Dry spell dries out Ilocos Sur tobacco farmers’ profits
The dry spell caused by the El Niño weather phenomenon has dried out the river irrigating tobacco fields in Ilocos Sur, the country’s largest producer of tobacco.
The tobacco leaves in scarcely irrigated fields have then become of poor quality and have been bought at much lower prices by the traders.
The sharp dip in the income of tobacco farmers has made Ilocos Sur the fourth poorest province in Region 1, composed of the provinces of Dagupan City, Ilocos Norte, Ilocos Sur, La Union, and Pangasinan.
From 2000 to 2003, Ilocos Sur was the frontrunner in Region 1 in “poverty incidence improvement," an indication of better incomes for the majority of the population. From 2003 to 2006, however, Ilocos ranked last in poverty incident improvement in Region 1.
In contrast, poverty incidence in the province—the proportion of people who cannot afford basic food and non-food requirements— went up from 22.8 percent in 2003 to 27.2 percent in 2006, the National Statistics Coordination Board (NSCB) reported in 2008.
San Emilio town, a producer of Virginia and burley tobacco, is the fourth poorest municipality in Ilocos Sur, with a poverty incidence of 41.21 percent, according to 2003 estimates by the NSCB.
Out of San Emilio town’s 6,920 residents (based on 2003 statistics), about 1,800 persons are classified as poor.
Nonetheless, in 2009, San Emilio town produced 984 metric tons (MT) of Virginia, native, and burley tobacco, the fifth largest production among Ilocos Sur province’s 29 tobacco-producing municipalities.
In the same crop year, Ilocos Sur province produced 67 percent of the over 21,000 metric tons (MT) of tobacco produced in Region 1, the National Tobacco Administration (NTA) reported.
It was during this crop year, 2009, that Ilocos Sur's agriculture sector suffered one of its heaviest beatings when typhoon “Pepeng" ravaged the province in October 2009.
The damage to agricultural crops was estimated at P890 million and to infrastructure, P181 million, the National Disaster Coordinating Council (NDCC) reported.
Costly production
Putting aside the devastating effects of the El Niño weather phenomenon, tobacco production is by itself very labor-intensive and costly.
Producing the Virginia type of tobacco, the kind that most farmers in the region choose to plant, is the costliest of all.
Most of the Ilocos Sur farmers prefer to plant Virginia tobacco because it sells for the highest price in the market, ranging from P71 per kilo to as much as P85, compared to only P20 a kilo for the lowest quality of tobacco.
The production cost for Virginia tobacco about P146,000 per hectare, compared to around P120,000 for other varieties, the NTA estimates. The cost includes expenses for materials, labor, field activities, and repairs.
Ilocos farmers often do not plant more than a hectare of tobacco because of their limited resources.
They usually have to wait for five months before starting to earn, because planting season starts in October or November, while the harvest season would start only in April or June of the following year.
Cowboys
The high cost of tobacco production pushes the farmers to be dependent on borrowed capital.
Borrowing cash from a tobacco trading company or a middleman (usually called a “cowboy,") is commonly known as “contract growing," a system where farmers are obliged to sell their crops to the lenders.
George Rubang, a farmer in Candon City in Ilocos Sur, has been planting the cheaper kind of tobacco for 20 years but has recently decided to plant the costlier and more full-flavored Virginia tobacco.
To produce Virginia tobacco, Rubang had to borrow P150,000 from Fortune Tobacco, one of the largest buyers of tobacco produce in the region.
“Siyempre doon [sa full-flavor type] lang may nagpapautang, eh wala naman akong pagkukunan ng puhunan, kaya doon ako, (Companies only lend to producers of Virginia tobacco. As I had no capital, I opted for that)," Rubang said.
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"Masyadong maraming gastos sa pagtatanim. Masyadong maraming tao at tubig ang kailangan niya para makuha iyong tamang kulay ng tabako. Eh mahina ang tubig dito sa amin, kaya mahirap palaguin, (There are so many so many farming costs. So many people are needed and water is very much needed to get the right color of the tobacco. Because water is scarce in our area, it is very difficult to raise Virginia tobacco)" Rubang said.
