Philippine: Tobacco Output Seen Falling Below 50,000 MT

Source from:  Business Mirror 09/08/2017

Philippine tobacco output this year may not reach 50,000 metric tons (MT), as the decline in the demand for cigarettes discouraged farmers from planting the cash crop, the National Tobacco Administration (NTA) said on Wednesday.

NTA Administrator Robert L. Seares said he does not see tobacco production breaching the 50,000-MT mark this year, after output in the first half recorded a 10-percent decline.

Data from the Philippine Statistics Authority (PSA) showed that tobacco output in January to June reached 48,922 MT, lower than the 54,363 MT recorded in the same period last year.

“The country’s production has been on a downtrend in recent years. Also, I do not think the 48,922 MT would still increase as the Philippines has already entered the rainy season,” Seares told reporters on the sidelines of the NTA’s biennial tripartite conference for tobacco floor prices.

Data from the PSA showed that the Philippines produced 56,456.73 MT of tobacco last year, which was slightly higher than the 56,193.50 MT recorded in 2015.

Seares said the public’s “misinterpretation” of President Durterte’s Executive Order (EO) 26, which banned smoking in public spaces, discouraged consumers from buying tobacco products in the market.

“The farmers and consumers had a different interpretation of EO 26. People thought that smoking was completely banned nationwide but it is not,” he said.

“People can smoke but only in designated areas and not in public places. So the consumption of cigarettes declined, causing the demand for tobacco to also go down,” Seares added.

In May Duterte signed EO 26, which disallowed minors to smoke, sell, or buy cigarettes or any other tobacco products. Also, vendors may not sell cigarettes in schools, public playgrounds, youth hostels and recreational facilities, including those frequented by minors.

Under EO 26, each building must have a designated smoking area (DSA) where smoking may be allowed. This may be in an open space, or a separate area with proper ventilation.

Also, the DSAs should have no opening that will allow air to escape to the smoke-free area of the building or vehicle, except for a single door equipped with an automatic door closer. A DSA should not be located in or within 10 meters from entrances, exits, or any place where people pass or congregate, or in front of air intake ducts, according to the EO.

“So what people thought is that what was going on in Davao is what is also going to happen here in Manila, or nationwide. And that cannot happen because the tobacco industry will die,” Seares said.

The NTA chief also said the shutdown of Mighty Corp., which buys about 6.5 million kilograms of low-grade tobacco from farmers, also contributed to the decline in tobacco production this year.

“We felt the effect of the closure of Mighty Corp. this year. Because Mighty is a major buyer of almost all of our low-grade tobacco produce,” said Mario E. Cabasal, president of National Federation of Tobacco Farmers and Cooperatives (Naftac).

Cabasal said the grading practice of some companies have also discouraged farmers from planting tobacco. “We do have floor prices for tobacco produce but grading them is a different matter. Graders tend to downgrade the quality of the produce to buy it at a lower price.”

He noted that the floor price for tobacco of the highest grade, or “AA” tobacco, is P81 per kilogram. “Most farmers get only “A”, which carries a lower price. This prompts them to stop planting or to reduce the area devoted
to tobacco.”

Data from the NTA showed that the number of tobacco farmers declined to 43,625 last year from 46,531 in 2015. Tobacco harvest area also contracted by 6 percent to 30,648 hectares.  Enditem