Sugar industry woes due to the failure of SRA to implement SIDA law

The corporate powers and functions of the Sugar Regulatory Authority (SRA) are vested in and exercised by the Sugar Board chaired by the DA Secretary with three members including the Administrator and two from the private sector. The day-to-day affairs and operations of the SRA are managed by the Administrator following the policies established by the Board. The SRA should focus on the development of the sugar industry to make it competitive by producing more sugar at a lower cost rather than focus on importation. The law was passed to boost the sugarcane industry, which contributes P70 billion to the country’s economy annually. In April 15, 2015, Sen. Cynthia Villar helped pass Republic Act (RA) 10659 or the Sugarcane Industry Development Act (SIDA) of 2015, “An Act Promoting and Supporting the Competitiveness of the Sugarcane Industry and for other purposes.” This law gave the Sugar Regulatory Administration (SRA) P2Billion a year starting 2016, to be spent for the following:

Republic Act 10659 or the Sugar Industry Development Act of 2015, promoting and supporting the competitiveness of the sugar industry, should have prevented the existing sugar crisis. The SRA in the identification and prioritization of specific programs and projects, should have conducted prior consultation with representatives of block farms, sugarcane farmers and workers, sugar millers, refiners, bioenergy producers, and producers of other products derived from sugarcane and its by-products. The SRA should have also issued the necessary guidelines for this purpose, as required by the law. The law as crafted, not only focuses on increasing and improving the yield, and also included programs that will develop the skills of the workers and their dependents through training and capacity-building activities.

IMPLEMENTATION

For failure to implement the law, the Committee on Agriculture and Food, as the Oversight Committee conducted two hearings were conducted to inquire into the implementation of Sugar Cane Industry Development Act over the reduction of the SIDA budget from P2 billion in 2016, to P1.5 billion in 2017, to P1 billion in 2018, and to only P500 million in 2019 due to the failure of the SRA to implement the law.

The Senate Resolutions are:

• Sen. Reso. No. 804 in July 2018, To Conduct an Inquiry in Aid of Legislation, to look into the Apparent Underspending of the Sugar Regulatory Authority (SRA) of the Sugar Industry Development Act of 2015 fund, thereby depriving the Sugar Farmers and the Industry the Chance to Compete in the World Market, and

• Sen. Reso. No. 40 dated July 29, 2019, To Conduct an Inquiry in Aid of Legislation, into the Reported Failure of the Sugar Regulatory Administration (SRA) in its Implementation of RA 10659 or the Sugarcane Industry Development Act of 2015 to the Detriment of the Sugar Industry in General and Small Farmers and Workers in Particular.

This is because the Department of Budget Management (DBM) proposed the lowering of the SIDA budget because SRA was not able to use it.

MECHANIZATION 

Also, In the 2020 SRA Annual Audit Report by Commission on Audit (COA), it stated that, SRA had a fund transfer transaction amounting to P547.103 million made to the Philippine International Trading Corporation (PITC) for procurement of various equipment, where only 245.9 million or 40% was utilized as of December 31, 2020, leaving a balance of P299.150 million unspent. Sen. Villar believed that SRA parked the amount with the trading firm, probably to make it appear that their funds had already been “obligated.” The procurement transactions by PITC for SRA was delayed for two years from the time the MOA between them was signed.

SOCIALIZED CREDIT

For socialized credit, SIDA has 15% or about P300 million annually for loans through Land Bank of the Philippines (LBP), for the acquisition of inputs, farm machineries, and implements necessary for the continuous production of sugarcane. The LBP manages this socialized credit facility under the Farm Support Program and the Farm Mechanization Program. Sadly, as what was observed by Sen. Villar in the two Senate Hearings, and also cited in a NEDA Report dated March 13, 2021, the Socialized Credit Program (SCP) under the SIDA was supposed to have a total allocation of P1.2 billion from 2016-2019, but only P624 million was approved for release, of which only P111.5 million was actually released to borrowers. The Utilization rate was only a dismal 17.8% of approved funds and only 9.3% of the SIDA-prescribed allocation. An earlier COA Report dated 2019, already called on the SRA’s attention of the Socialized Credit Program (SCP) for it to revisit the Implementing Rules of the SCP particularly the eligibility and documentary requirements under the basic lending policies to consider amendments thereof to facilitate the process of loan application by the sugar farmer/beneficiaries to maximize the impact of the program. Sadly, this did not happen. Studies show that agricultural credit is important in solving rural poverty and promoting countryside development. Smallholder farmers and fisherfolks when provided access to loans could have the capital needed to purchase production inputs, such as seeds, equipment, fertilizer or to diversify their crops or livestock to increase productivity, minimize losses and earn more.

BLOCK FARMING 

Another very important component of the SIDA is the Block farming system for sugarcane lands which is being implemented by the DA and DAR to increase the productivity of cultivated areas. Small farms of less than five hectares are consolidated into blocks of at least 30 hectares while preserving farmer’s ownership. Farm productivity is improved through the establishment of integrated sugar production systems and systematic provision of farm inputs and technical assistance. Around 85% of sugarcane farmers in the country have land holdings of five hectares and below. Sugarcane requires farm sizes of at least 30 hectares for cost-efficiency production.

The fragmentation of sugar farms led to some 140,000 hectares being held by about 74,800 small farmers during the crop year 2018-2019.

According to the same NEDA report, the Block Farm Program had only organized and assisted 216 block farms from 2016 to 2019, covering just about 8,523 hectares. This is far too small compared to the estimated 140,000 hectares held by small sugar farmers. The SRA again has been remised in assisting small farmers to better their welfare and become competitive. It just focused on importation.The SRA reports on stocks inventory is not simple and straight forward but difficult to understand. The supply (raw and refined) vs. demand (industrial grade 65%, institutional 13% and household 22%) should always be emphasized.

Moving Forward For SRA

The SRA Board membership should include representative of small farmers, service providers and user industries. Include small farmers in discussions and consultations in crafting plans under the SIDA. The agency’s structure is regulatory-oriented and their developmental function is largely only in R&D, which just focuses on development, propagation and distribution of high-yielding varieties of sugar points. This has to change. Its structure, competence and staff complement requires a different set of competencies, and larger staff and budget support. While the agency has formulated a restructuring plan, this has yet to be fully implemented. Institutional support should be rationalized. As to access to credit, Landbank should update its loan windows and shorten time for loan processing, and should have minimal documentary requirements.

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