Total Collapse of Sugar Industry by 2010 Feared

Unless the government gives full protection and support to the sugar industry, the industry will be gone after 2010, when all the tariffs on imports of agricultural produce, including sugar are removed. If the government adopts a regulation policy, then the sugar industry might survive, according to small sugar landowners.

By Karl G. Ombion

BACOLOD CITY – “Unless the government gives full protection and support to the sugar industry, the industry will be gone after 2010, when all the tariffs on imports of agricultural produce, including sugar are removed.”

This was the sentiment expressed by Jose Nadie Arceo, president of the United Farmers Association of Negros-South Inc. (UNIFARMS), an association of small sugar landowners affiliated with the United Sugar Planters Federation (UNIFED), based in southern Negros. The members of UNIFARMS are sugar planters with 25 hectares or less of cultivated lands.

Arceo believes that to save the sugar industry, the country must revert back to a regulated regime. “Our average sugar production every year is at 2.0 to 2.1M metric tons almost equal to our domestic consumption. With an annual increase of just 3 percent to 5 percent in domestic consumption, we could easily cope with the demands,” he said.

The problem with the current liberalization and deregulation policy of the government, Arceo also said, is that the local industry is losing out to the massive imports of sugar from countries with highly efficient, technology-wise, and heavily-subsidized sugar industries.

Lack of support

Arceo compared the failure of government to support the sugar industry with the problems confronted by the government’s agrarian reform program.

“The Comprehensive Agrarian Reform Program (CARP),” he said, “is a good program, that is why many of us small farmers have offered some of our lands for CARP coverage. But it failed because the government did not provide poor farmers with access to capital and subsidies to make their lands productive”.

“The government does not also have a comprehensive program to support the sugar industry. We have several government agencies that are supposed to assist sugar producers, like the Land Bank of the Philippines, the Quedancor, among others, but we do not know what they are doing,” Arceo added.

The sugar planter said “For example, if the government had only set up a system of centralized procurement and sale of fertilizers, the sugar producers would have saved and earned a lot. But the case now is that, sometimes the price of a bag of fertilizer is even higher than a 50 kg bag of sugar. Government agencies are still buying fertilizers from local private traders which normally charge higher prices.”

Arceo added that the problem is further compounded by the smuggling of sugar by some big people in the industry and in government.

Rampant smuggling

Arceo also said that the Sugar Regulatory Administration (SRA) is not doing anything about the smuggling of sugar.

“The SRA should focus its efforts and resources on curbing rampant sugar smuggling, which remain the most debilitating problem facing the entire Philippine sugar industry, especially the small sugar landowners,” Arceo added.

Arceo believes that the culprits of sugar smuggling are big and moneyed syndicates with links to big names in the sugar industry and higher ups in the government. He said that the operations of the smugglers are obviously well-organized, well-planned, well-coordinated and well-financed.

He mentioned the case of Kraft Food Philippines that was able to import premix products at three percent tariff. This, according to him, was a clear violation of Presidential Executive Order 295 pegging the tariff on all imported premixes containing more than 65 percent sugar at 48 percent.

He said that they have joined several other sugar federations in filing a case against Kraft Food Philippines. They filed the case to show that they are serious in penalizing errant players in the industry. This is a case for testing the “political will of our sugar industry leaders”.

Arceo revealed that he once wrote SRA stressing that the final solution to sugar smuggling is an all out, well-planned and well-financed campaign against sugar smugglers. He later got a rebuff stating that “there is no final solution to the problem.”

Still, Arceo believes that sugar smuggling can be stopped, if the SRA and the government get their acts together and gather the support of the whole industry, not just the voice of the Philippine Sugar Alliance, which according to him is dominated by big sugar landowners, millers and traders.

He is however wary of the ambivalent responses he is getting from industry leaders and even the SRA. He quoted SRA chief James Ledesma as saying, “I don’t want to get killed.”

Dearth of industry leaders

Asked why sugar smuggling continues unabated despite several pronouncements by SRA and top government officials that it is under control or manageable, Arceo said, “Well, we need industry leaders who are honest, not selfish and with a strong political will.”

