Abolishing SRA

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IT WAS unexpected but the possibilities are high because the President has already declared it so and this time he was not joking.

“I will abolish it” is a definite statement made several times in a speech, contrary to the opinion of Agriculture Secretary Emmanuel Piñol that it was indefinite. Industry leaders hope Piñol is right but there is so far no indication the Sugar Regulatory Administration will not be axed.

Of course it cannot be shelved arbitrarily because SRA was created by law (EO 18 of the Aquino Revolutionary Government) and thus would require an act of Congress where lobbying can probably save it from extinction.

But considering the tight hold of the President on the Congress, the fight is an uphill battle. The move to preserve SRA would be an excruciating battle but accounting the ironclad control of the President the chances of the President changing his mind are at best speculative.

It would be an irony if the SRA is abolished and should happen under an administration of a Duterte appointee, an outsider of the industry, that abused her discretionary authority with scandalous fees to her consultants.

She was regaled with high praises from the industry at the start (as is always the case with a new administrator) but she learned fast that at her first crop year in office, charges of manipulation of sugar stocks to favor traders erupted.

In a way it is not just the overpriced consultants but indications of corruption under her watch that must have made the President decide to abolish the agency. Industry leaders kept mum on the claim of stock manipulations that were published with clear statistical data.

The alleged sins of the Paner administration should not have merited drastic action as abolition, but she resigned before President made a public statement which means that a decision must have been made earlier than announced and she jumped the gun or was made to resign.

Will the industry collapse without SRA? This is theoretical but the fact is that the sugar industry had been prophesied several times to be on the brink of death.

As a pundit said, “the report of my death is highly exaggerated”. It had bounced back healthier than ever because sugar is a basic food particularly now that production is not keeping up with local consumption.

If all beverage companies returned to sugar we would be paying exorbitant prices that can only be stabilized with imports, but let us set that subject aside for later.

Sugar is the only agricultural crop that is tightly controlled by government. This was not so from the beginning but because it was “profitable” economically and politically for people who had tight grip over it, the control mechanism was retained although the reason for its being no longer existed.

Since the Spanish time when sugar became an important crop, there was no control. It played in the open, free market just like other products. Those years when the Philippines adopted the centrifugal processing there was no control, no price fixing and it was so profitable that Negros became the wealthiest province and earned over 60 per cent of the country’s foreign income. From 1925 to 1934, Negros annually produced 1.1 million tons of sugar out of the national output of 1.598 millions.

This runaway production was controlled to serve political ends when we needed the support of members of the US Congress from the sugar producing states during the campaign for Philippine independence.

As a concession to American sugar interest to support the Philippine bid, we accepted an export limit of only 952,000 tons to the US to prevent undue competition with the higher priced American sugar.

The Sugar Quota Administration was created to enforce this limitation by distributing production quotas and classifying sugar for the domestic market (“B” sugar), for the reserve (“C” sugar) and for the US market (“A” sugar). We had only two markets – local and the US.

The quota system was abolished in 1961 when America turned to the Philippines for its sugar due to the Cuban embargo. The Americans urged the Philippines to produce as much sugar as it could. But instead of free enterprise, President Marcos had other ideas to the grief of the industry.

Continued on September 22.

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