Floor prices for tobacco to go up
The National Tobacco Administration has approved new floor prices for tobacco for the next two trading years, 2018 and 2019, a development that would benefit both the farmers and leaf buyers.
The price increase for the three tobacco types—Virginia, Burley and Native— came almost two weeks after negotiations on price adjustments between the tobacco farmers and leaf buyers during the continuation of the Tobacco Tripartite Consultative Conference.
Tobacco is the only industrial crop in the country that enjoys a minimum floor price set by the government. This is based on the prevailing market conditions such as production cost, reasonable margin of profit for stakeholders and growing conditions.
For Virginia tobacco, which makes up almost 60 percent of the total tobacco production area in the country, the floor price per kilogram for the top grades increased to P82 for Grade AA, P81 for A, P80 for B, P78 for C, P70 for D, P69 for E; P60 for F1, and P57 for F2.
The former prices are 81 for AA, P79 for A, P77 for B, P75 for C, P68 for D, P67 for E, 59 for F1, and 56 for F2.
For Burley, the top-grade A rose by P2 bringing the price per kilo to P70 from the current P68. The floor prices for grades B, C, D, E, and F are now P67, P58, P47, P46, and P38, respectively, an increase of P2, except for Grade F which increased by P1, from the current prices per kilo.
The floor prices of the native-type were increased as follows: High-grade, from P70 to P71; Medium 1, from P58 to P60; and Medium 2, from P48 to P50.
However, there would be no floor price increase for Rejects, which remain at P46 for Virginia; P28 for Burley, and P40 (L-1) and P25 (L-2) for Native type.
This, after leaf buyers have insisted that there should be no price increase for low grades or rejects for all tobacco types to discourage production of low quality tobacco leaves.
Farmer leader Mario C. Cabasal, president of the National Federation of Tobacco Farmers Associations and Cooperatives (NAFTAC), said they were satisfied with the conclusion of the negotiation for floor price increases.
He said that, during the impasse, leaf buyers, through Director Rodolfo F. Salanga, have hinted that they are open to recommendations of farmers for a “small increase” for each type.
“We need any increase we can get to inspire our farmers to produce tobacco as I can’t imagine them working with higher production cost with reduced profit,” said Cabasal.