When Congress resumes its session on May 7, 2012, the proposed reform of the excise tax law will again be the hot issue. Lawmakers supporting the administration will push for the approval of the Abaya bill which will radically change the structure and features of the taxes on “sin products,” particularly cigarettes. Those who are opposing the reforms and would like to maintain the status quo will again bring up the plight of the tobacco farmers. What is the real score in tobacco farming?
A recent Xinhua wire report about Filipino tobacco farmers made it in the online editions of Shanghai Daily and this newspaper. Written by Prime Sarmiento, it is a piece that gives a more realistic picture of what tobacco farmers are going through as against what some purported “tobacco farmers” organizations have been saying. Here are excerpts of the article.
“For the past 17 years, farmer Bernadette Guya wakes up around 4 a.m. and works for the next 12 hours tending tobacco plants in a one-hectare leased plot in the northern Philippine province of La Union. She spends those hours watering and pruning them, and caring for each leaf by hand to remove pests.
“Guya earns roughly P50,000 ($1,169) from the sale of tobacco leaves, five months after planting them – a tiny income given the tedious work involved. But for this 39-year old widow, it’s the only way for her to earn a living and feed her four children.
“Guya’s plight illustrates how the revival of tobacco growing, which went through a slump until recently, hardly benefits the farmers.
““Planting tobacco is hard work,” Guya said in Filipino. She wanted to plant other less labor-intensive but profitable crop.
“Guya, however, doesn’t have the luxury of choice. In fact, of the P50,000 that she earned during the previous cropping season that ended in May 2011, about half went to the trader who loaned her the money to buy fertilizer, pesticides and fuel for the water pump. She netted only P20,000 ($467.62) just barely enough to pay for her children’s schooling and food.
“Guya sold all her harvest to the trader who loaned her the capital on the condition that she will plant tobacco. This arrangement leaves no choice but to sell at the price dictated by the trader. This cycle will be repeated in the current cropping season as Guya, bereft of savings, once again borrowed capital from the trader to allow her to plant tobacco last December.
Despite growing consumption
“With domestic cigarette consumption growing and big cigarette manufacturing companies picking the Philippines as the key raw material source, tobacco has recently emerged as one of the country’s fastest growing crops. Last year alone, production rose by 10.93 percent or almost twice the average 5.78-percent growth rate for all crops.
“It has even brought in more foreign exchange for the country. Tobacco exports rose from 43.6 million kilograms in 2008 to 56.94 million kilograms in 2010, generating nearly $270 million in export receipts.
“And yet farmers like Guya hardly benefit from these gains. The inequitable terms of trade facing Guya and other cash-strapped tobacco farmers like her underscores why tobacco growing is associated with rising poverty in spite of bright growth prospects.
“From 2003 to 2006, Ilocos Sur, the biggest tobacco producer, also registered the highest increase in poverty incidence, from 22.8 to 27.2 percent, according to the National Statistics Coordination Board. In this province alone, over 30,000 families are considered poor.
“Long neglected by the government and the rest of society, tobacco farmers have suddenly become a centerpiece in the current debate over the proposed sin tax reforms in Congress.
“Cigarette companies argue that raising sin taxes will reduce consumption, kill the industry and impoverish tobacco farmers. Tobacco control advocates insist that part of the revenues raised will be used to help tobacco farmers shift to other crops.
“But for most tobacco farmers whose fate is supposed to hinge on the passage of the bill the issue is not whether sin taxes will increase or not. What they care about is whether those sin taxes will be used to finance their needs: irrigation, technical support, and marketing.
Higher taxes should go to farmers
““The cigarette industry said the higher sin tax will hurt us. But we think if the sin taxes go up, the proceeds that are supposed to go to tobacco farmers will also go up. This will benefit us,” said Avelino Dacanay, chairman of Solidarity of Peasants against Exploitation (Stop-Exploitation).
“STOP-Exploitation is comprised of farmers in Ilocos provinces – the northern Philippine region where most of the country’s tobacco are grown. The group seeks to uplift the welfare of small farmers in northern Philippines by lobbying for land reform and fair prices for the farmers’ produce.
“Cavite Representative Joseph Abaya recently filed House Bill (HB) No. 5727 which seeks to impose more uniform taxes on cigarettes and liquor, removing the lower tax rates enjoyed by established brands and low-priced products. President Benigno Aquino III supports the bill which is expected to bring — additional $60 billion ($1.40 billion) in annual revenues, according to estimates by the department of finance.
“The bill is in line with the Philippine government’s commitment to the World Health Organization’s Framework Convention on Tobacco Control (FCTC), a global treaty which aims to cut tobacco use. To this end, the government, led by the health department, has enacted several policies meant to curb smoking in one of the world ‘s biggest cigarette markets.
“HB 5727 will raise taxes levied on cigarette and alcohol products, and in effect, increase retail prices of cigarettes in the Philippines, where which tobacco control advocates is one of the cheapest in the world. This deters people from smoking and endangering public health.
“A study done by Rene Rafael C. Espino and Danilo Evangelista, agriculture professors of the University of the Philippines in Los Baños, and Edgardo Ulysses Dorotheo of Southeast Asia Tobacco Control Alliance showed that tobacco farmers in Ilocos, given the right resources and opportunity, are willing to shift to other crops.
“In the crop year of 2006 to 2007, the authors conducted a survey among 503 tobacco farmers and 484 non-tobacco farmers in the provinces of Ilocos Norte, Ilocos Sur, La Union, and Pangasinan.
“The survey revealed that farmers preferred to plant non- tobacco crops like corn as tobacco is too labor intensive and requires them to work for 261 days (about eight months) before they can sell it. These crops also give them higher income. According to the study, farmers who planted bitter gourd net P158,640 ($3,709.14) per hectare, while tomato planting nets P116,204 ($2,716.95) per hectare. Planting Virginia tobacco only netted P51,642 ($1,207.44) per hectare.”
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