PH seeks bigger tobacco export
As the nationwide smoking ban in public places and newly imposed tax hike continued to pull down demand for local tobacco, the National Tobacco Administration (NTA) now seeks to set aside bulk of the country's tobacco production for exports.
NTA Regulation Department Manager Rohbert A. Ambros said this will also help tobacco farmers stay afloat amid the declining demand.
According to Ambros, the nationwide smoking ban in public areas will cause further reduction in the country's consumption of cigarettes, affecting demand of local tobacco leaves.
A spiraling impact has been happening in the domestic tobacco sector. For instance, the number of farmers and areas planted to tobacco, which have been decreasing in the last three years by 17 percent and 15 percent respectively, would also decline further.
In domestic manufacturing, uncertainty also looms. Due to the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) law, a pack of cigarettes is now R5 more expensive than the retail price of R30 in 2017. This will be followed by a series of lower rate increases until 2024.
After this period, the annual 4 percent increase mandated by RA 10351 becomes operational again.
To cushion the effect of the ban on the tobacco farmers’ income, the NTA is now concentrating on the production of leaf tobacco for export.
"There is really lower local demand but we hope to compensate it with the exports," Ambros said in an interview.
From the production of 48.22 million kilograms (kg) of across all types of tobacco in 2017, the output this year is only seen at 40 million kg.
As NTA pushes for exports, the agency will now be implementing the Total Tobacco Contract Growing System, which will address both volume and quality requirement for domestic manufacturing and for export based on Purchase Commitment to be submitted by tobacco companies starting tobacco season 2017 to 2018.
The NTA will also be assisting the tobacco farmers, especially those without tobacco marketing agreement with companies, penetrate the overseas market.
"We have to invest on provision of production assistance and inputs to tobacco farmers for shifting towards topped tobacco production, irrigation facilities, and flu-curing barns for Virginia and air-curing sheds for burley and native tobacco, among others," the agency said in a statement.