Thursday, December 25, 2008 Bacaoco: Sugar industry year-ender report (sort of) By Butch Bacaoco Cane Points
LAST Friday, SRA Administrator Lito Coscolluela was the guest at Storylines over Sunshine Channel hosted by Carla Canet and Teresa Ellera Dulla. Coscolluella delivered a sort of 2008 year-ender report on the sugar industry. A paraphrase of the Administrator's message runs as follows:
Low Sugar Prices: Planters decry the low price of sugar but they must understand that the industry had a bumper crop last year and that the whole world is experiencing a recession. Food exporters reported a decrease in their orders from abroad. Prices improved a little during the December 18 bidding but it is still below acceptable levels. Hopefully, prices might improve next year.
Productivity: Unusually heavy rains last year resulted to low cane tonnage this year. However, the low tonnage was somehow compensated by higher LKg/TC. With better weather this year, the production might recover.
SRA's adjusted production estimate of 2.2 million mt might go down a little but it is still too early to quantify. At any rate, lower production will translate to a better ending inventory this crop year.
Smuggling: Smuggling exacerbates low sugar prices. SRA, together with Sen. Migz Zubiri, met with Customs Commissioner Napoleon Morales to strengthen the fight against smuggling. On the first week of January, the SRA and Customs Technical Working Group will conduct a workshop to come up with stricter controls to make it more difficult for smugglers to get away with their nefarious activities.
If smugglers find it too difficult or too costly to leak smuggled sugar into the domestic market, they might stop. However, as long as there is a wide gap between domestic and world sugar prices, the temptation to smuggle sugar into the country will always be there.
For 2007, the anti-smuggling efforts resulted to the confiscation of P10 million worth of smuggled sugar. For 2008, it increased to P14.7 million. The origin of almost all smuggled sugar is Thailand.
While Coscolluela personally feels that smuggled sugar should be dumped into the sea, existing laws mandate that it should be classified as D sugar and auctioned by the Bureau of Customs to qualified bidders/exporters/food processors.
SRA has no police power to run after smugglers by itself. It has to work with Customs personnel who are the ones who make the arrest and seizure and initiate the legal action against the smugglers.
To illustrate the pace at which smuggling cases go, SRA received just this December the notice of hearing for a smuggling case, which occurred last 2004.
SRA is doing its best but it cannot watch each and every possible smuggling entry point in the country. Moreover, Coscolluela admitted that, in at least two cases of apprehensions, he was "approached" to go easy on smuggling or to come into an arrangement with people involved in smuggling.
He emphasized that smuggling is not just a simple or an easy problem to address but, as long as he is the SRA Administrator, sugar industry stakeholders can rest assured that there will be no "arrangements" with people involved in sugar smuggling.
Early and Longer Off-Milling Season: There is speculation that there might be an early off-milling season. An early and longer off-season will definitely affect sugar workers. SRA hopes that this will not happen but it will be prudent for all concerned to prepare for the eventuality.
LGUs should spearhead the preparation for the possibility of an early and longer off-season because affected workers will surely seek help first from their local leaders at the barangay or city/municipal level. Negros Occidental Governor Isidro Zayco was already sounded off on this matter.
The city/municipal agriculture offices should survey the status of cane fields in their respective areas so that they will know how much has already been harvested, how much remains to be cut, and how soon will the harvesting/milling end. With a clearer picture of the status, the LGUs can come up with an action plan and they can devise viable interventions.
Coscolluela recommends emergency employment assistance thru the "food for work" program as the most viable immediate solution to help the affected workers. He hopes that LGUs will adopt this measure.
High Fertilizer Prices: Philsucor is close to sealing the deal for the importation of Urea @ P950/bag landed at Bacolod and Batangas. If things go as planned, the first shipment of 12,500 mt is targeted to arrive by January. Planters can avail of the cheaper Urea thru their respective federations.
The Department of Agriculture is also working out a "government to government" deal for fertilizer with Qatar. The arrangements are still being finalized.
Planters claim that there is a cartel that controls fertilizer prices but that charge is difficult to substantiate. To break away from the clutches of the alleged cartel, planters should directly import fertilize.
Sugar Marketing: Recent mill-gate prices of sugar have been low but domestic retail prices of sugar remain high. Some sectors are making a killing but it is not the planters who benefit from the high retail prices.
Coscolluela admits that the industry is not equipped to handle the marketing of its own sugar. To make the most out of their product, he recommends that planters should learn how to market their own sugar and they should sell directly to the end-users.
(For reactions and suggestions, email bbacaoco@yahoo.com.)
