Philippine Leaf: Time to Choose

Source from:  Tobacco Asia  06/09/2013

Universal Leaf Philippines Incorporated (ULPI) prides itself on its tradition of excellence in producing the best-value tobacco based on sincere relationships with its farmer-partners, and a genuine concern for the quality of life of its stake holders. ULPI also has the motto "proudly Philippine grown."

The Philippines is a significant market and growing region, with most of the areas to the north of the capital Manila. ULPI's operations, first established in 1963, reflect this, with its main leaf buying centred on Candon, a natural cigar leaf and Isabela burley buying station at Reina Mercedes and GLT at Agoo, just to the south of San Fernando. ULPI acts as a bridge between suppliers and manufacturers, dealing with most of the 55,000 or so tobacco farmers in the country who between them produce a total of around 78,000 green tons of tobacco.

Most of ULPI's tobacco is purchased through contract growing systems involving some 30,000 farmers, forming an integrated production system. As ULPI's president Winston Uy told us during the recent ProTobEx Asia exhibition in Manila, all of the group's air cured crops are contracted, with guaranteed prices and good consistent growing conditions.

"All of the production is direct contracted to tobacco companies, so nothing is compromized," Uy said.

Unwieldy systems

However, Uy continued, there are some less well-structured and more unwieldy systems on the FCV side of the business, where there has been evidence of sustainability problems and it has been more problematic to put in place the latest and most progressive technology.

He characterised the next year as "the year of choosing – the right way or the wrong way." The FCV market dos require some attention to "ensure everyone can enjoy sustainable and growing business because all the best practices are being implemented in the best ways. We will not be able to achieve everything overnight but I am confident we can achieve in the FCV area what we have already achieved in the air cured sector."

Currently, he said, the crop is good and this increases the opportunities for change for the better. ULPI wants to "work together with the farmers. If we work with them and everyone is going in the same direction together, the entire business can be more sustainable." As it stands at present, some farmers do not have direct contracts and they tend to be more vulnerable to changes in business conditions. "At ULPI, we want to encourage them to move towards a more formal contracted arrangement."

Better outcome

Uy said he is "excited to be helping our farmers to get their businesses into a more healthy shape and more sustainable." Inevitably there would be some disruption and some difficulties during the period of transition, which would be kept as short as was feasible, but it was an important step to take on behalf of the whole Philippine industry and the outcome, he was confident, would be better for everyone concerned.

In terms of markets, Uy said that despite good growing conditions there is a shortage of product with the exception of FCV. "In the area of Burley and air cured, we need more product, because markets both at home and around the world recognise its quality and are snapping it up." The latest moves in taxation in the Philippines would impact more on the Virginia crop than on other product, he forecast.

ULPI takes its responsibilities seriously and is committed to its social responsibility efforts through day to day activities as well as services to farmers. Many projects have been initiated to benefit environment, health, education and community development. The group continues to be pro-active through research and development in advancing its tobacco crops to meet farmer and customer expectations in terms of quality, cost and sustainability, while its farmer and supplier contracts are compliant with Universal Supply Chain Integrity programmes. Traceability is available for all direct farmer contracted tobaccos. Enditem