Rubang said that planting the cheaper or “neutral" type of tobacco seems to be more beneficial for him personally. Although that kind of tobacco sold at a lower price, lesser production expenses are incurred.
“Mas maganda iyong sa neutral dahil mas kakaunti ang trabaho. Hindi mo na kailangang tanggalan ng bulaklak at lagyan ng gamot. Mas kaunti rin ang tubig at abonong kailangan" (The neutral kind is better because lesser work is needed. You don’t have to remove the flowers or put insecticides. Lesser water and fertilizers are also needed)," he explained.
Rubang estimates that he would earn less when he harvests the Virginia tobacco he planted because aside from his P150,000 loan, he also incurred higher labor and other costs.
“Mahina ang kita. Maayos sana kung lahat ng grado ng tabako ay AA at maganda ang presyo niya, pero ang tanong, may grado naman nang mababa ang klase, may P70, may P55, iba-iba. (The income is low. It would have been good if all the tobacco leaves are graded AA because the price would be high. However, there are lower grades that can get only P70 or P55 per kilo)," he said.
Grading of tobacco leaves
Before being sold, tobacco leaves are graded from AA (high-quality) to R (reject), with seven other grades in between. These correspond to floor prices that are adjusted yearly as prescribed by the NTA.
For crop year 2010-2011, the prices set by the NTA range from P33 per kilo for rejects to P71 per kilo for the AA grade of tobacco.
Under the prevailing rates, a hectare of tobacco plantation with an average yield of 2,000 kilos of tobacco, would give a farmer a minimum gross profit of P142,000, if all the leaves are graded AA.
The grading of tobacco, says a group of farmers who have shifted to planting other crops, is allegedly often a root of exploitation that keep its farmers poor.
“Iyang mga cowboys at traders, idodowngrade nila ang tabako. Sa halip na A or AA, sasabihin nila C. Wala namang magagawa ang farmer diyan, (Those cowboys and traders, they will downgrade the quality of the tobacco. Instead of A or AA, they will say C. There’s nothing that farmers can do about it)" said Avelino Dacanay of the farmers’ group Solidarity of Peasants Against Exploitation (STOP-Exploitation).
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As farmers can only sell their produce to the trader or cowboy who lent them the capital, they are left with no option but to sell at downgraded rates.
The grading of tobacco, based only on ocular inspection, remains at the trader’s or cowboy’s discretion.
STOP-Exploitation is pushing for the abolition of the multi-tiered grading system because tobacco redrying companies process the leaves of various grades altogether.
Once bought, tobacco leaves are brought to tobacco redrying plants for processing.
“Nakita namin iyong mga redrying plant noon, sama-sama naman na lahat ng tabako, iisa na lang, walang classification, (We saw the redrying plants before, all the leaves are processed together, there is no classification)" Dacanay said.
“Kaya sana nga ang pinaglalaban namin ay wala nang classification sa tabako. Pero ayaw ng mga traders, dahil doon sila kumukuha ng kita, (We are fighting for a policy where tobacco leaves no longer have to be classified. However, traders are against this because this is where they get their profits)" Dacanay explained.
“Sa middleman, kunwari ang napag-usapan niyo ay 25 percent iyong pupunta sa kanyang tabako, gagawin niyang 30 percent ‘pag nakita niyang maganda iyong quality ng tabako mo. Wala ka namang magagawa kasi wala kang pinirmahan eh. Wala kang pinanghahawakang papeles, (With middlemen, they pretend that they will get a 25 percent cut on the sale of the tobacco. When they see that you have a good grade of tobacco, they will raise this to 30 percent. You can do nothing because there’s no legal contract)," Rubang said.
Transactions with cowboys are often informal and verbal, and most farmers simply sign on the trader’s notebook, indicating the amount they borrowed.
Rubang clarified that his loan with Fortune Tobacco, a large company, has all the necessary paperwork.
Many tobacco farmers, however, still prefer to deal with cowboys because they wouldn’t have to go from their remote locations all the way to trading centers in the provincial capital.
Tobacco farmers dealing with big traders often have to shoulder additional costs to transport their goods to the provincial capital.
Lack of options
Dacanay, who has planted tobacco until 1995, has switched to planting corn ever since.
