New sugar industry - 12

The primary purpose of the Sugarcane Industry Development Act of 2015 is to “establish productivity improvement programs.” To this end, the SIDA adopted and institutionalized the Block Farm Program that is being implemented by the Sugar Regulatory Administration, the Department of Agrarian Reform and the Department of Agriculture.

This being the case, SRA Administrator Regina Martin declared during the consultation meeting in Bais that the block farm is the flagship program. It stands to reason her statement that “the failure of the block farm will be the failure” of the SIDA.

This is a courageous statement considering that block farms in other countries have mixed success. They were dubbed as “illusion” and “solution” but more of the former so that alternatives are being developed. However I will not discuss their disasters there. The Philippine program can succeed and be a model in other underdeveloped countries where block farms were introduced 15 years ago and failed their promises. This is not a critique but a mere presentation since there was no discussion of this program during the consultations in Iloilo and Bais.

The block farm as defined by law “is a consolidation of small farms including farms of agrarian reform beneficiaries as one larger farm, with a minimum of 30 hectares within a two-kilometer radius to take advantage of the economics of scale in the production of sugarcane, such that the activities in the small farms are aligned and implemented to ensure the efficient use of farm machineries, deployment of workers, volume purchase of inputs, financing, and other operational advantages, as well as recognition by sugar mills, government financial institutions, private investors but the ownership of each small farm remains with the landowners.”

Small farm is defined as not exceeding five hectares or less. Larger farm lands will be assisted in different ways because bigger farms (ten or more) are presumed able to fend for themselves. However, they will be able to access to socialized-credit programs and technical and professional assistance from SRA as has been traditionally done.

To implement this program, the SIDA allocated P300 million each year. Although the DAR and DA have their block farms and will help provide common services, for sugarcane the SRA appears to be the lead agency in insuring success.

The block farm has six years to prove its viability, improve productivity or raise efficiency and graduate to high efficiency and profitability of its operation, otherwise SRA shall recommend cessation of the program in that farm.

Block farms understandably will get a lion's share of concern and assistance from SRA. To repeat, if they fail SIDA also fails so we can expect SRA to give the block farm the best of its efforts.

As of January 2014, SRA has organized 29 block farms that it reported are operational. The SRA has not given out information of their status as of today but let us assume they are indeed operational. Whether they have achieved the profitability, efficiency and improve production, we have no data.

There are six of these operational block farms in Oriental Negros and eight in Occidental Negros. The rest are scattered in sugar areas in Luzon and Mindanao. SRA Administrator Regina Martin said her office will organize 68 more.

Some of these block farms were organized by the DAR and DA among the CARP beneficiaries and their funding support came from other sources since the money promised in SIDA is not yet in place.

The planters in Iloilo considered the six year period for block farms to prove their worth as too long. They proposed the time allotted be reduced to three years so “funds then could be deployed to other more productive uses”. Indeed, why throw good money after bad? This proposal however runs against the time frame provided by law.

It is well-recognized that sugarcane cultivation to be productive and profitable should be on a plantation scale. Martin said in Bais that sugarcane is a plantation crop and therefore should be cultivated in large scale. The 30-hectare block farm is considered by planters as small. They believe that the farm to really achieve economy of scale enough to mechanize must be at least 50 hectares - the larger the better.

Anyway, SRA is considered to be expert in this matter but planters are hands-on practitioners. The block farms, unlike the individual planter, have access to low or no interest funds, the key element.

The block farm will test SRA's assumptions that cost P2 billion each year.*

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