Gold leaf farming sector still searching for own El Dorado.

THE past five years of the Philippine tobacco industry paint a bleak future: dwindling tobacco area and declining number of farmers.

The major culprit? Falling domestic cigarette consumption due to higher excise taxes and anti-smoking initiatives both by the government and the private sector.

Despite this, the tobacco industry, which started in the late 16th century, remains among the cornerstones of Philippine agriculture. The crop, also called gold leaf, still brings more than P3 billion worth of value to the agriculture sector annually.

Latest National Tobacco Administration (NTA) data shows that total hectarage planted with tobacco plunged to a decade-low of 18,911 hectares last year.

Likewise, the number of tobacco farmers in the country last year fell to its lowest level in 10 years at 29,839 tillers, based on NTA data obtained by the BusinessMirror.

Despite these reductions, tobacco production in 2019 recovered to 46.571 million kilograms, halting a 9-year skid of output since 2010, the NTA data showed.

The volume was 7.7-percent higher than the 43.241 million kilograms recorded in 2018, which was the lowest output since 2010.

Better adoption

NTA OIC-Deputy Administrator for Operations Roberto R. Bonoan said last year's production recovery was caused by favorable weather conditions and better adoption of recommended technology by farmers.

Bonoan explained to the BusinessMirror that farmers have been receiving farm interventions from the NTA and leaf buyers (like seedlings). They also receive incentives if they follow proper technology applications. These incentives include farm inputs and subsidies, cash assistance, firewood assistance and gas, among others.

Despite these interventions, Bonoan admits that the local tobacco industry still lags behind other countries in terms of productivity due to low adoption of farm machinery that could make farm work easier and more efficient.

No less than Agriculture Secretary William D. Dar stated that there is a need to make Filipino tobacco farmers 'more competitive.'

Dar, who sits as chairman of the NTA governing board, emphasized the need for an industry development plan that would 'elevate' the industry's productivity to be at par of foreign tobacco producers.

'We have to use all available resources to accelerate the modernization and industrialization of the tobacco industry, and see to it that the tobacco farmers will have more income,' Dar said during the NTA's 33rd anniversary in July when he emphasized the goal of 'Masaganang Ani at Mataas na Kita [abundant harvest and high income].'

Industry roadmap

TWO years ago, the NTA started crafting an industry roadmap to chart the future of the tobacco farmers, especially in light of rising sin taxes, declining cigarette consumption and rising number of tobacco alternatives like vaping.

The NTA tapped the University of the Asia and the Pacific (UAandP) Center of Food and Agribusiness to conduct an industry study that would be the basis for the roadmap.

By 2018, the study was completed and a tobacco industry roadmap was presented to the various stakeholders of the industry.

The NTA noted then that the roadmap would guide the industry toward 'improving farmers' incomes, increasing exports, job creation and crop diversification including alternative farming systems, and provide inputs for the development of the manufacturing industries.'

But a key factor in achieving such goal was the 'appropriate and effective use of the Tobacco fund.'

The tobacco fund was created by the 56-year-old Republic Act 4155, which seeks to promote the country's Virginia tobacco industry. The fund comprises half of all the tariffs or taxes on imported leaf tobacco collected and half of the total special taxes on locally-manufactured Virginia type cigarettes.

Zeal in development

AS of the end of 2019, Department of Budget and Management (DBM) documents showed that the tobacco fund stood at P71.86 billion. The DBM document said the fund could increase this year to P80.751 billion and P89.642 billion by next year.

However, bulk of the fund remains parked in government coffers due to the lack of a sound and proper program that would convince the DBM to release the funds for the further development of the tobacco industry.

Since 2015, the tobacco fund has been increasing by at least P6 billion to as high as nearly P10 billion. Total taxes and tariffs remitted to the tobacco fund last year reached P9.717 billion.

In contrast, government expenditure using the tobacco fund is barely scratching the surface. DBM documents analyzed by the BusinessMirror showed the NTA was only able to use from 2015 to 2019 a measly average of P500 million of the parked money.

Last year, the NTA spent only P401.370 million from the tobacco fund; this was only 0.55 percent of the total pool.

'We could hardly get some releases from the tobacco fund unless we submit a comprehensive and sound program,' Bonoan told the BusinessMirror.

Proposed Step

BONOAN says they are keeping their fingers crossed that the proposed 5-year Sustainable Tobacco Enhancement Program (Step) would be approved and would be a 'step' in the right direction in tapping the tobacco funds and unlocking the remaining potential of the industry.

Bonoan explained that the Step seeks to fast-track the 'modernization and industrialization' of the industry. The Step is also now considered as the 'new and improved' tobacco industry roadmap aligned with Dar's...