Candon City, Ilocos Sur—Tobacco farmers can no longer endure tax increases on “sin” products, as these will further pull down the farm-gate prices of tobacco leaves, and force them to shift to lower-value crops, a lawmaker said over the weekend.
In an interview with reporters here, Rep. Eric D. Singson of the Second District of Ilocos Sur said farmers are reeling from the effects of tax hikes on sin products.
He claimed the proposed tax increase of P60 per pack on cigarettes in the Senate will cut the production of farmers.
“When you increase the taxes, cigarettes become pricey. With that, you also reduce the number of consumers. In the process, manufacturers will produce less and hurt the farmers in the process,” Singson argued.
Data provided by industry players reported the number of tobacco farmers in the Ilocos region fell 25.93 percent to 34,465 in 2017 from 46,531 in 2015. Further, the land used for tobacco farming declined 30.69 percent to 22,704 hectares in 2017 from 32,761 hectares in 2015.
Of the over 12,000 farmers that abandoned tobacco farming, about 2,300 left the agriculture sector for good, while the rest shifted to agricultural crops that are valued less than the main component of cigarette.
“We have to teach them to plant other agricultural products. Since this is the Ilocos area, the land here is dry, so what can be planted aside from tobacco is really corn,” Singson said.
However, according to the Ilocos Sur representative, farm-gate prices of corn are about 84 percent lower than those of tobacco.
High-grade tobacco, when sold to the trading center here, is bought by traders at P90 per kilogram, with lowest grade quality priced at P45 per kg. Corn is sold at P14 per kg at the maximum.
“The margin in farm-gate prices is wide. However, we have to instruct farmers to start shifting to other crops. We don’t want them planting too many tobacco because what if the demand for cigarette goes down? Where will we sell the remaining tobacco leaves? We have to balance,” Singson said.
The BusinessMirror also interviewed tobacco farmers, who are set to harvest their crops on Monday, and found out farm-gate prices are down 50 percent at present.
Tobacco leaves are bought P45 per kilo in the Candon City trading center, farmers reported.
Farmers said this is due to the proposed hikes on sin taxes, resulting in lower purchases of tobacco by cigarette firms. Singson said he understands where the government is coming from in pushing for the increase in sin taxes, but proposed it should be done gradually, as approved by the House of Representatives.
The House passed a tax hike of P37.50 per pack, while the Senate is pushing for P60 per pack, as proposed by Sen. Emmanuel D. Pacquiao, to as high as P90 per pack, as laid out by Sen. Joseph Victor G. Ejercito.
He said the government was able to “injure” the tobacco industry over the years, as shown in the decline on the number of farmers and land area for tobacco farming. Moreover, about three decades ago, Ilocos Sur is host to 10 trading centers for tobacco, but is now down to one.
Singson appealed to senators to be more considerate to the more than 34,000 remaining tobacco farmers of the country. He warned those running for reelections, particularly Ejercito, that their candidacies will be met with strong opposition in Ilocos Sur if they persist in pushing for higher excise taxes on tobacco.
Data from the Commission on Elections showed that in the 2016 polls, there were 451,951 registered voters in Ilocos Sur, with a voter turnout of 86.85 percent. La Union, another tobacco-farming province, had 454,778 registered voters.