Tobacco traders and cigarette manufacturers have agreed to buy all locally produced flue-cured Virginia (FCV) tobacco this season after a supply glut threatened to leave thousands of farmers without buyers and push prices lower.

The National Tobacco Administration (NTA) said Wednesday the industry commitment followed months of negotiations after projections showed a five-million-kilogram oversupply — about 27 percent above the 18.05 million kilograms initially committed for purchase by traders and manufacturers this trading season.

The surplus was driven by a surge in non-contracted tobacco farmers planting traditional Virginia varieties after two years of unusually strong demand and elevated prices, with local government units encouraging expansion.

NTA Administrator and CEO Belinda S. Sanchez said traders are committed to buy all locally produced tobacco at “reasonable prices” based on approved floor prices, easing fears of a “stop-buying” scenario in tobacco-producing areas in the Ilocos Region and Abra.

“The tobacco supply was short in the last two years, resulting in strong demand and unexpectedly high prices. However, this trading season, prices declined due to overproduction, consistent with the law of supply and demand,” NTA Deputy Administrator for Operations Nestor C. Casela said.

The market reversal has sharply cut farmgate prices. Prime-class FCV tobacco that fetched as much as P130 per kilogram during the 2025 trading season has so far reached only P105 per kilogram this year, although prices remain above government-approved floor levels.

For this year’s trading season, approved floor prices range from P98 per kilogram for Class AA leaves to P62 per kilogram for reject-quality leaves.

The NTA also flagged deteriorating tobacco quality this season due to limited irrigation water and extreme heat, adding pressure on both farmers and buyers.

Currently, only around 10,000 of the country’s 45,000 registered tobacco farmers are enrolled in the NTA’s program, while about 25,000 are contracted directly by private-sector companies.

The oversupply and quality concerns are now pushing regulators and industry players to accelerate participation in the Tobacco Contract Growing System, under which authorized tobacco companies guarantee purchases under agreed terms while providing farmers with production inputs, financing, and technical support.