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NTA sets new tobacco buying price for '14-'15

By Czeriza Valencia (The Philippine Star) | September 6, 2013

MANILA, Philippines - The National Tobacco Administration (NTA) yesterday approved the new floor prices for various tobacco variants for trading years 2014 and 2015. The new floor prices for Virginia tobacco rose by P6 per 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; 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; R, P28.

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

Taken into consideration in the adjustment of the buying rates is the imposition of the higher excise taxes on tobacco products which is feared to affect consumption.

The NTA approved the new buying prices during yesterday's Tobacco Tripartite Consultative Conference which is held every two years to review and adjust the floor prices for various tobacco types –Virginia, Burley and Native – for the next two trading years.

Present during yesterday's conference were local government chief executives from tobacco-producing regions, farmers organizations, and tobacco manufacturing companies.

These include farmers group National Tobacco Association of Tobacco Farmers Associations and Cooperatives (NAFTAC), cigarette manufac turer Philip Morris Fortune Tobacco Corporation (PMFTC), and tobacco buyer Universal Leaf Philippines, Inc.

The last tripartite conference was held from September 10 to September 11, 2011. 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 framers a guaranteed minimum return on investment of at least 25 percent for expenses.