Press Release
January 17, 2009

Stringent measures needed for ailing sugar industry - Loren

Senator Loren Legarda yesterday batted for a review of the country's tariff liberalization program for agricultural products, including sugar, in the face of stiff competition spawned by low tariff protection.

"I will advocate for a review of our tariff liberalization program for agricultural products and our MAV (minimum access volume commitments under the WTO (World Trade Organization)," Loren said during the annual general meeting of the Negros del Norte Planters Association at Victorias City, Negros Occidental.

"When we acceded to the WTO in 1994, we may have failed to realize that free trade can be a double edged sword," said Loren before sugarcane planters, industry leaders and local and national governments officials that attended the meeting at the Victorias Golf and Country club.

"It can open markets for our exports, but it can also open our domestic markets to competition. We neglected to provide our producers with support that would enable them to compete," added Loren.

"While our consumers benefit from lower prices on imports, we watch in dismay as our own farmers lose ground in many commodity markets. We have harvested the literal grapes of wrath from our neglect. The agricultural sector has become even more impoverished and unable to compete," Loren lamented.

Loren, chair of the Senate Committee on Agriculture, flew to this sugar-producing province on an invitation of Atty. Egdardo Y. Acuna, managing director of the association that has around 3,500 sugarcane planters-members mostly coming from Victorias, Manapla and Cadiz.

Loren noted that the current levels of tariff protection are hardly enough as it has gone down from 60% in 2001 to 38%. She said that under the Asean Free Trade Area (AFTA) tariff schedule, this will have to be cut further by 10 percent next year and down further to zero tariff in 2010, unless the Philippine sugar is reclassified as a highly sensitive import.

Loren cited that because of the prevailing weak tariff protection, local sugar suffers from stiff competition. Imported sugar from Thailand costs P800 per 50-kilogram bag while a 50-kilogram bag of local sugar is sold at P1,100.

"I believe that there is room for tariff protection, to the extent that domestic prices are shielded from dumping in the international market, but not to the extent of neutralizing competition," Loren said.

The interests of downstream industries such as the food manufacturers also have to be considered in the overall balance, and I will charge the Department of Agriculture to devise a mechanism that will address this objective,' she said.

Loren also said she would bat for a number of measures such as an the increase in research and development, to reach out for local governments to provide local public goods essential to the industry's development such as the farm to market roads, irrigation systems and extension program.

Loren also said she would advocate for the appointment of the vice president to the post of agriculture secretary to bring weight and stature to agriculture, which she said "is the sector that employs most Filipinos."

"I shall advocate that all Philippine tariffs should be maintained at their present level while the Doha Round is being negotiated. This, she said, will give our country a chance to strengthen our own agricultural sector with the appropriate subsidies and support. And only after we have developed reasonable competitiveness should we agree to open up our markets."

The Philippines sugar industry has fallen a long way from the 1950's and 1960's when sugar accounted for as much as 20% of Philippine exports.

Loren said that in its heyday, the sugar industry supported an elite that travelled the world in style and sent their children to the country's top schools.

The loss of the sugar quota in 1974 was a big blow to the industry. When the quota system was restored in 1982, the Philippine allotment was based on its share in US sugar trade in the period 1975-81, when our sugar exports to the US had dwindled. From about 25% to 30% of the total US quota, the Philippines' share was compounded further by a shrinking of the total pie as US imports declined by 40% from the mid 1970's to the mid 1980s.

"Today, the sugar industry is a feast or famine industry, highly exposed and vulnerable, not only to the vagaries of the weather, but also the wild fluctuations of the international market. The uncertainties have been such that the industry has grown used to a repetitive pattern of one good year, then a bad year, then a so-so year.

Sugar production in the 2007-2008 crop years hit a 25-year high of 2.455 million tones, yielding a surplus of some 611,000 tonnes.

In the recent years, the Philippines has become a net importer of sugar. Filipinos consume 150,000 tons of raw sugar a month, reflecting their sweet tooth for everything from "lecheflan" to "ensaymada" to popular beverages. Indeed, the Philippine beverage industry accounts for 30% of national sugar consumption.

"Today, the very survival of sugar industry hangs in the balance, and with it, the future of an estimated 556,000 farmers, 25,000 sugar mill workers, and about five million people who depend on the industry directly or indirectly.

In terms of membership, the Negros del Norte Planters Association is the biggest planters and miller's association. There are 15 sugar centrals throughout the plains of the country's seventh largest land area, Negros Occidental, earning the province the monicker "The Sugarbowl of the Philippines."

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