Premix sugar

Before I digress further on the other provisions of the Sugar Act proposed by Cong. Albee Benitez, it is relevant to comment on the recent news by the Confederation of Sugar Producers Associations director Luis Tongoy regarding the continuing importation of premix sugar by Coca Cola. This is precisely one of the tricky problems that Benitez bill intends to prevent. I will continue tomorrow the seventh segment of the discussion on the Sugar Act.

Director Tongoy claims the Sugar Regulatory Administration “continues to issue clearances to release the sugar from the Bureau of Customs despite assailing the tariff classification declared by Coke.”

It seems that the SRA and the Sugar Alliance that had blocked this importation and had in fact called for a boycott of Coke are working at cross-purposes. Coke has not released any statement on this subject which I think is the right move because the problem is a divergence of legal opinion and actuations of government agencies, i.e. SRA and Customs and the producers.

According to SRA Chairperson Gina Martin Coke has complied with all the requirements of importation and thus she can deny issuance of permit only at her peril, legally and civilly. Unless a law prohibits the importation of premix sugar and the importer has not complied with the requirements of the BOC and whatever other agencies that has a say on premix importation she cannot deny the permit even if in her heart of hearts she wants to prevent their entry.

Coke is very wise in this regard. It indeed promised to “reduce” its importation of premixes during a dialogue with the Sugar Alliance last year and it complied with its promise but one cannot fault them for acting as they should – as businessmen. Coke must have made its promise with fingers crossed.

According to SRA, Coke reduced its importation of premixes which dropped from 13,325 tons in 2010 to only 10,160 tons in 2011 for the same months of September to November. This shows that Coke complied with its word, though the planters probably thought or expected that the “reduction” could be more substantial or total as to have a better impact on the domestic price.

Ironically, now that the price of our sugar is down, Coke ought to reconsider its policy by not importing premixes especially because this year the tariff is down by another 10% to only 28%. This will be good public relations and planters can now serve Coke products in their parties and allow their sale in hacienda canteens. In the same way that Coke is protecting its economic interest so are the planters, in fact more so because this is a matter of life and death to the producers but would have a little impact on the overall multi-billion dollars Coke business.

The SRA is in a bind here. Chairperson Martin is right in issuing the release permit. First Coke has complied with the requirements of Customs and secondly, she, as representative of the Philippine government has the duty to follow the international agreement in similar fashion as we would demand from other signatory nations to honor their commitments.

Martin’s refusal to grant the permit would not be seen kindly by other countries. She can also be sued for damages for refusing to grant a permit to a legal importation (approved by BOC) when it is her duty to issue the permit. She is left with no choice, even if it displeases the sugar producers. To spite, Coke can even drag her to the Ombudsman.

However, while SRA has no authority over imported sugar, it can prevent the release of this sugar into the domestic market where SRA has exclusive authjority. The premix must be used exclusively by Coke. If Coke releases this in the local market or shares (sells) it to other industrial users then Coke can be liable for smuggling and I think even of misrepresentation.

The present situation and the fact that the tariff has already begun to drop to 28% and would decline further by next year by another ten percent until this is reduced to zero in 2015 makes the Sugar Act a critical legislation. The inability of SRA to legally refuse to issue a permit to importation that threatens the viability of the sugar industry is a pressure point to ask Congress to act on the Benitez bill with dispatch.

However, feedback on my six segments of the Sugar Act last December indicate that there is much work for Congressman Benitez to do, one of which is to convince the producers to rally behind his proposal. Unfortunately, as one official in a planters association said, they have yet to study the bill and so far they have only my column to refer to because they did not know of the contents of the proposed law until these came out in my columns.*

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