GUAGUA -— Several farmers and traders in the province expressed apprehension over the upcoming regional economic integration of the Association of Southeast Nations (Asean), which is set to materialize next year.
The regional economic integration will create an Asean Economic Community (AEC), which envisions Southeast Asia as "a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy."
In particular, the members of the Pampanga Cooperative Marketing Association (PCMA) are worried whether the country’s sugarcane industry can keep up with the implementation of the Asean Free Trade Agreement (AFTA) this coming 2015.
The AFTA 2015 was established to "increase Asean's competitive edge as a production base in the world market through the elimination, within Asean, of tariffs and non-tariff barriers and attract more foreign direct investment to Asean."
The Sugar Regulatory Administration (SRA), however, earlier announced that over 600,000 workers in the Philippines’ sugar industry may be affected by the Common Effective Preferential Tariff (CEPT) scheme of the said trade agreement. The CEPT is lower than the tariff on imported sugar by five percent.
"The CEPT scheme may imperil the livelihood of about 62,000 farmers and 600,000 workers in the country’s sugar industry, as the influx of imported sugar will apparently lower the mill site price of locally produced sugar," said the SRA.
Based on the data of the Department of Labor and Employment (Dole), there are around 17,828 sugarcane farmers in Central Luzon which are mostly from the province of Pampanga.
According to the Dole, the figure is 28 percent of the total number of sugarcane farmers in the entire country which is pegged at 62, 000 individuals.
High production costs
Dr. Richard Torno, member of the PCMA and owner of a 54-hectare farmland in Pampanga, said in an interview that the sugarcane industry of the Philippines has been waning in the past few years due to high production costs.
Torno estimated the costs of producing sugarcane in the country at around P 35,000 to P 40,000 per hectare including the costs of labor, machinery, and fertilizer.
The said amount is considerably higher compared to the estimated P20,000 production cost of other Asian countries such as Thailand, Vietnam, and Indonesia which employ a higher level of agricultural technology and provide higher government subsidy than the Philippines.
"In order to compete with the other countries, the Philippines must learn how to increase its efficiency. The labor and energy costs of the country, however, are definitely higher compared to the other countries. In terms of energy costs, for example, countries like Vietnam provide a lot of subsidy schemes for their farmers. They even receive subsidies when purchasing fuels (diesel) for their farms. In the Philippines, the value-added tax on fuel is too high," said Torno, adding that the Philippines has yet to provide energy subsidies to its farmers.
The agricultural sector in general and the sugarcane industry in particular, Torno said, will not be able to compete with the other country-participants of the AFTA 2015 unless the government pushes programs which will address the needs of the farmers. He cited the dismal support of the government to the farmers in terms of irrigation.
Last month, the National Irrigation Authority (NIA) warned the provinces of Pampanga and Bulacan of potential shortage of water supply next year.
Not yet ready
"The Philippines is not that ready yet in terms of trade and technology. We definitely lag behind other Asian countries. The government must go here to really see the things that are happening on the ground to know the immediate needs of the farmers," claimed Torno.
Meanwhile, sugarcane farmers are also disappointed over the insufficient agricultural support from the government of the Philippines.
"I have seen the decline of the sugarcane industry in my town. For so many years of my life as a sugarcane farmer, I have never received any significant benefit from the government," shared 75-year-old Antonio Ponio of Barangay Gasak, Floridablanca, Pampanga.
In this regard, PCMA Director Remigio Torno calls on the government to re-evaluate the country’s participation in AFTA before implementing it on 2015.
"I am not convinced by this free trade agreement next year. If the tariff for the sugar will be lowered it might affect the local farmers. If worse comes to worst, we might even be forced to shut down," said Torno.