Government hikes buying prices for tobacco leaves

MANILA, Philippines — The National Tobacco Administration (NTA) has approved higher minimum buying prices for tobacco for the next two years after an agreement has been reached between farmers and the private sector.

Stakeholders finalized an increase in tobacco floor prices by P2 across all types and grades.

For Virginia tobacco, which makes up almost 60 percent of total local production, the floor price per kilogram for the top grades increased to P84 for Grade AA, P83 for A, P82 for B, P80 for C, P72 for D, and P71 for E.

For Burley, the per kilogram price for top-grade A also rose by P2 bringing the price to P72 from the current P70. The floor price for Grade B is now P69 and P60 for C.

Low grade Burley also increased and now at P49 for D, P48 for E and P40 for F.

The floor prices for native high-grade tobacco were increased from P71 to P73, medium 1 from P60 to P62, and medium 2 from P50 to P52.

The agreement which adjusted floor prices of Virginia, Burley and native tobacco will be effective immediately upon the approval of NTA Governing Board and applicable for trading years 2020 and 2021.

Floor price is the minimum price allowed by the government for the procurement of tobacco from farmers. This is based on the prevailing market conditions such as production cost, reasonable margin of profit for stakeholders and growing conditions.

The setting of the minimum floor price provides tobacco farmers a guaranteed minimum return on investment of at least 25 percent for expenses incurred in production.

During the last quarter, tobacco production went down 48.4 percent amid decreases in area planted for Virginia tobacco in Northern Mindanao because of the shifting to corn production and other crops such as ampalaya, habitchuelas, squash and sweet potato.

There were also reports of stoppage of operation of some private corporations.