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National Tobacco Administration
Highlights of Accomplishments for CY 2016

Amidst formidable issues and challenges in the immediate past years which were foreseen to exert negative impact on the industry (to include, aggressive global campaign against tobacco and smoking, increasing health consciousness, increasing domestic taxation of tobacco, e.g. R.A. 10351, and increasing import liberalization and global competition) NTA continued to be aggressive in its performance to fulfill its twin mandate, to improve the lives of our tobacco farmers and all those who depend on the industry for their livelihood and promote the balanced and integrated growth and development of the tobacco industry to help make agriculture a solid basis for industrialization, resulting to some significant feats in the development of the local tobacco industry for the ultimate benefit of its stakeholder, especially the tobacco farmers.

We note herewith that, the industry provides livelihood and sustenance to about 2.9 million of stakeholders, including the more that 800,000 tobacco farmers and their families; in 2016, it generated PHP85.93 B in excise taxes, excludingother fees and duties, which help the government fund its education, health, welfare, infrastructure and economic programs over the country under RA 10351;

Based on PSA-BAS data, tobacco remained as one of the top ten agricultural exports at an average of 30.41 mt valued at US$227.62 B for manufactured tobacco, and 32.55 mt valued at US$104.51unmanufactured tobacco, for the period 2011-2015.

TOBACCO INDUSTRY'S PERFORMANCE FOR 2016

Number of tobacco farmers and tobacco farm area (in hectares) both decreased by 6%, from 46,531 to 43,625 and 32,761 to 30,648, respectively;

Volume of production showed a decrease of 10%, at 47 million kilos,valued at PhP3.45 billion.

Revenue from excise taxes as of December 2016 is at PhP85.93 billion, which is 12% lower than CY 2015's collections were at PhP97.40 billion.

Export of unmanufactured leaf tobacco decreased by 9% from 36.64million kilos to 33.36 million kilos; with the corresponding 3% decrease in value, from US$134.78 million to US$131.06 million;

Local manufacturers, imported a total of 52.11 million kilos of unmanufactured leaf tobacco for 2016, from 63.34 million kilos in 2015, or a reduction of 18%. Including manufactured tobacco, importation totaled at 57.52 million kilos, valued at US$282.76 million.

PROGRAMS/PROJECTS/ACTIVITIES

The Agency's programs and projects are anchored on the societal goal of "rapid, inclusive and sustained economic growth",its sectoral goal as stated in the Medium Term Philippine Development Plan (MTPDP) 2011-2016, "competitive and sustainable agriculture and fisheries sector" and in response to its intermediate outcome of "sustained viable tobacco industry".

It is also in line with the MFOs and targets in its Performance Scorecard with the GCG, wherein the following were accomplished in 2016:

MFO 1: Production Assistance:

Integrated Farming and Other Income Generating Activities Project (IFOIGAP)- Market-Driven Quality Tobacco Production:

a. Tobacco Contract Growing System (TCGS)

TCGS is a market-oriented production system that assures the tobacco manufacturers and exporters of the volume and quality of tobacco they need; and, at the same time, assures the farmers of the technology, production assistance, technical assistance from seedbedding to delivery of produce, ready market, proper grading, accurate weighing and better prices for their produce, including incentives for good performance, like production quota, 100% delivery, prompt repayment and high nicotine, among others.

For calendar year 2016 (covering end of crop year 2015-2016), NTA assisted a total of 3,493 tobacco farmers. The total production assistanceextended was PhP70.65 million out of the PhP80 millionproposed. Likewise, NTA facilitated the release of production assistance provided by Tobacco Buyer Firms, GFIs and LGUs totobacco farmers.

Volume and Value of Production/Acceptances

Total tobacco production/acceptances documented, to date, is at 47.18millionkilograms, valued at PhP3.45billion, as against 67.66 millionkilograms, valued at PhP4.664 billion, or a decrease of 4% and 0.71%, respectively, as shown in the table below:

  2014-2015 2015-2016
TobaccoType Volume (M Kgs)  Value (B PhP) Volume (M Kgs) Value (B PhP)
Virginia 27.54 1.78 23.31 1.57
Burley 17.29 1.35 17.19 1.36
Native 7.46 0.55 6.68 0.52
Total 52.29 3.68 47.18 3.45
Data source: NTA Regulation Dept. as of Dec. 2016

Yield per Hectare

Yield obtained under the Tobacco Contract Growing System (TCGS) across tobacco types and source of financing CY 2015-16 was at 2,369 kgs/ha, a 7% increase of from CY 2014-15's 2,210 kgs/ha.

Net Income per Hectare

Average net income across all types of tobacco increased by 54%, from PhP45,063 to PhP69,271 per hectare.

b. Rice Production component

As an IFOIGAP component, this is implemented in line with the rice self-sufficiency program of the government led by the DA, to augment the income of tobacco farmers, by increasing their yield to at least 5tons/hectare.

For CY 2016, NTA provided production assistance to 2,449 tobacco farmers, covering 2,266hectares. Production Assistance totaled PhP20.65 million, slightly more thanthe targeted production assistance for the year of PhP20 million.

c. Agripinoy Tobacco Farmers' Food Processing and Trading Center

The IFOIGAP includes value-adding/processing, where in 2012, NTA established the Agripinoy Tobacco Farmers Food Processing and Trading Center. The project provides production assistance to tobacco farmers in the production of raw materials- hogs and poultry, which the Plant will buy and process into bagnet, Vigan longaniza, tapa, bacon, etc. and sell to Bagsakan Centers, govt. offices and hospitals in Region 1 and Metro Manila. The Agripinoy milling complex will include a feedmill to cater to the requirement primarily of the farmer-beneficiaries of hog fattening and broiler production.

