It’s a pretty scary time to be in the sugar industry in the Philippines. There’s just a handful of years left before the domestic market is open to competition from other, and cheaper, sugar producing countries in ASEAN as import tariffs fall to just 5%. But there may yet be a plan to keep the industry humming.
One of the key legislators from main sugar-growing area Negros Occidental has been pushing for more than a year to find a way to reform the sugar industry in such a way that it will be able to compete come 2015. Last year Rep. Albee Benitez was pushing for a common marketing scheme for sugar sales, but that fell on deaf ears from some of the local planters groups who feared a repeat of the failed National Sugar Trading Corp. (NASUTRA) and later Philippine Sugar Marketing Corporation (PHILSUMA) that became defunct when President Aquino created the Sugar Regulatory Authority in 1986.
Rather than come up with new legislation, the National Federation of Sugarcane Planters felt that what needed to be done to support the sugar industry could be achieved within the confines of the existing rules that make up the SRA who could devise the needed regulations, and if more was needed, then an executive order could take care of whatever else was required.
But Benitez saw the value in making sure that the Sugar Act he was developing was something “for the people, by the people” so he spent several months in consultations with the various industry stakeholders to solicit what they felt were the true needs of the industry that would ensure they could compete in their own domestic market in time for 2015. Key too was to still be strong enough come 2015 to continue exports and even introduce more ethanol and energy production like other major sugar producers in the region.
Having brought together the recommendations of everyone, he revised his Sugar Act earlier this year so that it looked much more like a series of industry support mechanisms to strengthen production, milling, marketing and trading rather than the single marketing scheme he proposed earlier. The new version aims to establish a Sugarcane Industry Development Fund to be collected from the proceeds of 15% of the Value Added Tax on the sale and importation of refined sugar and sugarcane by-products and the total tariff collected on the importation of raw, refined and premix sugar.
All the proceeds collected would be remitted in full by the Department of Finance to a separate trust to be maintained by the Philippine Sugar Corp. to fund among others the establishment of Special Economic Zones for the sugar industry and agro industrial districts. The fund is also geared toward providing assistance to sugarcane farmers, planters and mills to boost production, efficiency and diversification, for research and development, for socio economic programs, and scholarships for students taking degrees relevant to the sugarcane industry.
The legislation has been making its way through both Houses of the Philippines’ Congress, apparently garnering support having already received the sign off from industry through the development phase. In June, the bill known as HB 6113 passed its first reading with the House of Representative’s agriculture committee and is now awaiting a reading in the House’s ways and means committee next month.
Though the bill is the only one receiving wide media attention, and in theory stakeholder support, at the agriculture committee hearing held on June 6, four other sugar related reform bills were also heard. One was focused on providing funds to boost the SRA’s ability to fight sugar smuggling while another looked to strengthen the SRA as a whole, but interestingly the other two bills put forward dealt with investigating the SRA’s ability to handle not only the smuggling issue but also its ability to maintain an environment of stabilized sugar prices to protect consumers. The latter two were both put forward by Minority Leader Rep. Danilo Suarez. It appears that there’s something of an undercurrent going on in the sugar industry that perhaps isn’t being dealt with directly through the House proposal.
On the Senate side, a sister bill has been put forward by Senator Edgardo Angara who has been coordinating with Benitez. In theory the bill is in the agriculture committee, but those committees have all been delayed due to the scandalous impeachment trial of the country’s Supreme Court Chief Justice who as a result was ousted by the Senate in May.
The rules require three readings in the House committees before being voted upon by the entire chamber. Then it moves on to the Senate, which shouldn’t be an arduous process if Angara’s version has made it through. But as delays continue to mount up, there’s growing concern that the legislation won’t make it through before year’s end. Midterm legislative and local elections will be held on May 13, 2013, which could throw a screw into the new Sugar Act’s progress if a move isn’t made before the focus shifts to campaigning. And with 2015 right around the corner, that would indeed be a wasted opportunity.