Dacanay explained that it is easier to plant corn which yields almost the same price as tobacco.
“Ang tabako kasi after six months ka pa lang makakapagbenta. Ang mais ay 72 days lang pwede nang mailuto. Pangatlong beses na naming magtanim ng mais, isang beses pa lang sa tabako. At ang mais, kapag nataniman at naabonohan mo na, aantayin mo na lang. Sa tabako hindi, araw-araw ka dapat andito sa bukid, (With tobacco, you can only sell after six months. With corn, after only 72 days, it can be cooked already. We would have already planted corn three times during the period that we have planted tobacco only once. With corn, once you have planted it and put fertilizer, you would just wait for the harvest time. With tobacco, you have to be at the farm everyday)," Dacanay said.
According to estimates from the Bureau of Agricultural Statistics (BAS), corn farmers earn an average of P23.71 per kilo, compared to only P15.82 per kilo for tobacco farmers.
The average production cost for corn is estimated at P6.15 per kilo, much lower than the P36 per kilo production cost for tobacco.
According to the January to March 2010 data of the BAS, national tobacco production went up by 9.66 percent compared to the same period last year.
The tobacco yield for the first quarter of 2010 is 10.67 MT, compare to only 9.73 MT in the same period last year.
The BAS attributed the higher yield to the shift to tobacco farming from yellow corn planting in Abra province.
A bag of fertilizer for a hectare of tobacco
The billions in excise tax share that the Ilocos Region has been entitled to since 1993 through Republic Act (RA) 7171 or An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces should have given much-needed relief to debt-burdened tobacco farmers.
Since its enactment, about P11 billion had been released to the Ilocos provinces, half of which went to Ilocos Sur because it produces the highest volume of Virginia tobacco.
When asked how RA 7171 has benefited them, however, farmers often find themselves at a loss.
“Iyan ang problema naming mga magsasaka ngayon. May mga ibibigay naman silang isang kaban ng abono, pero anong silbi noon? Paghahati-hatian pa ng tatlong farmer. Ang laki ng [RA] 7171, tapos isa lang ang ibibigay for the entire season, (That’s a problem for us farmers today. They give us one sack of fertilizer but what good is that? Three farmers even have to divide it among themselves. RA 7171 is huge but they will only give us one sack of fertilizer for the entire season), " said one farmer in Ilocos Sur.
A hectare of land, he added, needs around 25 sacks of fertilizers, which include ammonium sulfate and urea, one sack of which amounts to P512 and P893, respectively.
The farmer added that the only RA 7171-funded project he knows of is a warehouse that doubles as a solar dryer for crops during the rainy season.
Local governments have reportedly mostly spent the RA 7171 fund for infrastructure projects such as multipurpose pavements and centers, farm-to-market roads, solar dryers, and barangay halls.
The farmers said government subsidy of their production costs would have helped them lessen the debts they incur every planting season.
“Iyong puhunan lang namin ang talagang problema. Kaming mga farmer, kung hindi na kami uutang, hindi na kami makakapagtanim (Capital is really a big problem for us. If we will not borrow money, we will not be able to plant)," said one farmer in La Union.
An official of the NTA acknowledges the issues raised by the farmers.
“Ang complaint ng mga farmers, wala silang nakukuhang direct benefits. Indirect lang, kasi ginagamit sa infrastructure, sa daanan, na mabebenepisyuhan sila, pero indirectly.. Mga eskwelahan para sa mga anak at apo nila, kaya lang kung tutuusin ang gusto nila, kahit konting subsidy lang (The complaint of the farmers is that they do not get direct benefits, only indirect because the fund is used for infrestructure such as roads which will also benefit them but indirectly, or schools for their children and grandchildren. In the end, what they want is a little subsidy)" the NTA official said, adding that subsidizing 30 to 50 percent of the production cost would greatly ease the farmers’ burdens.
Dacanay said the farmers are not seeking a full subsidy from the government, lest that cultivates a culture of dependency among the farmers.
He said, however, at times like this when the El Niño phenomenon has made tobacco farming more difficult, a government subsidy would be beneficial. –VVP, GMANews.TV
The tobacco leaves in scarcely irrigated fields have then become of poor quality and have been bought at much lower prices by the traders.