With regard to its Hog Production Project component, 3,250 piglets were dispersed. Total assistance of PhP27.043 million were extended to 332 farmer-cooperators. As a contribution to the food sufficiency goal of the DA, a total of1,388 hogs were harvested for processing.

d. Renewable FuelwoodEnergy Farm Project and Restoration of Ecological Integrity of the Tobacco Growing Regions

The project, now on its third year, aims to address the fuelwood and other forest resources requirement of the farmers in the curing of Virginia and other types of tobacco, as well as assist in the reforestation efforts of the tobacco growing regions.

For the Synchronized Tree Plantingcomponent, a total of 1,203,333seedlings were were planted in various areas in Region 1, 2 and CAR,participated by government agencies, SUCs, LGUs and other groups.

For the Kahuyang Pangkabuhayan at Pangkalikasan or grow-out plantation module, a total area of 1,144 hectares were planted with 2.86 million tree seedlings (giant ipil-ipil and gemelina). For the bamboo plantation, 402 hectares were planted with 98,490 bamboo seedlings. A total of PhP42.97 million was released for production assistanceto tobacco farmer cooperators of the project.

MFO 2 - Research and Development Services

As part of its integrated production technology development/enhancement, the following studies were conducted by the Farm Technology Services Department: Tobacco Germplasm Collection, Maintenance and Characterization; Improvement of Curing Structures and Processes for Virginia Tobacco;Verification of Vermicompost as Organic Fertilizer for Virginia Tobacco; and various Protocol Researchers on fertilizers in coordination with the private sector.

Under the Industrial Research Department, studies were conducted to find alternative uses of tobacco, one of which was the Tobacco Leaf Extracts for the Control of Mosquitoes. Continuing studies are being undertaken on standards and quality assurance: 1) Annual Physical and Chemical Evaluation of Philippine Grownand Imported Tobacco Leafand 2) Annual Physical and Chemical Evaluation of Manufactured Tobacco Products (Cigarettes). These studies are being conducted to determine thepresence and levels of hazardous chemicals/carcinogenic substances in tobacco and tobacco products, as part of NTA's regulatory function.

Other Priority Programs and Projects

Tobacco Seed Production and Distribution

The NTA makes available market-preferred, quality seed varieties to tobacco farmers and tobacco companies, to replace the many, old, degenerated varieties the farmers are using. This is intended to enhance global competitiveness, by ensuring consistency in the volume and quality, of leaf tobacco, as required by local cigar/cigarette manufacturers and exporters. For CY 2016, a total of 83 kg.of seeds were distributed to about 8,305tobacco farmers.

Analytical Services

NTA has laboratories at NTA Research and Training Center in Batac, Ilocos Norte and at the NTA Central Office, Quezon City- Quality Assurance Laboratory

Annually, in addition to requests from the various sectors that are being responded, the NTA's quality assurance activities include the following:

  • Continuing monitoring of soil fertility, chloride determination and water quality of major tobacco growing areas
  • Fertilizer and pesticide analyses
  • Monitoring/Analysis of Physico-Chemical Quality of Tobacco Production, using various technology applications, across locations
  • Monitoring of quality of tobacco leaf and tobacco products being exported and imported

Scholarship Program for Tobacco Farmers Dependents (pursuant to RA 9211

For the year, the NTA continued the scholarship program for tobacco farmers' children, pursuant to RA 9211, Tobacco Free Education Program (TFEP) and in affirmation to the Administration's thrust of giving priority to the primary stakeholders of the industry, the tobacco farmers. As of date it has extended financial assistance to of 365 scholars, enrolled in 4-year and vocational/technical courses, in state colleges and universities in Regions I, II and CAR.

Communication Support Program

  • Conducted continuing active consultation with the tobacco private sector and tobacco farmers groups on matters affecting the local tobacco industry, amidst the global campaign against tobacco and smoking, including the legislative agenda in both houses of congress;
  • Implemented the “Oras ni Mannalon ti Tabako” radio program in 3 provincesin Region 1, with a total of 60 broadcasts,¬† for a more active information dissemination and consultation, and reach out to far-flung areas of the regions; and,
  • Distributed 8,000 technocalendars to tobacco farmers and other stakeholders;
  • Distributed 18,000 copies of Tobacco Production Manual (In English/Ilocano dialects) to tobacco farmers and stakeholders
  • Published a quarterly newsletter, “The Tobacco News” and 4 press releases

Other Significant Accomplishments:

  • NTA is already ISO 9001:2008 Certified (on 3 business processes: Technology Assistance and Production Support Services, Research and Development, and Regulatory Services);
  • A Customer Satisfaction Survey was conducted by Ilocos Sur Polytechnic State College and obtained a 4.50 Rating, or Excellent/Extremely Satisfied; and
  • Conducted Competency-Based Trainings, the output of which will be the NTA Manual on Competency¬† Based Human Resource Devt.

Prepared by: NTA Corporate Planning Department