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Bacolod City, Philippines Thursday, January 12, 2012
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The Sugar Act – 8


The Sugar Price Stabilization Fund that the proposed Sugar Act intends to create will provide the SRA with greater power and responsibility for the growth and development of the sugar industry. The first two purposes of the fund are for control of prices by controlling stocks that SRA alone can dispose.

The second objective is to improve mill efficiency by providing them with loans.  This allows the SRA to impose efficiency standards and control for other purposes. Philsucom also granted loans to mills but the loans were so huge that until today the mills so finance over 25 years ago, are still under government control for their unpaid loans. Some have closed; others limping.

The third purpose is wide-ranging in scope and probably will be the most problematic. Chapter IV, Sec. 6 (c) provides that part of the SPSF will be used “to finance infrastructure projects related to sugar production, post-harvest facilities processing and marketing.”

In Thailand we have seen that infrastructure support was such that farm roads are in good condition, irrigation canals bring abundant and free water into the farms even during the summer months thus insuring good harvest and the road system are in top conditions for cane and public transport.

Post harvest facilities for sugar are different from the usual concept of post-harvest facilities that refer to grains. Construction of sugar warehouses is a vital components of marketing.  Nasutra had them in Pulupandan and Guimaras. Sugar mills, of course have their own warehouses but these are temporary storage, some sort of half-way house for sugar before taken out for distribution or refining them to the market.

I am not certain about what the proposed law refers to by “post harvest processing facilities” because it is not clear what the term “harvest” means. If it were corn or rice or vegetables and aquatic products, we can think of several. If the “harvest” means the removal of the cut canes from the field, then we can think of a sugar mill, an ethanol plant or a sugar juice plant.

I just hope that Philippine sugar will not rot as during the time of Nasutra for lack of warehousing that later included schools, churches, pelota courts and swimming pools. The glut was a result of the failure of Philippine Exchange, the sole sugar trading government agency, to sell. The post-harvest facility can refer to this if we think of processed sugar from the mills.

The SRA is authorized to “invest its fund (SPSF) directly or indirectly in accordance with this Act.” The manner of investment of this fund is spelled out in another section but I wonder if this fund will go the way of the establishment of the Republic Planters Bank.

 Philsucom, not entirely or directly engaged in financing, established the RPB to handle the funding of the industry, including crop loans and loans to sugar mills. How the SRA will invest to earn from the SPSF can only be assessed when it comes to that in future.

Another use of the fund is for research which is vital in the developing new varieties and upgrading field culture as well as industrial research. The search for the best way of doing things is a sine qua non in development.

In earlier days ,there was the Philippine Sugar Institute but this was absorbed by the Philippine Sugar Commission. Now there is Philippine Sugar Research Institute or Philsurin but funded by the industry. This will change in the event that the Sugar is enacted and this provision is retained as it should be but funded from the SRA operations.

The funding for research will include granting funds to private institutions engaged doing in research that will improve, promote and benefit the industry. If Philsurin is not absorbed by the SRA then it can be granted money from the SPSF.

Programs to enhance farmer’s capabilities and income may also be funded from the SPSF.  How this can be used independently and to the maximum can be problematic because the fund can be politicized as had happened in the past.

The fund can also be used by the SRA “to defray any expenditure for purposes of meeting the objectives of this Act” which places a large sum of money at SRA disposal. In the hands of honest and sincere administrator, this can make a lot of difference, otherwise it can be abused.

I will pause in further discussing the proposed Sugar Act because information says that Rep. Benitez is meeting this week with sugar industry stakeholders. I am not certain if this is with the committee created with the industry organizations or his own.

The report says once the industry people have agreed on the important points of this proposal, Benitez will file the bill. We will then comment because not only the industry but consumers are also involved.*     




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