PMFTC to invest P2.2 B in Mindanao

MANILA, Philippines - Philip Morris Fortune Tobacco Corp. (PMFTC), the country’s largest cigarette maker, remains in investment mode with plans to infuse about $50 million (around P2.2 billion) in fresh capital to expand its Virginia tobacco leaf production in Mindanao.

PMFTC president Paul Riley told reporters that the company is beefing up its investment in its Virginia tobacco experimental farm situated on a 10-hectare property in Claveria, Misamis Oriental.

“We’re helping farmers down there so we’re starting up a whole new operation because its quite a unique project.  Its only the second place in the world where we grow tobacco twice a year,” Riley said.

“We’ve invested a lot of capex there, building curing barns, providing seedlings to the farmers,” he added.

Riley said the investment would be made over a period of five to six years.

“We’re not going away so we have to invest in the future,” he said.

The expansion of the Virginia tobacco farm, established in January 2012, follows encouraging  results of the pre-commercial launch.

PMFTC has extended production assistance in the form of cash inputs and technical assistance.

Following  harvest, the company buys the tobacco leaves from the farmers and flue cures them,  using the six barns it constructed with the slabs from sawmills as fuel.

The first batch of transplanting for the commercialization phase was conducted last November.

PMFTC transplanted K326 and PVH 2254 varieties on a staggered basis from November 2013 to April 2014, covering a total area of 200 hectares.

Virginia tobacco, also known as Brightleaf tobacco, is the most widely-grown type of tobacco in the country, comprising 58 percent of the tobacco cultivation areas. This export-oriented tobacco variety is also the most common type of flue-cured tobacco used for making cigarettes.

According to the National Tobacco Administration, tobacco firms are increasingly turning to Misamis Oriental for growing Virginia tobacco.

NTA administrator Edgardo Zaragoza earlier said the province was a suitable location for growing the Virginia variety because of its fertile land and good climate.

Virgina is commercially grown in the provinces of Abra, Iloco Norte, Ilocos Sur, and La Union.

Tobacco farmers in Misamis Oriental, particularly in the municipalities of Opol, El Salvador, Alubijid, Laguindingan, Gitagum, Libertad and Initao, have been growing the native variety only.

PMFTC was formed in 2010 as a result of the merger of Philip Morris and tycoon Lucio Tan’s Fortune Tobacco Corp.,  It remains  market leader in the Philippine cigarette industry despite the many challenges it is facing now.

The company approximately accounts for about 70 percent of the market, producing six of the top 10 cigarette brands of choice last year.