New tobacco floor prices for 2016-2017 trading

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The National Tobacco Administration (NTA) has approved new tobacco floor prices for 2016 and 2017, with increases limited to the higher grade varieties in a bid to discourage the production of cheaper grades.

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Prices for three tobacco types — Virginia, Burley and Native — were approved at the biennial Tobacco Tripartite Consultative Conference, held last September 29 at the NTA Central Office in Quezon City.

For Virginia, the floor prices per kilogram for the top grades were increased by P2 to as much as P4, bringing prices to P81 for Grade AA, P79 for A, P77 for B, P75 for C, P68 for D and P67 for E.

The prices to be replaced starting next year are P78 per kilo for AA, P75 for A, P73 for B, P71 for C, P66 for D and P65 for E.

Prices for low grade Virginia were kept at P59 per kilo for F1, P56 for F2 and P46 for Reject.

For Burley, top-grade A will cost P68 per kilo from the current P61; Grade B, P65from P59; and C, P56 from P53. Low grade prices were retained at P45 per kilo for D, P44 for E, P37 for F and P28 for Reject.

Mario Cabasal, president of the National Federation of Tobacco Farmers Association and Cooperatives, said farmers agreed to keeping the status quo for lower grade Virginia and Burley. He said this would discourage production of lower quality leaves and raise farmers’ incomes.

Meanwhile, floor prices of native-type tobacco were increased as follows: high grade, P70 from P66; Medium 1, P58 from P56; Medium 2, P48 from P46; Low 1, P40 from P38; and Low 2, P28 from P26.

The conference, hosted by the NTA every two years, gathers representatives from tobacco farmers’ groups and tobacco manufacturing companies who evaluate and negotiate floor prices of unprocessed tobacco.

NTA Administrator Edgardo Zaragoza said the tripartite meet achieved a “win-win” situation.

“We took into consideration the unabated increase of prices of farm inputs in coming out with the appropriate prices of tobacco,” Zaragoza said.

Especially considered, he said, were the cost of materials such as fertilizers and pesticides, labor (seedbed preparation, seedling care and field activities) and other expenditures (sticks, materials in repair, depreciation cost, interest and land rental).

Tobacco is the only industrial crop in the country that enjoys a minimum floor price set by
the government. The support level is based on prevailing market conditions such as production cost, reasonable margin of profit for stakeholders and growing conditions.

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

The actual buying price, which is based on prevailing market prices, is higher.

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