The sharp dip in the income of tobacco farmers has made Ilocos Sur the fourth poorest province in Region 1, composed of the provinces of Dagupan City, Ilocos Norte, Ilocos Sur, La Union, and Pangasinan.
From 2000 to 2003, Ilocos Sur was the frontrunner in Region 1 in “poverty incidence improvement," an indication of better incomes for the majority of the population. From 2003 to 2006, however, Ilocos ranked last in poverty incident improvement in Region 1.
Each kilo of tobacco leaves sells for about P70, but these are graded first from AA (high-quality) to R (rejects) by the traders buying them.
Nikka Corsino
Nikka Corsino
San Emilio town, a producer of Virginia and burley tobacco, is the fourth poorest municipality in Ilocos Sur, with a poverty incidence of 41.21 percent, according to 2003 estimates by the NSCB.
Out of San Emilio town’s 6,920 residents (based on 2003 statistics), about 1,800 persons are classified as poor.
Nonetheless, in 2009, San Emilio town produced 984 metric tons (MT) of Virginia, native, and burley tobacco, the fifth largest production among Ilocos Sur province’s 29 tobacco-producing municipalities.
In the same crop year, Ilocos Sur province produced 67 percent of the over 21,000 metric tons (MT) of tobacco produced in Region 1, the National Tobacco Administration (NTA) reported.
It was during this crop year, 2009, that Ilocos Sur's agriculture sector suffered one of its heaviest beatings when typhoon “Pepeng" ravaged the province in October 2009.
The damage to agricultural crops was estimated at P890 million and to infrastructure, P181 million, the National Disaster Coordinating Council (NDCC) reported.
Costly production
Putting aside the devastating effects of the El Niño weather phenomenon, tobacco production is by itself very labor-intensive and costly.
Producing the Virginia type of tobacco, the kind that most farmers in the region choose to plant, is the costliest of all.
Most of the Ilocos Sur farmers prefer to plant Virginia tobacco because it sells for the highest price in the market, ranging from P71 per kilo to as much as P85, compared to only P20 a kilo for the lowest quality of tobacco.
The production cost for Virginia tobacco about P146,000 per hectare, compared to around P120,000 for other varieties, the NTA estimates. The cost includes expenses for materials, labor, field activities, and repairs.
Ilocos farmers often do not plant more than a hectare of tobacco because of their limited resources.
They usually have to wait for five months before starting to earn, because planting season starts in October or November, while the harvest season would start only in April or June of the following year.
Cowboys
The high cost of tobacco production pushes the farmers to be dependent on borrowed capital.
Borrowing cash from a tobacco trading company or a middleman (usually called a “cowboy,") is commonly known as “contract growing," a system where farmers are obliged to sell their crops to the lenders.
George Rubang, a farmer in Candon City in Ilocos Sur, has been planting the cheaper kind of tobacco for 20 years but has recently decided to plant the costlier and more full-flavored Virginia tobacco.
To produce Virginia tobacco, Rubang had to borrow P150,000 from Fortune Tobacco, one of the largest buyers of tobacco produce in the region.
“Siyempre doon [sa full-flavor type] lang may nagpapautang, eh wala naman akong pagkukunan ng puhunan, kaya doon ako, (Companies only lend to producers of Virginia tobacco. As I had no capital, I opted for that)," Rubang said.
Most Ilocos farmers resort to contract-growing--borrowing capital from lenders--in order to plant tobacco. Part of this agreement is for the farmers to sell their produce only to their lenders, often at lower prices.Nikka Corsino
"Masyadong maraming gastos sa pagtatanim. Masyadong maraming tao at tubig ang kailangan niya para makuha iyong tamang kulay ng tabako. Eh mahina ang tubig dito sa amin, kaya mahirap palaguin, (There are so many so many farming costs. So many people are needed and water is very much needed to get the right color of the tobacco. Because water is scarce in our area, it is very difficult to raise Virginia tobacco)" Rubang said.
Rubang said that planting the cheaper or “neutral" type of tobacco seems to be more beneficial for him personally. Although that kind of tobacco sold at a lower price, lesser production expenses are incurred.
