Philippines:Tobacco Farmers Cold to Proposal to Raise Sin Taxes

Source from:  Manila Times (ph) 05/22/2012

Tobacco farmers on Thursday has asked the government to go slow on the imposition of higher tax on tobacco products, saying that they are getting high buying prices contrary to claims by legislators. In a statement, the Federation of Free Farmers (FFF) said that local tobacco leaf continues to fetch higher buying prices than other cash crops, which has led to the steady growth of the tobacco farming industry at an average of 17.5 percent per year. Saturnino Distor, president of FFF-Pangasinan Chapter, also noted that more than eight firms led by biggest tobacco buyer Universal Leaf Philippines Inc. (ULPI), PMFTC and Trans Manila Inc. compete to buy their crop annually, resulting in buying rates way above the floor price set for tobacco. He stressed that the annual floor price is determined by a tripartite body made up of representatives from the government, buyers and farmers. "It is not true that prices of tobacco are being manipulated by one cigarette company. The floor price is set by a tripartite body composed of the government, the buyers and us farmers from the different provinces that plant tobacco," Distor added. He explained that most of the farmers sell to leaf buyers and traders or the so-called "cowboys" and not directly to cigarette companies. To date, Distor said that no other agricultural crop can even come close to the profits they earn from tobacco, adding they will not allow any single entity to dictate buying prices. He said that in 2009, local tobacco farmers unexpectedly earned a good windfall profit from the global shortage of tobacco leaf supply. That year, when oil prices in the world market reached record highs, Virginia tobacco commanded an average actual buying price of P74 per kilo because of the shortage of supply in the world market from the high cost of farm inputs such as fertilizers. Data from the National Tobacco Administration showed that the actual buying prices of Virginia leaf stabilized at P68.56 per kilo and P70.42 per kilo in 2010 and 2011, respectively Burley tobacco also enjoyed high prices, increasing steadily from P53.40 per kilo in 2008; P65.79 per kilo in 2009; P67.08 in 2010; and P69.19 in 2011. To keep up the momentum of growth, the farmers group appealed to the government to consider the plight of tobacco growers in reforming the excise tax structure for cigarettes and to avoid the temptation of raising too much taxes that may have a crippling effect on them. "We appeal to the government to go slow with the tax increases. We do not want to stop the growth of the tobacco industry," Distor said.Enditem