Powerful SRA - 4

Yesterday I cited the establishment of the Sugar Cane Industry Development Fund by the Benitez bill. This fund has a wide-ranging influence in the life, health and direction of the industry.

The fund is encompassing from financing the establishment of the Economic Zones to granting of “financial assistance in the form of loans, guarantees and other credit accommodations… to the sugar farmers, planters, and millers…” This financing covers “farm machineries and equipments, roads, buildings, irrigation, water impounding facilities and distribution networks” etc.

This fund will assist more phases, needs, plans or projects that are directly connected with the sugar industry. For the long list, just get them in the internet and you can see the ambitious intents of the fund. The examples I cited are sufficient for the purpose in this column.

Three large-scale projects are envisioned to be funded: special economic zones, nuclear farms and agro-industrial districts. The bill does not define them but there are several models in other countries, like the nuclear farms in Malaysia. It will be interesting to discuss these large-scale projects if one puts them in perspective of the Comprehensive Agrarian Reform Program and the mentality in the industry. 

These ideas are revolutionary in the sugar industry and thus would take time and plenty of money. That money is to be raised and dispensed by the Fund.

Nuclear farms were proposed years back during the incumbency of Governor Daniel Lacson and backed up by Cong. Hortensia Starke. Fortunately I was employed by the International Labor Organization project with the International Co-operative Alliance to assess the co-operatives in Malaysia and the nuclear farms. I wrote a series on that system and its weaknesses and failures and for whatever reasons the province abandoned the nuclear farm idea.

The agro-industrial complex can develop around the sugar mill. We have already models of special economic zones but what this will entail is another matter.

In brief the concepts are doable and if the Fund is managed well, we can see a new launching pad for progress comparable to the introduction of the centrifugal sugar mills from 1917 to 1970 that revolutionized the Philippine sugar industry.

How will the Fund be provided for? The Benitez bill listed several sources. However, they can be discussed in later columns. If these sources furnished the money expected and it is managed well, the ambitious plan under the bill will be realized.

But who will manage the funds? This can be a point of contention and can cause irritation within the industry.

The bill amends the Presidential Decree 1890 that created the Philippine Sugar Corporation as it provides that “the powers and functions of the Philippine Sugar Corporation… shall be exercised by a Board of Directors … of eleven (11) members as follows:  Administrator of the SRA as chairperson, the President of Philsucor as vice chairperson and the remaining nine (9) member nominated by the SRA of which five (5) shall come from the sugar farmer sectors and four (4) from the sugar millers.

The SRA administrator thus becomes a very powerful personality who has total control of the industry. This person controls where sugar should go, what projects can be funded, etc.

Nobody gets its hands into the pie unless one is acceptable to the SRA chief. Although the board members are appointed by the President, only the SRA has the privilege of deciding who gets appointed.

If one thus examines closely the powers granted to SRA and knows the powers of Philsucom, one cannot escape seeing the similarity.

For instance, Philsucor, created in 1983 to financially assist the sugar mills, was headed by the chairman of Philsucom with the nominees from the Philippine National Bank which then owned the mills to be assisted and eventually sold to the private sector. The other appointees included those nominated by Philsucom.

Philsucom also controlled the financing arm of the industry - PNB and later Republic Planters Bank as the classification of sugar. Now SRA controls the funds for the industry – financing, loan guarantees, etc. through the board members that it selects.                                                                                                   

Philsucor‘s website listed “trading” as its business. How this will fit into the new realities? Will it morph into the National Sugar Trading Corporation or Nasutra considering its new composition and powers? Note that Philsucor will guarantee loans that can be secured by the sugar and molasses quedans controlled by SRA.

The quedan is the assurance of payment of crop loans. Who controls the quedan controls the money; who controls the money controls the industry.*

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