When it rains, it pours: Tobacco farmers grapple with debts, losses from torrential rains (Part 1)

After trying his luck farming corn for three years, Ryan Reyes decided to plant tobacco again.

He said the laborious cultivation and low farm gate price were the reasons he decided to shift from tobacco to corn, but his father convinced him to return to tobacco growing.

The 36-year-old farmer from Burgos, Ilocos Sur added that fertilizer subsidies from the local government and production loans from tobacco trading companies were also factors in his decision to return to tobacco farming.

Reyes is one of the farmers under the contract growing program of Universal Leaf Philippines, Incorporated (ULPI). Based on his receipts, he owes the company more than P20, 000 production loans. He also owes several sacks of fertilizers from fellow farmers.

However, torrential rains washed away his hopes of paying his debts and saving some amount for his family’s needs from the crop.

From January 24 until a few days before the start of harvesting leaves from his tobacco crops, heavy rains drenched a large part of the province. He lost almost half of the 5000 square meter farm he cultivated because of the rains.

Heavy rains came again on February 10. He said some of his crops survived, there will still be leaves to harvest and cure but most will surely fall as “rejects.”

“With the damage, it will be hard for me to even earn enough to pay my debts. I’m hoping the company will defer payment or subtract the cost of the damage from my loans,” he said in Ilocano.

Reyes is among the more than 1500 tobacco farmers in Ilocos Sur who are still reeling from the economic impact of the Coronavirus pandemic and are now grappling with debts and losses after torrential rains destroyed hundreds of hectares of tobacco crops in the region.

The National Tobacco Administration (NTA) has estimated the January rains to have destroyed 1,132 hectares of tobacco, at the early vegetative and mid-growth stage, valued at P81-million.

In Ilocos Sur, the affected area reached 453 hectares across the 27 tobacco-producing municipalities. The damaged crop estimate is more than P30 million.

However, the figure does not include the additional damages brought by the rains in February.

NTA Candon Branch Chief of Operations Adonis Lazo said farmers are the most affected in terms of the economic impact “[because] this is the only cash crop available to them to have a higher income.”

“I doubt [that they can still recover] because the quantity and quality are now affected, not enough to cover up the cost of production they have applied. Whatever amount they can salvage will be used for other projects,” he answered when asked if farmers can still recover their losses after the latest downpour.

Tied to loans

Like Reyes, Luis Garpida, a tobacco farmer for more than 40 years in Santiago town, said that he took loans for almost all of the years that he cultivated the plant.

He used to borrow from middlemen (cowboys) but shifted to contract growing programs offered by Philip Morris Fortune Tobacco Company, ULPI, and also with NTA. According to him, he earns more under the growership scheme of the companies compared to when he was still getting funds from the cowboys. However, he still has to acquire loans for the next tobacco season despite the increase in his earnings.

Despite the higher returns in tobacco, he has also opted to plant other crops this year, citing difficulty in finding farmworkers. “Work is lighter and I don’t have to ask for loans to plant vegetables, peanuts, and watermelon,” he added.

According to the latest cost of production computation of the NTA, a farmer needs P108, 000 to P143, 600 for a hectare of land, depending on the cultivated type of tobacco. The amount does not include the “non-cash” cost of about P37,000-P47,000, which is usually composed of the farmer’s labor (including abled family members) and expenses for their food while working on the farm. The NTA calls the non-cash expenses farmer’s equity.

Solidarity of Peasants Against Exploitation (Stop Exploitation), a farmers group in Ilocos, said the high production cost of tobacco has tied farmers to loans “for as long as one can remember.”

“Once financed by usurers and cowboys, most tobacco farmers are now more dependent on loans from tobacco companies and the NTA for their farm needs,” said Stop Exploitation chair Antonino Pugyao.

According to NTA, more than half of the tobacco farmers in the region are under different forms of contract growing. The government and tobacco companies have promoted contract growing to address farmers’ concerns on production capital, quality, and marketing. With loans and support available, the agency also hoped farmers would do away with usurious loans and cheap-paying “cowboys’.

However, contrary to the notion that contract growing removed the cowboys and their usurious loans in the equation, many farmers still run to them for cash.

Pugyao explained that since companies and the NTA only provide the production cost, many farmers continue to seek loans for household expenses during the cropping season.

He pointed out that even if farmers were able to salvage their crops from the rains, “the next issue is the low buying price.” The peasant leader said the low farm gate price is what “keeps farmers in debt.”

“The price and the increase are not commensurate to our expenses and sacrifice to produce a kilo of tobacco. What we earn is just enough to pay our loans, buy some basic needs, no more than that. Next season, the cycle of debt to produce tobacco continues,” he added.