Lucio Tan’s Fortune Continues to Reign in Tobacco Sector 
Ilocos Region farmers press GMA to raise tobacco prices to P65 a kilo

Government authorities say that despite its ups and downs, the tobacco industry is performing well. Badgered by increasing production costs and Fortune Tobacco’s monopolistic practices, however, Ilocos farmers say the industry’s performance amounts to nothing to them and they are asking government to raise tobacco prices to P65 a kilo.

By Gerry Albert Corpuz 
Bulatlat.com

Government claims that the Philippines’ P21-billion ($3.9 million) tobacco industry provides income to 62,470 farmers and 300,000 direct dependents. In addition, around 11 million Filipinos are also involved in this industry in production, marketing and distribution. If the claim is true, the industry provides hope to nearly 12 million Filipino farmers, their dependents and other  workers.

Not so, say Ilocos farmers who are directly involved in tobacco production. And they are accusing government of being biased to magnate Lucio Tan who happens to own also Fortune Tobacco. Fortune, organized farmers say, corners the bulk of tobacco that is produced locally.

Some 39,327 hectares of agricultural land are planted with tobacco. Production yields an average of 1,734 kilos per hectare every year.

The National Tobacco Administration (NTA) said for trading year 2001, about of 68,195 kilos of locally-grown leaf tobacco with a farm-gate value of P2.63 billion ($4.8 million) were bought by the NTA through its 123 trading centers. Compared to year 2000, production dropped by 9.30 percent, although total farm gate value registered a growth rate of 2.67 percent in 2001, the NTA also said.

Data obtained from NTA shows that in 2001, 24.46 percent of some 15.3 million kilos worth $33.1 million were exported. About 3.1 million kilos representing 34.66% of total un-manufactured leaf exports were shipped to the United States during the same period.

Meanwhile, Myanmar was largest buyer or importer of locally-manufactured tobacco with a total importation of 2,084 kilos valued at $2.7 million which represents 37.32 percent of the total volume of exported manufactured tobacco.

However, the strong performance of the tobacco industry did not spell boom to tobacco farmers all over the country. Farmers in Ilocos region, the tobacco capital region of the Philippines north of Manila, are complaining about massive underpricing and price manipulations and overpricing of inputs as well as sky-high land rent.

The Solidarity of Peasants Against Exploitation (Stop-Ex), the biggest association of tobacco farmers in the Ilocos region, complained that the prevailing farm gate price of so-called  "rejects" is only between P10 to P15 ($0.18 to $0.27) a kilo although prices at trading centers pegged the average price level at P48 ($0.88) per kilo. The NTA sets floor price for AA class tobacco or Virginia tobacco at P46 ($0.85) a kilo.

The average daily income registered for the last two years was pegged at not less than P25 ($0.46) , a far cry from the required average of P393 ($7.28) a day for a family of six among the rural people.

Raise to P65 a kilo campaign

Last week, tobacco farmers pressed President Gloria Macapagal-Arroyo to act on their demand to raise tobacco prices to P65 ($1.20) a kilo without classification. The same demand was addressed to NTA and the Philippine Aromatic Tobacco Dealers Association (PATDA).

Stop-Ex, an affiliate of Kilusang Magbubukid ng Pilipinas (KMP-Peasant Movement of the Philippines) is leading both a regional and national campaign to raise the support price of Virginia tobacco to P65 per kilo regardless of type or classification.

Stop-Ex secretary general Avelino Dacanay said that tobacco farmers “are burdened with onerous land rent, rising costs of production, underpricing and other deceptive measures that keep income at depressed levels."

Each tobacco farmer, Dacanay said, spends P10,500 ($194.44)  in one-fourth (1/4) hectare of land for tobacco production. "Our demand to raise tobacco prices to P65 a kilo and without classification is very little compared to the millions and millions of profits raised by cigarette manufacturers," he said.

Virginia monologue

Government data indeed reveal that the total production of Virginia tobacco for Ilocos Sur's 2nd District has reached 18.4 million kilos with an estimated cost of P700 million ($13 million).

La Union produced 8.2 million with production cost amounting to P397.3 million ($7.35 million) while Ilocos Norte and lowland Abra produced more than 1 million kilos each province.

The country's total production of tobacco in 1999 reached 41 million kilos and cost P1.5 billion ($2.8 million). At least 1,667 sticks of cigarettes or 83 packs can be made in a kilo of tobacco.

The Peasant Education and Research Studies (PERS), an advocacy group, this week charged the government of bragging an empty success in the tobacco sector.

Roy Morilla, policy advocacy officer of PERS, said "This the kind of success anybody can argue and dismiss as plain rhetoric. It is a plain case of ‘Virginia monologue’ that has numbers to its credits but lacks substance and meaning to productive forces in the tobacco industry."

Tan's fortune

PERS' Morilla said the Fortune Tobacco Corporation owned by business tycoon Lucio Tan is the biggest buyer of raw tobacco in the country. He said  Tan's company corners 57.36% of the raw tobacco produced.

"Tan's Fortune company really got a million-dollar fortune from the tobacco industry. It dictates over phases from production to planting to distribution and marketing and of course, pricing," he said.

KMP secretary general Danilo Ramos said Tan's monopoly position in the tobacco sector has given him the immense power to say anything and acquire everything he wants. "The tobacco sector is actually Tan's turf since the Marcos regime in exchange for his support to Martial Law," he said.

Instead of giving political accommodation and economic concessions to tobacco magnates like Lucio Tan, Ramos said, President Gloria Macapagal-Arroyo must order NTA to raise the floor price of tobacco and side with the farmers interests.

Tan’s close association with past and present administrations has enabled him to take control of some of the country’s strategic industries including the airlines and banking.

Net importer

Ramos further said however that despite its performance, the tobacco sector remains a perennial net importer. Government data said the Philippines imports a huge volume of leaf tobacco due to shortage based on domestic requirements for exports and local consumption.

In 2001 alone, total imports for leaf tobacco reached 23.7 million kilos draining the country’s dollar reserves by $149.7 million. The bulk of these unmanufactured leaves came from Brazil, with 6.2 million kilos ($18.2 million) and Taiwan with 3.7 million kilos ($8 million).

On the other hand, the country's manufactured lead tobacco imports came from Singapore. During the same year, the Philippines imported from Singapore 2.7 million kilos of manufactured tobacco worth $45 million or 46 percent of the total import volume.

"While the government has been mass flooding the market with tobacco imports, it has kept prices of local tobacco products at prices almost ten feet below ground," Ramos added. Bulatlat.com 

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