By SHERWIN DE VERA
AFTER trying his luck farming corn for three years, Ryan Reyes decided to plant tobacco again.
He said the laborious cultivation and low farm gate price were the reasons he decided to shift from tobacco to corn, but his father convinced him to return to tobacco growing.
The 36-year-old farmer from Burgos, Ilocos Sur added that fertilizer subsidies from the local government and production loans from tobacco trading companies were also factors in his decision to return to tobacco farming.
Reyes is one of the farmers under the contract growing program of Universal Leaf Philippines, Incorporated (ULPI). Based on his receipts, he owes the company more than P20, 000 production loans. He also owes several sacks of fertilizers from fellow farmers.
However, torrential rains washed away his hopes of paying his debts and saving some amount for his family’s needs from the crop.
From January 24 until a few days before the start of harvesting leaves from his tobacco crops, heavy rains drenched a large part of the province. He lost almost half of the 5000 square meter farm he cultivated because of the rains.
Heavy rains came again on February 10. He said some of his crops survived, there will still be leaves to harvest and cure but most will surely fall as “rejects.”
“With the damage, it will be hard for me to even earn enough to pay my debts. I’m hoping the company will defer payment or subtract the cost of the damage from my loans,” he said in Ilocano.
Reyes is among the more than 1500 tobacco farmers in Ilocos Sur who are still reeling from the economic impact of the Coronavirus pandemic and are now grappling with debts and losses after torrential rains destroyed hundreds of hectares of tobacco crops in the region.
The National Tobacco Administration (NTA) has estimated the January rains to have destroyed 1,132 hectares of tobacco, at the early vegetative and mid-growth stage, valued at P81-million.
In Ilocos Sur, the affected area reached 453 hectares across the 27 tobacco-producing municipalities. The damaged crop estimate is more than P30 million.
However, the figure does not include the additional damages brought by the rains in February.
NTA Candon Branch Chief of Operations Adonis Lazo said farmers are the most affected in terms of the economic impact “[because] this is the only cash crop available to them to have a higher income.”
“I doubt [that they can still recover] because the quantity and quality are now affected, not enough to cover up the cost of production they have applied. Whatever amount they can salvage will be used for other projects,” he answered when asked if farmers can still recover their losses after the latest downpour.
Tied to loans
Like Reyes, Luis Garpida, a tobacco farmer for more than 40 years in Santiago town, said that he took loans for almost all of the years that he cultivated the plant.
He used to borrow from middlemen (cowboys) but shifted to contract growing programs offered by Philip Morris Fortune Tobacco Company, ULPI, and also with NTA. According to him, he earns more under the growership scheme of the companies compared to when he was still getting funds from the cowboys. However, he still has to acquire loans for the next tobacco season despite the increase in his earnings.
Despite the higher returns in tobacco, he has also opted to plant other crops this year, citing difficulty in finding farmworkers. “Work is lighter and I don’t have to ask for loans to plant vegetables, peanuts, and watermelon,” he added.
According to the latest cost of production computation of the NTA, a farmer needs P108, 000 to P143, 600 for a hectare of land, depending on the cultivated type of tobacco. The amount does not include the “non-cash” cost of about P37,000-P47,000, which is usually composed of the farmer’s labor (including abled family members) and expenses for their food while working on the farm. The NTA calls the non-cash expenses farmer’s equity.
Solidarity of Peasants Against Exploitation (Stop Exploitation), a farmers group in Ilocos, said the high production cost of tobacco has tied farmers to loans “for as long as one can remember.”
“Once financed by usurers and cowboys, most tobacco farmers are now more dependent on loans from tobacco companies and the NTA for their farm needs,” said Stop Exploitation chair Antonino Pugyao.
According to NTA, more than half of the tobacco farmers in the region are under different forms of contract growing. The government and tobacco companies have promoted contract growing to address farmers’ concerns on production capital, quality, and marketing. With loans and support available, the agency also hoped farmers would do away with usurious loans and cheap-paying “cowboys’.
However, contrary to the notion that contract growing removed the cowboys and their usurious loans in the equation, many farmers still run to them for cash.
Pugyao explained that since companies and the NTA only provide the production cost, many farmers continue to seek loans for household expenses during the cropping season.
He pointed out that even if farmers were able to salvage their crops from the rains, “the next issue is the low buying price.” The peasant leader said the low farm gate price is what “keeps farmers in debt.”
“The price and the increase are not commensurate to our expenses and sacrifice to produce a kilo of tobacco. What we earn is just enough to pay our loans, buy some basic needs, no more than that. Next season, the cycle of debt to produce tobacco continues,” he added.
