based on the prevailing market conditions such as production cost, among others.

The minimum floor price guarantees tobacco farmers a minimum return on investment of at least 25% on their costs. — Janina C. Lim