PMFTC, Inc. will be allotting $130 million (P6.3 billion) to buy tobacco leaves from Filipino farmers who will supply more than 45,000 tons of its leaf requirement over the next three years to help boost the sector’s growth.
“Despite these developments (declining leaf production), Philip Morris Fortune Tobacco Corporation (PMFTC) remains committed to purchasing a substantial size of our local tobacco leaf through our suppliers. While dependent on tobacco industry dynamics and the government’s excise tax policies, we anticipate spending approximately $130 million for more than 45,000 tons of Philippines green tobacco leaf over the next three years,” said PMFTC President Denis Gorkun in a letter addressed to the secretaries of Finance and Agriculture departments.
Mr. Gorkun said leaf production volume in the country had been falling because of the recent tax hikes on tobacco products and the expected surge in the illicit trade of cigarettes because of an increase in prices.
A new round of increases in excise taxes slapped on tobacco products, electronic cigarettes, and vapor products took effect this year after Republic Act No. 11467 was signed into law in January.
Mr. Gorkun said PMFTC, the Philippine affiliate of Philip Morris International, sourced 43% of its leaf purchases from local farmers last year, both directly and through suppliers. The volume supplied a portion of the firm’s production in the Philippines and in 15 other countries.
PMFTC is also working on a possible $1-million investment to boost the capacity of the National Tobacco Administration’s quality assurance and physico-chemical laboratory to conduct aerosol testing and check the compliance of products.
The company will continue its program that helps 15,000 tobacco farmers in tobacco-producing provinces become more competitive and yield quality output, he said.
“We would also like to take this opportunity to assure PMFTC’s support for reasonable regulations applicable to tobacco products. The development of balanced and fair regulations will not only protect the interest of various stakeholders but also ensure the sustainability of the tobacco industry and the livelihood of our Filipino tobacco farmers, especially with the economic challenges we are facing today,” he said in his letter.
Finance Secretary Carlos G. Dominguez III and Agriculture Secretary William D. Dar earlier asked tobacco manufacturers to buy more from local farmers and help the industry recover from the impacts of the coronavirus disease 2019 (COVID-19) pandemic.
The lockdowns and other restrictions imposed to curb the spread of the disease has affected the flow of agricultural goods including tobacco, which is among the most adversely affected crops as it is a non-food item.
Japan Tobacco International (Philippines), Inc. on Monday also said it would increase its purchases of tobacco leaves to 4.6 million kilograms next year.
Republic Act No. 10351, or the excise tax reform law on alcohol and tobacco, requires manufacturers or vendors selling tobacco products in the country to buy at least 15% of their needed tobacco leaf raw materials from local farmers. — Beatrice M. Laforga