Cane purchase – 2

One of the serious consequences cited by the sugarcane planter on the adoption of the cane purchase scheme is the negative effect on Republic Act 809. This law passed in 1954 defined the sharing of the sugar once the canes are milled. The sharing ranged from a low of 65 percent for the planters to 70 percent today. The percentage depends on the milling capacity of the mill.

Of significance in this law is that any increment on the sharing of between the planters and the millers should be shared with labor. This law has somehow reduced the clash of planters and millers in the sharing of the sugar and at the same time benefit labor.

In fact, the law was upheld as constitutional by the Supreme Court when it was challenged because of the social character of the law that mandates the share of labor.

Because cane purchase does away with the sharing system, RA 809 is effectively rescinded. This means that laborers in the farms will no longer share from anything from sugar produced and planters will be under no obligation to share anything with labor.

This can create a serious social problem, back to the pre-RA 809 situation.

I don’t know whether the mills would consider putting aside an equivalent of the labor’s share, but this would be an accounting nightmare. It is near impossible for the mill or the planter to determine the labor share as there is yet no scheme for this purpose.

Of course, the mill would know how much sugar it will extract from the cane because there are instruments that can determine the cane purity right in the field, or delivered to the mill or the trans-loading stations. That examination is not absolute because there are other factors from the time the cane is delivered to the time it is milled.

So the question arises: can the mill determine the share of labor under RA 809? Or to be more precise, will the mill consider the labor share in its payment to the planters?

I doubt it because RA 809 is not the concern of the mill except, under the present situation it reports the planters share. That will no longer be true under the cane purchase system.

The labor sector and SRA have not yet taken a position in this regard but they should before the problem arises which I believe will be inevitable. The planters surely will not be able to give, even if they wanted to because they have no idea how much to give.

Perhaps, the mills can clarify this. Maybe they have considered this in the price they will pay for the canes.

The second serious consequence in the cane purchase system that the planters mentioned is the mandated Social Amelioration Program. The planter, not receiving any amount other than the price that the mills dictate will have no way of sourcing money for the Social Amelioration Fund for the SAP unless, again the mills will either include this in the amount they pay the planters or directly handle this program.   

The complications arising from the mills handling the SAP would be herculean so that I don’t think they would. But like the labor share under RA 809, the problem of determining the amount would be horrendous.

Nevertheless, I hope the mills will explain how they intend to handle these problems before the issue deteriorates considering that milling has started.

The planters also claim, rightly that they would lose control of their sugar. It is not just control of sugar because in fact, they will have no sugar at all because all sugar will be owned by the mills. This makes the several dozen sugar cooperatives unnecessary.

These cooperatives sell their member’s sugar and earn tax exemption that they plow back to their members as patronage refund.  The amounts can run into several million pesos that form part of the earnings of the planters and which capitalizes their fertilizer and other farm inputs business.

Under the cane purchase scheme these cooperatives will naturally close shop because relying on the sale of fertilizer and chemicals requires a large amount of capital.

To secure the advances given to planters in the form of farm inputs cooperatives require the planters to enter into marketing agreements that include trading of their sugar. This security is the only guarantee of payment. Without sugar in their name, the planters have to pay in cash.

That will be a disincentive that will result in reduced national production at the time when the Sugar Regulatory Administration is projecting higher production to cover domestic need and international commitment.

One other contentious issue is the role of the planters associations that will make the associations and the federations irrelevant. I shall deal with this later.*  

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