By ANGELA CELIS and JED MACAPAGAL
Government and sugar industry stakeholders are turning their focus on ways on how improve the yield of the sweetener after Senate passed last week a resolution bucking the liberalization of the commodity.
Bernardino Yulo, Sugar Regulatory Administration board member representing the sugar producers, said in a briefing in Makati last week a roadmap eyes to increase the production of small farms by 10 percent every two years.
Carlos Dominguez, secretary of the the Department of Finance (DOF) for his part said
the agency will continue is discussion with the Senate on matters beyond liberalization: improving yields of the farms and of the mills, satisfying local demand and even exporting.
Dominguez said yield maximization will entail incentives.
“It’s a long discussion,” Dominguez told reporters at the Senate lounge in Pasay City last week.
Senators last week unanimously approved Senate Resolution 213, urging the executive department not to pursue the planned liberalization of the sugar industry to safeguard the welfare of sugar farmers and industry workers in more than 20 provinces in the country.
Dominguez said meeting local demand and addressing prices is a problem.
“..In the last two to three years, there’s always shortage and the domestic prices are double the world market. That’s one set of problems… the supply,” Dominguez said.
Dominguez called on the need to change the current system on sharing the crop yield.
He said he told Sen. Juan Miguel Zubiri, sponsor of Senate Resolution No. 213, the other problem plaguing the industry is the legislation that regulates the relationship between the planter and the mill.
“The law says the planter gets between 60 and 70 percent share of the crop, and the mill gets between 30 and 40 percent of this crop, it really depends on the area,” he added.
Because of this, the mills have no incentive to put capital expenditures to improve the efficiency of their mill.
“Because you put a capital expenditure there, you only are able to recover 30 to 40 percent of the revenue of the mill because the balance goes to the sugar planter. Why should they put 100 percent of the capital expenditure and only reap 30 or 40 percent of that. So I said we should also think about a new kind of relationship between a mill and the planter so that the mill is also incentivized to be more efficient. They will spend for the necessary technology and the capital to extract more sugar from the cane,” Dominguez said.
Dominguez said worldwide, the mills and farmers do not share.
“The mill buys the cane. If they own the whole cane, then they can extract, they have every incentive to extract the most amount of sugar so I don’t really know what will come out but the current (system) has to be changed,” Dominguez said.
Meanwhile, sugar industry stakeholders will hold a summit next year to consolidate plans from all sectors to improve production.
“Our main goal is to at least achieve parity with Asean neighbors because that is always the benchmark for the competitiveness of sugar,” Yulo said.
He said the primary plan for a roadmap is to increase productivity, starting with a goal to increase the production of small farms by 10 percent every two years through proper mentoring and more help from the government starting from next year’s crop season in September.
“Our national consumption is 2.4 to 2.6 million metric tons (MT) and we are producing roughly 2 million MT. A 10 percent production improvement is equivalent to 200,000 MT so the shortage of up to 600,000 MT can now be supplied locally after six years (with our plan),” Yulo explained.
Dave Alba, convenor of sugar industry group Tatak Kalamay, said efforts must begin at the small farms since they have the biggest room for improvement.
“We are also asking the government to liberalize farm inputs. Fertilizer already has zero tariff but government should still come in and watch over importers of fertilizers because its cost is still high at the moment,” Alba said.
The bid to improve production will be focused on persuading small farmers to use the correct varieties of sugarcane and discourage the practice of using multiple varieties in a single field as it lowers their yield, he added.
“If you check their fields right now, maybe in one field there are three or five different varieties planted and it can never produce good numbers and has low yield. What we want to teach them is when you plant sugar, it should be only one variety that is best suited in their lands,” Alba said.