Govt agency raises tobacco floor prices

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Amid concerns on the effect of higher sin tax to the tobacco industry, the National Tobacco Administration (NTA) on Thursday approved the increase in the floor prices of tobacco variants for trading year 2014-2015.

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Following the Tobacco Tripartite Consultative Conference, the NTA has agreed to raise buying prices of tobacco variants—Virginia, Burley and Native—starting next year.

The new floor prices for Virginia tobacco rose by P6 a kilogram across all grades.

The new buying prices for grades of this variety are as follows: AA, P78; A, P75; B, P73; C, P71; D, P66; E, P65; F1, P59; F2, P56 and R, P46.

The new minimum buying prices for Burley rose by P3 to P10. The new minimum buying prices for grades of this variety are: A, P61; B, P59; C, P53; D, P45; E, P44; F, P37 and R, P28.

The new minimum floor prices for Native tobacco rose between P4 and P10. The new floor prices for grades of this variety are HG, P66; Medium 1, P56; Medium 2, 46; Low 1, P38 and Low 2, P26.

Tobacco is the only industrial crop in the country that enjoys a minimum floor price support set by the government.

Floor price is the minimum price allowed by the government for the procurement of tobacco buyers from farmers. This is set based on the prevailing market conditions such as production cost, reasonable margin of profit for stakeholders and growing conditions.

The actual buying price, which is based on prevailing market prices, is usually higher than the minimum floor price.

The setting of the minimum floor price provides tobacco farmers a guaranteed minimum return on investment of at least 25 percent for expenses.

The tripartite conference, which is held every two years to review the floor prices of various tobacco types, took into consideration the imposition of higher excise tax for the adjustment of the buying rates.

James Konstantin Galvez

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