Philippines:Tobacco farmers remain poor despite industry revival, 03/04/12

ANILA, Philippines (Xinhua) – For the past 17 years, farmer Bernadette Guya wakes up around 4 a.m. and works for the next 12 hours tending tobacco plants in a one-hectare leased plot in the northern Philippine province of La Union. She spends those hours watering and pruning them, and caring for each leaf by hand to remove pests.

Guya earns roughly P50,000 ($1,169) from the sale of tobacco leaves, five months after planting them – a tiny income given the tedious work involved. But for this 39-year old widow, it’s the only way for her to earn a living and feed her four children.

Guya’s plight illustrates how the revival of tobacco growing, which went through a slump until recently, hardly benefits the farmers.

“Planting tobacco is hard work,” Guya said in Filipino. She wanted to plant other less labor-intensive but profitable crop.

Guya, however, doesn’t have the luxury of choice. In fact, of the 50,000 pesos that she earned during the previous cropping season that ended in May 2011, about half went to the trader who loaned her the money to buy fertilizer, pesticides and fuel for the water pump. She netted only P20,000 ($467.62) just barely enough to pay for her children’s schooling and food.

Guya sold all her harvest to the trader who loaned her the capital on the condition that she will plant tobacco. This arrangement leaves no choice but to sell at the price dictated by the trader. This cycle will be repeated in the current cropping season as Guya, bereft of savings, once again borrowed capital from the trader to allow her to plant tobacco last December.

With domestic cigarette consumption growing and big cigarette manufacturing companies picking the Philippines as the key raw material source, tobacco has recently emerged as one of the country’s fastest growing crops. Last year alone, production rose by 10.93 percent or almost twice the average 5.78 percent growth rate for all crops.

It has even brought in more foreign exchange for the country. Tobacco exports rose from 43.6 million kilograms in 2008 to 56.94 million kilograms in 2010, generating nearly $270 million in export receipts.

And yet farmers like Guya hardly benefit from these gains. The inequitable terms of trade facing Guya and other cash-strapped tobacco farmers like her underscores why tobacco growing is associated with rising poverty in spite of bright growth prospects.

From 2003 to 2006, Ilocos Sur, the biggest tobacco producer, also registered the highest increase in poverty incidence, from 22. 8 to 27.2 percent, according to the National Statistics Coordination Board. In this province alone, over 30,000 families are considered poor.

Long neglected by the government and the rest of society, tobacco farmers have suddenly become a centerpiece in the current debate over the proposed sin tax reforms in Congress.

Cigarette companies argue that raising sin taxes will reduce consumption, kill the industry and impoverish tobacco farmers. Tobacco control advocates insist that part of the revenues raised will be used to help tobacco farmers shift to other crops.

But for most tobacco farmers whose fate is supposed to hinge on the passage of the bill the issue is not whether sin taxes will increase or not. What they care about is whether those sin taxes will be used to finance their needs: irrigation, technical support, and marketing.

“The cigarette industry said the higher sin tax will hurt us. But we think if the sin taxes go up, the proceeds that are supposed to go to tobacco farmers will also go up. This will benefit us,” said Avelino Dacanay, chairman of Solidarity of Peasants against Exploitation (Stop-Exploitation).

STOP-Exploitation is comprised of farmers in Ilocos provinces – the northern Philippine region where most of the country’s tobacco are grown. The group seeks to uplift the welfare of small farmers in Northern Philippines by lobbying for land reform and fair prices for the farmers’ produce.

Cavite Representative Joseph Abaya recently filed House Bill (HB) No. 5727 which seeks to impose more uniform taxes on cigarettes and liquor, removing the lower tax rates enjoyed by established brands and low-priced products. President Benigno Aquino III supports the bill which is expected to bring additional $60 billion ($1.40 billion) in annual revenues, according to estimates by the department of finance.

The bill is in line with the Philippine government’s commitment to the World Health Organization’s Framework Convention on Tobacco Control (FCTC), a global treaty which aims to cut tobacco use. To this end, the government, led by the health department, has enacted several policies meant to curb smoking in one of the world ‘s biggest cigarette markets.

HB 5727 will raise taxes levied on cigarette and alcohol products, and in effect, increase retail prices of cigarettes in the Philippines, where which tobacco control advocates is one of the cheapest in the world. This deters people from smoking and endangering public health.

A 2006 study made by the University of the Philippines, World Health Organization and Health Department said economic costs of smoking, including expenses for health care and costs of productivity losses can hit as much as P300 billion ($7.01 billion) a year.

The Philippine Tobacco Institute (PTI), a lobby for the cigarette industry, is opposing the bill. In a press statement issued in January, PTI President Rodolfo Salanga questioned why the government is imposing higher taxes that will penalize not just the manufacturing firms but the 2.7 million farmers and their families who depend on the industry.

For Dacanay and other farmers, the more pressing issue is the government’s ability to provide financial, infrastructure and extension support that will free them from the clutches of tobacco traders, and allow them to freely choose the most profitable and suitable crop to grow.

“All the farmers want is for the government to help them shift to other crops,” he said. This includes funding irrigation facilities like simple water ponds or shallow tube wells as the soil in the region is dry, and capital and market support to wean away the farmers dependence on middlemen.

Farmer Perlita Sarro, also from La Union, said that if she has enough capital, she wants to become an entrepreneur, planting and selling vegetables that sell for higher prices than tobacco. She said that she only earned over P10,000 ($233.81) from the previous tobacco harvest in the one and a half hectare plot that she’s leasing from the owner. This is just enough to pay for the debt that she owed from the traders who loaned her the capital and to eke out a living. Like Guya, Sarro had to plant tobacco because that’s the only way to get a capital and be assured of a market for her produce.

A study done by Rene Rafael C. Espino and Danilo Evangelista, agriculture professors of the University of the Philippines in Los Banos, and Edgardo Ulysses Dorotheo of Southeast Asia Tobacco ControlAlliance showed that tobacco farmers in Ilocos, given the right resources and opportunity, are willing to shift to other crops.

In the crop year of 2006 to 2007, the authors conducted a survey among 503 tobacco farmers and 484 non-tobacco farmers in the provinces of Ilocos Norte, Ilocos Sur, La Union, and Pangasinan.

The survey revealed that farmers preferred to plant non- tobacco crops like corn as tobacco is too labor intensive and requires them to work for 261 days (about eight months) before they can sell it. These crops also give them higher income. According to the study, farmers who planted bitter gourd net P158,640 ($3,709.14) per hectare, while tomato planting nets P116,204 ($2,716.95) per hectare. Planting Virginia tobacco only netted P51,642 ($1,207.44) per hectare.

The 51-year old Dacanay, who tilled tobacco for 20 years before shifting to corn farming, affirms that finding. He said that while a hectare of corn field earned him about P60,000 ($1,403), he only netted roughly P22,000 ($514.38) from planting Virginia tobacco.

“Tobacco planting doesn’t pay,” Dacanay said.

The only time that he saw tobacco paying off was in the crop year of 2009-20010. Dacanay said tobacco farmers were able to sell a kilo of tobacco for about P90 ($2.10) a kilo. This, he said, was relatively high compared to prices in previous crop years which range from P80 to P85 ($1.87 to $1.99). This encouraged farmers to plant tobacco in the next cropping season. In the 2010-2011 cropping season, prices dropped to P73 ($1.71) per kilo.

For Dacanay, it’s a sign he made the right choice to shift away from tobacco 12 years ago.