LGU Excise Tax Share for Genuine Agrarian Reform
Second of three parts

A glance on the Cost of Production (COP) form of the National Tobacco Administration (NTA) tells a lot about the state of the tobacco industry. From start to finish, the field activities, equipment and the number of mandays employed shows a backward if not primitive production process compared to other tobacco producing countries. The feudal character of the Philippine countryside is also apparent. Landlordism and the scarcity of land in the region generate prohibitive land rent. Foreign control over our agricultural production is also evident, with majority of the chemical inputs for the crop are imported.

Besides these things, the exploitative and oppressive marketing scheme also becomes undeniable when one thoroughly studies the form. Presented below the computed COP are the percentages of the different leaf classes. Based on the NTA projection, about 67% of the leaves fall under Class AA to C that commands higher price while, 33% are of the lower value. However, this projection set by the agency is a distant reality. Tobacco companies classify most of the farmers’ produce under the lower quality bracket to increase their profit margin. This system aggravates the low price of dried tobacco leaves, leaving tobacco farmers’ in deep debt and bankruptcy.

The law that promotes the development of the farmers in the Virginia tobacco-producing provinces has been in effect for 25 years, yet according to a recent study conducted by the Action for Economic Reforms (AER) a lot of them are among the poorest of the poor. For the earmarked funds under Republic Acts 7171 and 8240 to work, the local government receiving these allocations should fund programs that promote genuine agrarian reform.

FAMILY AFFAIR.  Tobacco farming is considered a family affair, with half of household contributing to activities related to producing tobacco according to the study conducted by AER and the American Cancer Society.

The Municipality of Santa in Ilocos Sur has somewhat started a viable program. Its municipal council approved an ordinance allocating part of its excise tax to purchase land for poor and landless farmers. The beneficiaries have the right to till the land free of rent, and given production assistance. In return, they are required to adapt a cooperative farming and labor-exchange systems or inammoyo. Another legislation assigns part of the LGU’s RA 7171 share for early recovery projects for farmers during calamities and disasters. The municipality is yet to put these programs in full swing, but for a small town and excise tax share, this is a groundbreaking project funded by RA 7171.

Strategic spending plan for agricultural development must be in place to allow a certain focus to produce significant change. LGU’s can program their annual share to work for farm mechanization through grants for a certain number of farmers that will jointly use and maintain the equipment. With a plan in place, farmer’s cooperatives or organizations can have common facilities for tobacco production such as flu-curing and storage barns. Agricultural equipment and facilities such as tractors, irrigation systems, and storage barns also increase the production of other crops such as rice, corn and vegetables.

Credit access greatly affects the cropping system of farmers. Accessible and reasonable source of production capital and cash for day-to-day needs allow farmers to explore other crops. Thus, LGU’s should give attention to cooperatives managed by famer’s organizations that primarily cater for landless and poor farmers. Other than financing their needs, cooperatives can also act as buying stations eliminating the cowboys (middlemen) and increase the bargaining power of the farmers against big traders and tobacco companies.

Some LGUs have given production incentives and assistance. The incentives ranging from P2.00-5.00 per kilo of dried tobacco leaves, and financial and material assistance up to P10, 000.00 per hectare. However, not all LGUs provide such support for farmers, and not all farmers’ have a hectare of land to plant on. On the average, tobacco farmers in the region rent and cultivate 0.7 hectare.

Furthermore, the fund allocated to programs that provide direct benefits to farmers is miniscule compared to the assigned amount for infrastructures. Taking the P1.26 billion 2016 RA 7171 released for the three Ilocos provinces as base figure, a P10.00 production incentive per kilo would only amount to 28% of the whole figure, leaving about P904 million to fund other projects. This would amount to about P18,000 additional income for the farmer for every hectare of land. Greater production incentive and assistance increases the farmer’s income and purchasing power, and encourages more farmers to plant the crop. Both results of this program are quite favorable for the LGU. The former allows higher spending and the latter for bigger excise tax share. By increasing the farmers’ income, the demand to increase the daily wage of farmworkers’ become more justified and realizable.

Funding for research and development is a must for LGUs and concerned agencies like the NTA. These will include the development of efficient alternative fuel for curing Virginia tobacco, environmentally friendly farming techniques and area-specific technologies.

The LGUs must likewise allot from the excise tax fund, financial and technical aid for farmers to shift to other crops in compliance to the Philippine government’s commitment to its own law Section 33 of RA 9211 (Tobacco Regulation Act of 2003) and Article 17 of the Framework Convention on Tobacco Control.

Infrastructures such as roads, barangay halls, covered courts and public buildings are just facade to widespread poverty and neglect in the countryside. Facilities are the least of the concerns that famers’ face, it is landlessness and usury that have plagued the countryside for centuries. Thus, to make the LGU share from the excise tax significant, it must go to projects that confront these issues and change the relations of production in the countryside at raises the economic condition of the farmers.#


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