“Mas maganda iyong sa neutral dahil mas kakaunti ang trabaho. Hindi mo na kailangang tanggalan ng bulaklak at lagyan ng gamot. Mas kaunti rin ang tubig at abonong kailangan" (The neutral kind is better because lesser work is needed. You don’t have to remove the flowers or put insecticides. Lesser water and fertilizers are also needed)," he explained.
Rubang estimates that he would earn less when he harvests the Virginia tobacco he planted because aside from his P150,000 loan, he also incurred higher labor and other costs.
“Mahina ang kita. Maayos sana kung lahat ng grado ng tabako ay AA at maganda ang presyo niya, pero ang tanong, may grado naman nang mababa ang klase, may P70, may P55, iba-iba. (The income is low. It would have been good if all the tobacco leaves are graded AA because the price would be high. However, there are lower grades that can get only P70 or P55 per kilo)," he said.
Grading of tobacco leaves
Before being sold, tobacco leaves are graded from AA (high-quality) to R (reject), with seven other grades in between. These correspond to floor prices that are adjusted yearly as prescribed by the NTA.
For crop year 2010-2011, the prices set by the NTA range from P33 per kilo for rejects to P71 per kilo for the AA grade of tobacco.
Under the prevailing rates, a hectare of tobacco plantation with an average yield of 2,000 kilos of tobacco, would give a farmer a minimum gross profit of P142,000, if all the leaves are graded AA.
The grading of tobacco, says a group of farmers who have shifted to planting other crops, is allegedly often a root of exploitation that keep its farmers poor.
“Iyang mga cowboys at traders, idodowngrade nila ang tabako. Sa halip na A or AA, sasabihin nila C. Wala namang magagawa ang farmer diyan, (Those cowboys and traders, they will downgrade the quality of the tobacco. Instead of A or AA, they will say C. There’s nothing that farmers can do about it)" said Avelino Dacanay of the farmers’ group Solidarity of Peasants Against Exploitation (STOP-Exploitation).
Farmers' groups claim that the discretionary and ocular grading system often results in the downgrading--and therefore cheaper selling prices--of tobacco. Nikka Corsino
As farmers can only sell their produce to the trader or cowboy who lent them the capital, they are left with no option but to sell at downgraded rates.
The grading of tobacco, based only on ocular inspection, remains at the trader’s or cowboy’s discretion.
STOP-Exploitation is pushing for the abolition of the multi-tiered grading system because tobacco redrying companies process the leaves of various grades altogether.
Once bought, tobacco leaves are brought to tobacco redrying plants for processing.
“Nakita namin iyong mga redrying plant noon, sama-sama naman na lahat ng tabako, iisa na lang, walang classification, (We saw the redrying plants before, all the leaves are processed together, there is no classification)" Dacanay said.
“Kaya sana nga ang pinaglalaban namin ay wala nang classification sa tabako. Pero ayaw ng mga traders, dahil doon sila kumukuha ng kita, (We are fighting for a policy where tobacco leaves no longer have to be classified. However, traders are against this because this is where they get their profits)" Dacanay explained.
“Sa middleman, kunwari ang napag-usapan niyo ay 25 percent iyong pupunta sa kanyang tabako, gagawin niyang 30 percent ‘pag nakita niyang maganda iyong quality ng tabako mo. Wala ka namang magagawa kasi wala kang pinirmahan eh. Wala kang pinanghahawakang papeles, (With middlemen, they pretend that they will get a 25 percent cut on the sale of the tobacco. When they see that you have a good grade of tobacco, they will raise this to 30 percent. You can do nothing because there’s no legal contract)," Rubang said.
Transactions with cowboys are often informal and verbal, and most farmers simply sign on the trader’s notebook, indicating the amount they borrowed.
Rubang clarified that his loan with Fortune Tobacco, a large company, has all the necessary paperwork.
Many tobacco farmers, however, still prefer to deal with cowboys because they wouldn’t have to go from their remote locations all the way to trading centers in the provincial capital.
Tobacco farmers dealing with big traders often have to shoulder additional costs to transport their goods to the provincial capital.
