Think of the sugar farmers too

Apparently pressured by TV Patrol’s constant hammering on rising sugar prices, Agriculture Secretary Art Yap called me one evening shortly after the newscast went on air, to sound me out on some options they are considering. Not surprisingly, price control is on top of their agenda, as is tax free importation of sugar to flood the market and bring down prices.

Secretary Yap emphasized that they have very little choice in the light of the continued rise of domestic sugar prices particularly in the Metro Manila wet markets. The supermarkets are still trying their best to hold down the price of sugar but a spokesman warned they have just about reached their limit. They will stop selling sugar if government insists on what DTI calls a “suggested retail price” or SRP which is really a price ceiling because there are sanctions for going beyond the “suggestion”.

Because he asked what I thought, I told Secretary Yap it is a mistake to do both. Price control will only mean sugar will disappear in the domestic market and create a bigger headache for them. As it is now, even if the price is going up, there are no lines of anxious consumers anywhere waiting to buy sugar. This is one time government should ignore TV Patrol’s misguided coverage of what is obviously an agit-prop operation of the leftist groups in the form of an alleged rally of a minuscule number of housewives.

As for tax free importation, I told Secretary Yap that will punish Filipino farmers and reward foreign farmers assuming they can buy sugar in the world market at a price lower than what we have locally. I reminded the Secretary of his previous statement that there is no shortage of domestic sugar supply specially now that he had ordered the release of domestic buffer stocks.

Well, the Secretary said it is true there is no domestic shortage outside of Luzon but the supply is largely in Negros. So I said that sounds to me like a logistical problem that involves moving the supply from Negros to Manila. They would have the same logistical problem of moving their intended imports from, for example, Thailand to Manila.

In this light, I do not understand why they want to import instead of supporting our sugar planters. If I had a dirty mind, I can have a number of guesses why they want to import but I always give Secretary Yap the benefit of the doubt. But I did not get a good explanation from him why he wants to import in that phone call.

I understand that the Secretary is also under a lot of pressure from industrial users of sugar, basically the soft drinks, ice cream and candy manufacturers who all want to get access to low cost sugar, tax free imported sugar if necessary. I don’t see why government should even listen to these industrial users. They are all big boys and should be able to import their own sugar requirements. And because their products are really non essential in the sense that our people can survive without soft drinks, ice cream or candies, they should pay the proper import duties. They do not deserve special treatment from government.

Government officials should only worry about ordinary consumers and the sugar planters. But even in the case of consumers, they have to be educated on how sugar is priced in the world market and how that in turn affects domestic prices. In a worse case scenario, ordinary consumers can cut their sugar intake and end up healthier for it.

This brings us to the sugar planters. We have to start disabusing our minds of the image of the old time sugar hacendero like the family of Noynoy in Hacienda Luisita or the sugar barons of Negros. I understand that in the Victorias milling district for instance, 90 percent of the members of the VMC Farmers’ Multi-purpose Cooperative own less than two hectares and are mostly agrarian reform beneficiaries.

As it is, sugar planters are getting a raw deal from government. The sugar planters are pretty much on their own in terms of financing their planting operations. They pay market price for their fertilizers and other inputs. Yet, they are not free to sell their produce as they please. They are covered by rules from government agencies on how much they can export and are required to assure domestic supply even if this means a great opportunity cost compared to what they can earn in the world market.

Thus, government’s plan to import some 150,000 MT of sugar tariff free would undercut our farmers specially that they are now at the height of the milling season. I think it is a better idea for government to use its NFA “tax expenditure subsidy” budget intended for sugar imports to fund importation of badly needed fertilizer for distribution to the farmers. That will not only help our farmers enhance our “food security”, we will also be helping fellow Filipinos rather than foreign farmers.

Let us not begrudge our sugar planters the opportunity to earn profits. The so-called “windfall profits” of the farmers, estimated at P5 billion would go a long way in pump-priming the countryside. As pointed out by the VMC Coop, that would enable the farmers to pay their debts/amortization with the LBP, pay for other debts incurred when fertilizer prices shot through the roof, pay for the repairs of their houses destroyed by typhoons, buy some basic needs for their families and pay for their health care and education of their children, etc.

That should also be good for peace and order in the countryside and address problems associated with an insurgency that is still very much alive. There are 17 sugarcane growing provinces in the country with an estimated direct and indirect employment of six million people. (400,000 has. planted x 3 workers/ha. x 5 members per family.)

The six million people dependent on the sugar industry, located in the 17th provinces would be adversely affected if sugar prices collapse as a result of a massive importation. Peace and order problems would deteriorate in the countryside and eventually cost us more not just in financial terms but also in terms of increased social tensions.

As I have always written in this column, it is time that government and the rest of us who live in urban areas realize the need to make farming profitable. Our food security problems, be it in rice and corn, pork and poultry and sugar, coconut and other crops, can only be solved if we have a comprehensive plan to make farming profitable.

Price control and importations are only stop gap measures and we shouldn’t be addicted to resorting to these measures year in and year out. Every time government resorts to these measures, the administration effectively confesses the failure of its agricultural programs. –Boo Chanco (The Philippine Star)