SRA reaction-2

I cited the need for unity and leadership in the sugar industry to work with government to implement the aspirations of the Benitez bill. But we must also accept the reality that the incumbent SRA leadership will be out of office by 2016 when a new government takes over.

We have also to face the fact that the solutions proposed by the Benitez bill will take time to reach fruition, granting the circumstances are ideal. The irrigation system alone, so needed by the sugarcane fields to increase production, will take a lot of time and the desired assistance in farm inputs is likely to open the doors to corruption and negate the noble intentions of the proposed law.  

SRA also wrote: We have to expand our bioethanol and power co-generation programs to provide additional revenue streams which are not affected by world market factors. To pump this up, we need as much sugarcane as we can produce. This will also support our mill improvement programs as we are still short in canes to feed our sugar mills since our mill capacity utilization is only at 70 percent which is 10 percent below the ideal 80 percent. Further, the sugarcane used by two operating ethanol distilleries are(sic) already in excess, and have been put into a new market without disrupting the sugar supply and demand situation.”

Let’s clarify two points: (1) we are still short in canes to feed our sugar mills and (2) sugarcane used by two generating ethanol distilleries is already in excess.

 So there is lack of cane for the mills but excess for the ethanol plants. Why is this so? It somehow reverses the earlier claim that the reason the first ethanol plant in San Carlos had to stop operation was for lack of feed stock, meaning sugarcane.

Again as I wrote in an early column, these plants will compete with the mills for the sugarcane. If the ethanol plants offer lower prices than the mills, then planters will send their canes to the mills and vice versa. Are the ethanol plants giving more to planters?

What happens then when we expand ethanol production? Is not the low supply for the mills due to the competition by the ethanol plants?

Once more we must consider that land devoted to sugarcane is limited, more so with the fragmentation of the land under the Comprehensive Agrarian Reform Program. SRA knows that the smaller the farm, the per capita output is lower for many and varied reasons.

The block farming of SRA is a right step but to what extent can the ARBs be convinced to join? What is the cost per unit? This is important because the SRA assistance is a form of government subsidy, meaning paid for by public funds that is not extended to other planters.

Be that as it may SRA should expand its block farm concept. However I find incredible the SRA published claim that this system has doubled farm production. Nevertheless the claim has to be validated objectively so that if true then maybe the main focus of the industry is to implement the block farm concept and double its production. An increase of just ten or twenty per cent would be short of a miracle.

SRA also said “we can't subscribe to your idea of outrightly (sic) allocating all sugar production for the domestic market.”

Again SRA is putting words in my column. I never advocated the outright allocation of our sugar to the domestic market. I wrote that there is such a proposal but that that would deprive us of dollars that planters actually do not get. Only the traders get the US currency.

SRA added, “We have a monitoring system in place, and we act if the situation calls for it. We are glad that the domestic market is getting stronger, and we align our strategies with that reality. Abiding by our mandate, to set a balanced supply and demand situation for sugar such that prices are fair to consumers and profitable to the producers, is always our guiding principle in any action we take. And we believe we have continually done that, at no advantage or disadvantage for any party or stakeholder of the industry. “

Consumers will disagree – prices of sugar have risen through the years in an almost predictable path as recent events show. Sure SRA acted but the price of sugar in the market stabilized at high level and planters are riling against the traders who are not included in the SRA mandate.
More later. *

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