Lack of options
Dacanay, who has planted tobacco until 1995, has switched to planting corn ever since.
Dacanay explained that it is easier to plant corn which yields almost the same price as tobacco.
“Ang tabako kasi after six months ka pa lang makakapagbenta. Ang mais ay 72 days lang pwede nang mailuto. Pangatlong beses na naming magtanim ng mais, isang beses pa lang sa tabako. At ang mais, kapag nataniman at naabonohan mo na, aantayin mo na lang. Sa tabako hindi, araw-araw ka dapat andito sa bukid, (With tobacco, you can only sell after six months. With corn, after only 72 days, it can be cooked already. We would have already planted corn three times during the period that we have planted tobacco only once. With corn, once you have planted it and put fertilizer, you would just wait for the harvest time. With tobacco, you have to be at the farm everyday)," Dacanay said.
According to estimates from the Bureau of Agricultural Statistics (BAS), corn farmers earn an average of P23.71 per kilo, compared to only P15.82 per kilo for tobacco farmers.
The average production cost for corn is estimated at P6.15 per kilo, much lower than the P36 per kilo production cost for tobacco.
According to the January to March 2010 data of the BAS, national tobacco production went up by 9.66 percent compared to the same period last year.
The tobacco yield for the first quarter of 2010 is 10.67 MT, compare to only 9.73 MT in the same period last year.
The BAS attributed the higher yield to the shift to tobacco farming from yellow corn planting in Abra province.
A bag of fertilizer for a hectare of tobacco
The billions in excise tax share that the Ilocos Region has been entitled to since 1993 through Republic Act (RA) 7171 or An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces should have given much-needed relief to debt-burdened tobacco farmers.
Since its enactment, about P11 billion had been released to the Ilocos provinces, half of which went to Ilocos Sur because it produces the highest volume of Virginia tobacco.
When asked how RA 7171 has benefited them, however, farmers often find themselves at a loss.
“Iyan ang problema naming mga magsasaka ngayon. May mga ibibigay naman silang isang kaban ng abono, pero anong silbi noon? Paghahati-hatian pa ng tatlong farmer. Ang laki ng [RA] 7171, tapos isa lang ang ibibigay for the entire season, (That’s a problem for us farmers today. They give us one sack of fertilizer but what good is that? Three farmers even have to divide it among themselves. RA 7171 is huge but they will only give us one sack of fertilizer for the entire season), " said one farmer in Ilocos Sur.
A hectare of land, he added, needs around 25 sacks of fertilizers, which include ammonium sulfate and urea, one sack of which amounts to P512 and P893, respectively.
The farmer added that the only RA 7171-funded project he knows of is a warehouse that doubles as a solar dryer for crops during the rainy season.
Local governments have reportedly mostly spent the RA 7171 fund for infrastructure projects such as multipurpose pavements and centers, farm-to-market roads, solar dryers, and barangay halls.
The farmers said government subsidy of their production costs would have helped them lessen the debts they incur every planting season.
“Iyong puhunan lang namin ang talagang problema. Kaming mga farmer, kung hindi na kami uutang, hindi na kami makakapagtanim (Capital is really a big problem for us. If we will not borrow money, we will not be able to plant)," said one farmer in La Union.
An official of the NTA acknowledges the issues raised by the farmers.
“Ang complaint ng mga farmers, wala silang nakukuhang direct benefits. Indirect lang, kasi ginagamit sa infrastructure, sa daanan, na mabebenepisyuhan sila, pero indirectly.. Mga eskwelahan para sa mga anak at apo nila, kaya lang kung tutuusin ang gusto nila, kahit konting subsidy lang (The complaint of the farmers is that they do not get direct benefits, only indirect because the fund is used for infrestructure such as roads which will also benefit them but indirectly, or schools for their children and grandchildren. In the end, what they want is a little subsidy)" the NTA official said, adding that subsidizing 30 to 50 percent of the production cost would greatly ease the farmers’ burdens.
Dacanay said the farmers are not seeking a full subsidy from the government, lest that cultivates a culture of dependency among the farmers.
He said, however, at times like this when the El Niño phenomenon has made tobacco farming more difficult, a government subsidy would be beneficial. –VVP, GMANews.TV
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