PHL tobacco industry to increase exports, import substitution

The Philippine tobacco industry said on Friday that the dampening of demand for their products due to higher sin taxes could be counteracted by increasing exports and substituting local tobacco for imports. During the biennial Tobacco Tripartite Consultative Conference on Friday, tobacco manufacturers stressed the need for farmers to produce high quality leaf to be used by local cigarette manufacturers so that importation would be lessened. “Tobacco is still a crop to believe in and will and will be around for a long time. As quality is improved, we are trying to keep more Philippines tobacco,” said Jorge Struecker, leaf buying manager of Philip Morris Fortune Tobacco Corporation. “To sustain production, we need to increase production efficiency,” he added. “We need to be competitive because we are not the only producer selling to cigarette manufacturers,” said Erwin Ang of Universal Leaf Philippines Inc. Tobacco production this year is expected to reach more than 70 million kilograms, a recovery from the production level of 65 million kilograms in 2012 when unfavorable weather  prevailed. In 2011, tobacco production reached 79 million kilograms, higher than the 2010 production level of 73 million kilograms. National Tobacco Authority Administrator Edgardo Zaragoza said that of the 70 million kilograms produced this year, 40 million kilos are expected to be exported while 30 million would be retained for domestic production. Zaragoza also pointed out that the local manufacturing industry actually needs 150 million kilos of leaf for its blending requirements. The balance of the demand is imported from other tobacco-producing regions. “So we are asking the mayors to come up with areas for expansion of tobacco crop,” said Zaragoza. Tobacco exports, both manufactured and unmanufactured is expected to be approximately the same as in 2012 at 73 million kilos valued at $188.85 million, up from 2011 production of 71 million kilos in 2011 valued at $339.20 million. As of July 2013, production was placed at 40 million kilos valued at $188.85 million. In December of 2012, the Sin Tax Reform bill, which increased excise taxes on alcohol and tobacco products, was signed into law by President Benigno Aquino III. — DVM, GMA News