2015 sugar scenario

THE 2015 scenario where tariff reduction due to Asian Free Trade Agreement (AFTA) will drop to five (5) percent and to zero (0) in post 2015 indeed poses a chilling scenario for our sugar industry.

It is an agreement our government is not in a position to reverse because the real power behind it is the World Trade Organization (WTO) dominated and directed by advanced capitalist countries led by United States, Germany, France, UK, Japan, Canada, Russia and Australia.

It is part of the neoliberal offensive of these imperialist powers to expand their markets by breaking other economies under the slogan of so called “free trade” and “free market” while keeping their own economies strongly protected.

Therefore, the implications of this trade agreement on smaller and predominantly backward countries like the Philippines would have more negative than positive. One, the world market price by 2015 will have full impact on our domestic prices, like the projected $0.18 per pound of raw sugar in world market, $0.25 per pound in US market, and the big possibility of lowering of domestic price to Ph 1,100 per bag.

Two, sugar from other ASEAN countries will be considered part of Philippine supply to the world market, and possibly including our traditional US quota.

Three, there will be an increasing demand for sugar due to better economic activity, but preference will always be for lower sugar prices. According to SRA administrator Ma. Regina Martin, who was the guest of honor in Sugar Trade symposium recently in Bacolod, the more competitive Thailand sugar could land in the Philippine market at P1,100 to P1,200 per bag only, such is almost the local average cost of production per bag of raw sugar.

Fourth, there would be persistent pressure for cheaper imported sugar to enter our country, which could readily make domestic market especially among the food processors, and entice the big traders to grab the cheaper supply.

However, instead of agonizing on the negatives, Martin was quick to shift everyone’s eye by stressing on the strengths of our sugar industry and the opportunities that go with the seeming grim scenario. Among those she mentioned are; the Philippine US sugar quota at 10 percent of annual production, the mandated 10 percent bioethanol blend and 100 percent purchase of local production, the mandated power feed-in-tariff (FIT) for any sugar mill serving as co-gen power provider that could amass millions in income, and the availability of a vast pool of local technical expertise to improve mill and farm operations to raise recovery rate and productivity.

With these strengths, she said we could easily seize a number of opportunities, like big sugar mills have already available plans for modernizing mills and increase overall recovery, produce other products from sugarcane like bioethanol, bioplastics, etc, more than a dozen prospective investors for bioethanol production, and identified potential areas for sugarcane expansion.

Cagayan Valley, Leyte, San Carlos and La Carlota have already bioethanol distilleries, while three mills in Negros and one in Davao, are already selling power to the grid. The Philippine sugar mills have the potential to generate 500 MW power enough to light up milling districts and neighboring towns and cities.

Except for Martin’s plan to expand the production areas for sugar production by 10 to 20 percent from its current 422,384 hectares which is basically anti-land reform, Martin’s basic roadmap measures look like we can neutralize or upset the impact of 2015 sugar scenario.

Can Martin realistically implement them? Will she get the support of the main players in sugar industry? Is the PNoy administration ready to provide all the necessary support services to SRA plans? And will there be a change in the quality of life of the more than half million of sugar workers and two million of their dependents?

I wish Martin will do her best not only for the sugar planters, millers and traders, but more importantly, for the sugarworkers who despite their sweat and blood for the industry have long been wallowing in misery caused by the unregulated greed of those who control the sugar industry.

The sugar planters and workers will certainly appreciate if buddies Congressman Anthony Golez and Congressman Jeffrey Ferrer take the lead in passing a resolution urging the PNoy government to give all out support to Martin’s plans. To do so would add pressures to the government to show its political will in protecting sugar industry and our already impoverished sugar workers.