March 22, 2018, 8:11 am
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NTA hikes floor prices of tobacco for next 2 years

The National Tobacco Administration (NTA) has approved an increase in floor prices of tobacco for trading years 2018 and 2019.

NTA said the adjustment of prices for Virginia, Burley and Native tobacco types were approved after almost two weeks of negotiations on the rate movement.

For Virginia tobacco, which makes up almost 60 percent of the total tobacco production area in the country, the floor price per kilogram for the top grades 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. 

They were formerly priced atP81 for AA, P79 for A, P77 for B, P75 for C, P68 for D, P67 for E, 59 for F1, and 56 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 prices per kilo.

Meanwhile, floor prices of the Native-type also went up as high-grade settled at P71 from P70, Medium 1 to P60 from P58, and Medium 2 to P50 from P48. 

On the other hand, there is no increase in the floor price of rejects, which remained at P46 for Virginia, P28 for Burley, and P40 (L-1) and P25 (L-2) for Native type.

NTA said leaf buyers insisted there should be no price increase for low grades or rejects for all tobacco types to discourage production of low quality tobacco leaves.

During the tripartite meeting to set the floor prices, farmers negotiated for as high as P16.77 increase per kilo across all grades, taking into consideration the increase of prices of farm inputs for production.

However, leaf buyers had earlier wanted a status quo for all floor prices citing reduced sales of cigarettes as a result of increasing excise tax rates as well as the implementation of Executive Order No. 26 which imposes a nationwide ban on smoking in all public places.

Farmer leader Mario Cabasal, president of the National Federation of Tobacco Farmers Associations and Cooperatives, said the group is satisfied with the conclusion of the negotiation for floor price increases.

“We need any increase we can get to inspire our farmers to produce tobacco as I can’t imagine them working with higher production cost with reduced profit,” he explained.

NTA administrator Robert Seares said with the success of the negotiation, the agency will now focus on reducing production cost of farmers by offering subsidy in the form of production assistance.   

At present, tobacco is the only industrial crop in the country that enjoys a minimum floor price set by the government which is based on the prevailing market conditions, with considerations on production cost, reasonable margin of profit for stakeholders, and growing conditions.
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