Tobacco agency projects 10% output hike in CY 2010-2011

MANILA, Philippines - The National Tobacco Administration (NTA ) projects a 10-percent increase in production for crop year beginning September 2010 and ending August 2011, of around 10 percent to 71.4 million kilograms from crop year 2009-2010 production of 65.392 million kilograms.

NTA administrator Edgardo D. Zaragoza said total output is expected to reach 71.4 million kilos, from only 65.392 million kilos last year. This is mainly due to an expansion in production areas in Regions I and II to 36,593 hectares from the current planted areas of only 32,762 hectares, Zaragoza said.

For tobacco crop year 2009-2010, the NTA said, the value of production amounted to P4.325 billion, a 7.47 percent increase from the comparable production value of crop year 2008-2009 of P4.024 billion.

The Philippines’ tobacco production is comprised of Virginia, Burley and native varieties with Virginia being the most unduly planted variety. Zaragoza said 45 percent of the country’s total tobacco production is exported.

Current buying price of tobacco leaves is around P70/k, while buying price for rejects is P40/k.

Zaragoza expressed concern though for the future of the tobacco industry in the face of a controversial Framework Convention on Tobacco Control (FCTC), to which the Philippines is a signatory, and the possible increase in excise taxes on “sin” products – both of which could affect Filipino tobacco farmers.

Proposed revisions to the FCTC, Zaragoza said, aims to discourage tobacco and cigarette smoking and one proposed disincentive is for signatory countries to increase taxes on tobacco and tobacco products up to as high as 70 percent.

 Zaragoza pointed out that since the Philippines is a signatory to the FCTC, it must abide by the international treaty under the auspices of the World Health Organization (WHO).

The treaty, allows for some leeway among the signatory countries on certain economic aspects.

In the case of the Philippines, the NTA is hoping to moderate possible adverse provision that may eventually be included in the FCTC.

The NTA is also hoping to clarify if it will be the lead agency in drawing up the local guidelines since the Department of Health is also supposedly responsible for drawing up the guidelines.

More likely, though, Zaragoza said, an inter-agency committee may be formed with the NTA and DOH working together to craft the local guidelines for implementation of the FCTC.

Zaragoza pointed out that the Government currently collects around P30 billion in excise taxes on tobacco and cigarette products.