Sugar bill, again

There are two responses to the newspaper report on the speech of Rep. Alfredo Benitez at the annual convention of sugar technologists in Cebu.

In that speech, Benitez, Neg. Occ. 3rd District, spoke about the salient points of his bill (HB 6113) proposing the transformation of the sugar industry into “a multi-product and diversified industry.” It will steer the industry from “focusing on sugar alone.”

Time is of the essence, he said, as the clock is ticking towards 2015 when the tariff on imported sugar reaches its bottom of only 5 percent.

The industry, he said is vulnerable to our competitors in the world market. “We cannot be complacent.”

Radio broadcasters and some planters expressed generally two opinions but surprisingly, the ordinary citizens had practically nothing to say on the warning of the congressman.

This absence of reaction from the general public demonstrates once more the reality that most people, even in Negros, do not care what happens to the sugar industry in this regard.

One reaction of a radio commentator gushes with praises for Benitez to the point that he is painting him as a savior of the sugar industry, in effect, blaming others in the industry for inaction. While this laudate to Benitez is deserved for this bill, it is unfair to say that others did not do their work,

The fact is that many sugar industry leaders had been saying the same thing as the Benitez bill but they were voices in the wilderness, voices that agonized until they were hushed from frustration.

The advantage of Benitez is that he is in power and has the luxury of money, that some people, many even in media, think is inexhaustible. The perception is misplaced but perceptions can also be created.

As a member of Congress, he is in position to harness the resources and influence of his office for the good of the industry and, I hope, as many others, that he will succeed in getting this bill passed.

Anyway, the second reaction is that the provisions are not new. Indeed they had been said for decades. Perhaps a little history of the sugar industry can tell us about the efforts in the past and why they failed, although space would not warrant their detailed discussion. They can fill a book, so I will cite only a few.

At the core of the Benitez bill is the high cost of production. The thesis is that if we reduce the cost of production we would be able to compete with any other foreign sugar producer. That thesis is actually a reality for generations.

In 1936, just after the Philippines was granted Commonwealth status before full independence, the problem of high production was already identified. George H. Fairchild, a miller, cited the article written by Dr. Carlos Locsin of Victorias Milling Company comparing the cost of production of the leading producers, Hawaii, Cuba and the Philippines.

Hawaiian sugar production cost at the time was 3.3979 US cents per pound, that of Cuba was 1.7423 and that of the Philippines was 2.94. The discrepancy is clear but nothing was done for years before this time to reduce the cost of production. The reason which remains true today was given by Fairchild.

He said prophetically, “Without the maintenance of the present favorable tariff relations, the Philippine sugar industry will never be able to… cope with that of its Far Eastern neighbors…” in terms of competing with them. As we now know, we cannot compete with Thailand because we had always been dependent on the US market.

He had high hopes, though, because at the time, there were “more progressive planters, fearing the uncertainty of the protection now enjoyed by the United States market and the desire to improve standards of living, are already endeavoring to increase their yield through the introduction of modern methods and improved varieties of cane.”

If these were done, “it is conceivable”, Fairchild said “there will be increase in unit yields with a corresponding reduction in unit costs to a point where the sugar industry will not be ruined, as it would now be, should this protection be withdrawn within that period of time.”

Just exchange the US tariff to our own tariff protective wall and we are back to 1936.

The Benitez bill is overly ambitious, a shot gun approach to the problems that will require billions of pesos yearly, taking the mills rehabilitation alone. Is the fund source identified in the bill sufficient? Looking at the sources and the magnitude of the problems the answer is certainly not.

The bill must consider other sources if we want to address the multifarious needs, given the time we have. What is probably needed at this stage is a turkey shoot but the aims of the bill can stay.*

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