Where’s the money?

The title can be more precise with the question, “what did they do with the money?”

If one is monitoring the apprehension of “smuggled sugar” one is immediately aware of the relation of this question on the money that the sugar industry annually gives to stop the smuggling of sugar. The illegal activity continues and there is no end to this annual zarzuela.

Another reported apprehension came out of the news saying that Customs intercepted P10 million worth of sugar but beyond that the Customs said nothing except the usual script about running after smugglers, the confiscation of the sugar, the bidding process, etc., etc. You have heard that always, there is no need to repeat them here.

I only cited this ritual because it has become an annual event. However, if one looks closely enough, the story is not in the news.

For instance, the Bureau of Customs says that they valued the smuggled sugar at P2,000 per bag. Now, ask any planter whether the price of sugar at the time of alleged apprehension has reached P2,000 per bag which gives the BoC a bloated P10 million catch.

If the price of smuggled sugar is P2,000 per bag, then the smuggler must be very stupid when he can buy sugar in the Philippines at 15% less. But is the smuggler really stupid or the BoC pulling our legs so that it can show some performance (and the usual photo ops for the Boc Chief) for the Christmas season?

Behind the scenes, we find the reaction of National Federation of Sugarcane Planters president Enrique “Nene” Rojas. He laments, also like an annual rite “what was apprehended by the Bureau of Customs might be only 10 percent of the total volume of smuggled sugar.”

In another part of the news report, he said “customs must make sure that the seized smuggled sugar will not end up back into the hand of those who smuggled them.”

How many times have we heard the same lamentation among the sugar industry people? He is expressing the growing frustration in the entire industry.

It is this same frustration that the industry extended its help to the BoC and it created a Task Force to help the government. They hoped that these pernicious illegal activities will become a thing of the past.

The industry, planters and millers put their money where their lamentations and hopes are. They contribute P1 per bag of their sugar to finance the task force.

Isn’t that wonderful? No agricultural industry is doing this – financing the effort to help custom.

At the usual annual production of 2.5 million tons, we can estimate at least P50 million is contributed by the industry to this effort each year.

But in all endeavors, we must compute the benefit against the cost. The industry spent P50 million and the Custom seize P10 million (even admitting the bloated). Granting that the smuggled sugar reaches to P50 million worth, is the cost commensurate with the added expense?

But let’s examine the situation closely. The BoC is one of the collection agencies of the government. It had its own budget by the billions and for that it has the prime and sole responsibility to stop smuggling not just of sugar but of all taxable commodities.

So should the planters, big and small (some with less than a hectare of land) have to pay extra for the work that is the duty of Customs?

I can understand the wonderful intentions of the sugar industry but even the best intentions can be flawed and open the gates for waste, if not of corruption.

I was informed that this money is also accounted for but that is not just the point. The P50 million is an admission that sugar smuggling cannot be stopped. Nobody believes that, but granting it to be so, why should the sugar people carry a brunt of this task?

The greater question arises is: Is spending P50 million annual for the apprehension of sugar worth the P10M or P20M worth of sugar justifiable?

Nothing can be wasteful than this when the planters need a common fund for their own development, say additional funds for quedan financings or better still loan funds for the purchase of machineries.

The performance of the sugar anti-smuggling task force is dismal compared to its cost. The obligation to stop smuggling belongs to Customs and it should be made to account for their failure: The performance (mostly none) of the task cost cannot justify the cost that is burdened on the planters.

Individually P1/per bag is small but collectively, it is a huge expense for nothing especially because the final taxes levied on smuggled sugar do not accrue to the industry to replace its cost but to customs.*

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