Arceo also laments that most often small sugar landowners associations are not consulted on matters that concern the industry. He specifically scored SRA saying that “The SRA consults only the leaders of big federations, and seldom, or not at all, the small sugar planters associations.”

In addition, he said, SRA is inutile in controlling sugar smugglers, and regulating the ups and downs of the sugar industry to benefit not only the big sugar landowners and big traders, but also the small sugar landowners.

He also said that “Industry leaders seem only concerned with their own interests and survival, unmindful of small sugar landowners who need more support than them. They should not forget that this industry has developed not only because of their efforts but also that of the more numerous small sugar landowners, the sugar workers and farmers.”

“We really need leaders who care for the welfare of the entire industry and the people not just their own interests. These leaders should unite the different member organizations, also listen to associations of small sugar landowners like us, and demonstrate the capability and political will to resolve key issues in the industry,” Arceo averred.

To attain this, Arceo suggests that the government should convene an assembly of more than 150 sugar associations nationwide, from small to big ones, to ensure a truly broad and democratic consultation among all the stakeholders in the industry.

This, according to Arceo, will guarantee that the sugar industry will become “truly dynamic, equitable and beneficial to all players and their dependents.”

Additional levies

Another issue confronting small sugar landowners is the move of the SRA to continue imposing a levy of PhP 2 (three cents) per kilogram of sugar produced.

Sugar Order no.2 Series of 1995-1996 provided for a lien of Php 2.00/l kg bag on all sugar produce in favor of PHILSURIN. It is due to expire 31 August 2005. The SRA’s Sugar Order No.8, Series of 2004-2005, issued August 18, 2005 provides for the continuity of Sugar Order No.2.

UNIFARMS says that the additional levy is “illegal and confiscatory”.

Arceo said, “We are not against the Php 2 lien per se, we have done that before with the Social Development Fund, among others. But this time, we were not only uninformed, we were even given vague reasons”.

Arceo said that they have always been supportive of the moves of SRA especially when they know that these were for the good of the sugar landowners, the sugar industry and the people.

“The problem is,” Arceo claimed, “there has been no consultation and no clarity where the money should go except for the vague ‘monitoring service fee’ and supposedly to fund the Philippine Sugar Research Institute Foundation Inc. (PHILSURIN), which is a private sugar research agency”.

Arceo said, if that is the only purpose, the funds to be generated for the fiscal year will be more than enough to finance the entire inventory. He also asserted that sugar planters do not need additional researches as there are enough studies regarding high yielding sugar varieties and higher productivity schemes. He also questioned the need to fund a private agency when there are enough government agencies to conduct researches.

Due to vehement protests from various sugar federations, James Ledesma, Head of SRA suspended, August 30, the implementation of Sugar Order No.8, stating that “We need more discussions with all the industry stakeholders, so it’s better to listen to them first”.

Two other organizations of big sugar landowners, the National Federation of Sugar Planters (NFSP) and Negros Del Norte Planters Association Inc., have also opposed the continuation of the Php 2 lien.

Arceo said that they would not oppose the PhP 2.00 levy if it is used to fund a campaign to curb the smuggling of sugar and the formation of an Anti-Smuggling Task Force.

Arceo said “If spent for the right purpose and managed by honest, corrupt-free leaders, the estimated Php 80 million we could generate annually from Php 2.00/lkg lien, would be enough to run after big smugglers.”

Hope for the industry

On the upside of the industry, Arceo hopes that the government is serious in developing ethanol as alternative fuel. According to Arceo, the production of ethanol may save the sugar industry in case the 2010 removal of tariffs on agricultural imports becomes irreversible.

He said that the development of ethanol production will inject new life to the dying sugar industry. The demand for sugar will increase. But instead of producing raw sugar as a finished product, the sugar industry will be geared towards processing sugar directly to ethanol fuel. Not only will it save the industry, the production of ethanol could also save the country a lot especially in the face of rising prices of imported petroleum products.

“Other than ethanol, there are still numerous sugar by-products, which if fully harnessed, with the support of government, would keep the viability of the industry, and spur more jobs for our people,” Arceo concluded. (

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