Ample & appropriate support
Bernard Vicente, president of the National Federation of Tobacco Farmers Association and Cooperatives (NAFTAC), is urging the NTA and local governments to act immediately on the needs of the affected farmers.
“[The damage] caused by the rains is a huge burden for farmers who have yet to recover from the impact of the pandemic. How fast and appropriately the NTA and local governments will respond, can make or break the lives of many farmers affected by these events,” he said.
The NAFTAC leader called on NTA to resolve the problem regarding the insurance coverage of tobacco under the Philippine Crop Insurance Corporation (PCIP). He said the non-inclusion of tobacco and detrimental incidents like heavy rains under the program makes them more vulnerable to bankruptcy and debt traps.
He said that while the most favorable action of the government and private sector is to condone their loans, they also welcome restructuring of loans “to give them breather and time to recover.”
Vicente said local governments should allot ample funds from their Republic Act No. (RA) 7171 share for the relief and recovery program for tobacco farmers, like alternative likelihood and greater farm subsidies for supplemental crops.
“We, tobacco farmers, deserve more than what they are giving. During these dire times, they should allot more, give what is due to us, since the fund came from the work and sacrifice of tobacco farmers,” he added.
RA 7171 mandates that tobacco-producing provinces receive a 15 percent share from the collected excise tax from Virginia tobacco products such as cigarettes. Another law, RA 8240, provides a fifteen percent allotment for LGUs planting Burley and Native tobacco from the excise tax of the products from the said variety.
Tobacco-producing provinces in the country are set to receive their RA 7171 share amounting to P14.4 billion for those cultivating the Virginia-type and P3.6 billion for the producers of the Native and Burley varieties.
Ilocos Sur province will take the lion’s share, with a P8.3 billion share.
Easing the burden
In an e-mailed response, NTA Administrator Robert Seares, Jr. said NTA is talking with other government agencies and tobacco companies to create measures to ease the burden of farmers from the torrential rains and the continuing pandemic.
“This will surely lessen the production of tobacco which will heavily affect farmers. We are looking at other livelihood programs and alternative crops for tobacco farmers… and crafting long-term programs,” he said.
According to him, besides the alternative livelihood and supplementary crops, the NTA is also negotiating with the Philippine Crop Insurance Corporation (PCIC) to expand their coverage.
“Currently, only those affected by typhoons are covered by it but we are looking at widening the coverage. Our legal team and the NTA board are working on it,” he said.
The agency has also talked with tobacco companies providing production loans for farmers. He said ULPI has a condonation program but only to a certain limit. Meanwhile, Trans Manila, Inc. (TMI) has expressed its willingness to restructure the loans depending on the yield level of the farmers.
However, Seares explained that under the rules of the Commission on Audit (COA), the NTA has no authority to condone production loans. All they can do is restructure the payment period, extending it for an additional one to two years.
Meanwhile, the province of Ilocos Sur is planning to provide additional subsidies, such as fertilizers, for the affected farmers, said Oscar Tobia, provincial agriculture chief. The province has also requested additional assistance from the Department of Agriculture for assorted vegetable seeds, peanuts, and mung beans.
He said the province has also coordinated with ULPI for additional seedlings. In his last monitoring, the company has distributed its remaining tobacco seedlings and replanted around 70 hectares.
“Municipalities have different responses which the province is supplementing. Some have decided to provide cash assistance besides the usual subsidy and farm support,” he said.
Ripple effect
Lazo said the losses in the province from the series of heavy downpours from January 22 to 24, and again on February 10 would send a ripple effect in the province’s economy.
Besides the decrease in the buying power of farmers, he said the extent of damage would also affect the RA 7171 share of the province.
“Lower harvest and income for farmers, he said, means their purchasing power will also be affected, and in turn impact local businesses in tobacco-producing areas,” he explained.
Lazo also noted that local governments greatly depend on the funds from their excise tax share for the provision of agricultural support and subsidies for farmers in the province. Lesser harvest means reduced share for the LGUs and possibly lesser support for tobacco cultivators.
Meanwhile, the NAFTAC and Stop Exploitation leaders said the unfortunate coming of the rains has further exposed the dismal state of tobacco farmers despite the flourishing tobacco and cigarette trade.
Vicente said that more than the reduced harvest and excise tax share; farmers are concerned about how they will be able to pay their loans since they have to borrow again cash to plant other crops.
For Pugyao, farmers will remain dependent and buried in debts until the government resolves the issue of landlessness. He also noted the low price and misuse, and selective prioritization of the excise tax funds continue as factors that keep the “cycle of debt” turning.
