Albee’s rehash – 2

I wrote last week about the diversification idea that the sugar development plan provided in the bill filled by Rep. Albee Benitez. It is clear that diversification, both for the sugar crop and product diversification for sugar had failed. His proposal is a rehash and had been tried and it failed. I wonder whether anyone of those who tried are still around today.

I do not say that we should not diversify, only that to trumpet this as another solution for the dreadful day when the sugar import tariff drops to 5 percent in 2015 is a pipe dream. Benitez should not create false hopes because that is more deadly than unpreparedness.

There is a commercial about someone is selling palm tree seedlings. I had the opportunity under the UN auspices to observe cooperatives devoted to palm and rubber trees in Malaysia. Those who might be enticed must be prepared to lose their shirts, except the supplier of the seedlings because this is not a short term crop.

Let’s talk about the proposal described as urgent by Manuel Lamata for the mills to immediately improve their efficiency. Manolet is right. He strikes at the heart of one of the most vital aspects of the sugar industry.

The Benitez bill in fact, provides for this improvement of mill efficiency and legislates for funds to insure that this is done.

But as usual, it is easy to speak, but the difficulty lies in the implementation. I hope the bill is approved immediately because although this provision is a rehash of so many calls for years by the planters to improve mill efficiency, the fact is that the process of improving the mill efficiency takes time and a lot of money.

My information is that the expected income under the bill would amount to P500 million yearly but it will take P2 billion to improve a mill to the desired efficiency.

The Sugar Regulatory Administration, in fact, has the authority to insure that the mill efficiency is kept up to requirements but the SRA cannot do this without funds loaned out to the mills. The huge cost of mill rehabilitation is simply staggering but if the industry must survive, as Manolet claims, then the government must decide, as the song goes, “now or never”.

The problem with the Benitez bill is that it did not take into consideration the cost of the rehabilitation or the improvement of the mills. This is evidenced by the narrow sourcing of funds.

Did the framers, Benitez and company, consider magnitude of the cost of mill rehabilitation in view of the number of low efficiency and other mills that need to be rehabilitated to meet the plans of the SRA and the industry?

I presume they had, but if the sources of funds are only from those provided by the bill, like the tax on imports and VAT then the proposal of Manolet and I believe the desire of the planters as well cannot be met within a brief period of time as we race for the crucial 2015.

But even so, the Benitez bill falls short of the intent. The inclusion of improving mill efficiency is fine, as it has been the call for decades and repeated here, but the proponents failed to provide the resources, the wherewithal to attain the objective.

I wonder whether the Ways and Means Committee of the House which will deliberate on the money aspects of the bill can be swayed to meet this dream.

I think the problem is that the bill rehashed the sentiments uppermost and closest to the hearts of the millers and the planters but fell short of providing for the means to attain it. It is good only for publicity.

There had been proposals in this area for years and the Benitez bill, in fairness, has addressed the problem but still the solution is not enough unless other means are adopted to cover the present shortages in the bill.

There is a surfeit of proposals on how to raise funds for this purpose. The Philippine Sugar Corporation I believe has plenty of them, not only in expertise but in imaginative ways as well.

The mills in Occidental Negros are dead or dying. We have lost Bacolod Murcia, Talisay, Ma-ao, Danao, while Dacongocogon and Sonedco are gasping for breath. Manolet must be thinking of the other operating mills that must improve.

The Victorias Milling Company canes purchase scheme is a way of throwing into the lap of the mills the sole duty to improve their efficiency. They depend on their efficiency to survive.

But the planters associations are against this scheme as it is their death knell but it is also a way of improving the mill efficiency. So which way shall the industry go?*

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