Sugar industry troubles due to SRA’s failure to implement AIDS law – Manila Bulletin

The powers and functions of the Sugar Regulatory Authority (SRA) are vested in and exercised by the Sugar Board, chaired by the Secretary for Agriculture and composed of three members, including the Administrator and two members from the private sector. The day-to-day affairs and operations of the SRA are managed by the Administrator in accordance with policies established by the Board.

The SRA should focus on developing the sugar industry to make it competitive by producing more sugar at lower cost rather than focusing on importation. The law was passed to boost the sugar cane industry, which contributes 70 billion pesos to the country’s economy every year.

On April 15, 2015, Senator Cynthia Villar helped pass RA 10659, or the Sugar Cane Industry Development (SIDA) Act of 2015, “An Act to Promote and Sustain the Competitiveness of ‘sugarcane industry and for other purposes’.

This act gave the Sugar Regulatory Administration (SRA) P2Billion one year from 2016 to spend on the following:

Republic Act 10659 or the Sugar Industry Development Act of 2015, Promoting and Sustaining the Competitiveness of the Sugar Industry, should have prevented the existing sugar crisis.

The SRA, in identifying and prioritizing specific programs and projects, should have carried out prior consultations with representatives of block farms, cane growers and workers, sugar mills, refiners, sugar producers, bioenergy and producers of other products derived from sugar cane and its by-products. The SRA should also have issued the necessary directives for this purpose, as required by law.

The law, as written, not only focuses on increasing and improving performance, but also includes programs that will develop the skills of workers and their dependents through training and capacity building.

IMPLEMENTATION

For non-enforcement, the Agriculture and Food Committee, as an oversight committee, conducted two hearings to investigate the implementation of the Food Industry Development Act. sugar cane regarding the reduction of Sida’s budget from 2 billion pesos in 2016 to 1 billion pesos. 5 billion in 2017, to 1 billion pesos in 2018 and only 500 million pesos 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 investigation in support of the legislation, to examine the Sugar Regulatory Authority (SRA)’s apparent underutilization of the Sugar Development Act 2015 fund sugar industry, thereby depriving sugar producers and the industry of the chance to compete on the world market, and

•Sen. Reso. No. 40 dated July 29, 2019, to conduct an investigation in support of the legislation, into the reported failure of the Sugar Regulatory Administration (SRA) in its implementation of RA 10659 or the of 2015 on the development of the sugar cane industry at the expense of sugar Industry in general and small farmers and workers in particular.

This is because the Department of Budget Management (DBM) proposed the reduction of SIDA’s budget because SRA could not use it.

MECHANIZATION

Further, in the 2020 annual audit report of the SRA by the Commission on Audit (COA), it stated that the SRA carried out a fund transfer transaction in the amount of P547.103 million to the Philippine International Trading Corporation (PITC) for the purchase of various equipment, where only 245.9 million or forty percent (40%) has been used as of December 31, 2020, leaving a balance of 299.150 million pesos unspent. Senator Villar believed that the SRA had deposited the amount with the trading company, presumably to make it appear that their funds had already been “obligated”. Supply transactions by PITC for SRA have been delayed for two years from the signing of the Memorandum of Understanding between them.

SOCIALIZED CREDIT

For socialized credit, SIDA has 15%, or about PhP 300 million per year, for loans through the Land Bank, for the acquisition of inputs, agricultural machinery and tools needed for continuous production of sugar cane. The LBP manages this socialized credit facility under the Farm Support Program and the Farm Mechanization Program.

Unfortunately, as Senator Villar observed in both Senate hearings, and also quoted in a NEDA report dated March 13, 2021, the Social Credit Program (SCP) under AIDS was supposed to have a total allocation of PhP 1.2 billion. from 2016 to 2019, but only PhP 624 million was approved for release, of which only PhP 111.5 million was actually disbursed to borrowers. The utilization rate was a dismal 17.8% of approved funds and only 9.3% of the SIDA mandated allocation.

An earlier COA report dated 2019, had already drawn the attention of the SRA to the Social Credit Program (SCP) to review the rules for applying the SCP, in particular the eligibility and documentation requirements as part of the basic lending policies, to consider modifications to these to facilitate the process. of the loan application by the sugar producer/beneficiaries in order to maximize the impact of the programme. Unfortunately, that didn’t happen.

Studies show that agricultural credit is important in solving rural poverty and promoting rural development. Smallholder farmers and fishers, when they have access to loans, could have the capital needed to buy production inputs, such as seeds, equipment, fertilizers or to diversify their crops or livestock in order to increase productivity, minimize losses and earn more.

FARMING IN BLOCKS

Another very important component of SIDA is the block cropping system for sugar cane land which is implemented by the DA and DAR to increase the productivity of the cultivated areas. Small farms of less than five hectares are grouped into blocks of at least 30 hectares while preserving the property of the farmer. Farm productivity is improved through the establishment of integrated sugar production systems and the systematic provision of agricultural inputs and technical assistance. About 85 percent of the country’s sugar cane growers own land holdings of five hectares or less. Sugar cane requires holdings of at least 30 hectares for profitable production.

The fragmentation of sugar farms led to the ownership of some 140,000 hectares by around 74,800 small farmers during the 2018-2019 campaign.

According to the same NEDA report, the Block Farm Program organized and assisted only 216 block farms from 2016 to 2019, covering roughly 8,523 hectares. This is far too little compared to the estimated 140,000 hectares owned by small sugar producers. The SRA was once again given over to helping small farmers improve their welfare and become competitive. He only focused on importing.

Stock count SRA reports are not simple and straightforward, but difficult to understand. Supply (raw and refined) versus demand (industrial grade 65%, institutional 13% and household 22%) should always be emphasized.

Moving forward for SRA

SRA board members should include representatives of smallholder farmers, service providers and user industries. Include smallholder farmers in discussions and consultations when developing AIDS plans.

The agency’s structure is regulatory-driven, and its development function is largely limited to R&D, which focuses solely on the development, propagation, and distribution of high-yielding varieties of sugar spikes. This must change.

Its structure, skills and staffing require a different set of skills, as well as more staff and budgetary support. Although the agency has formulated a restructuring plan, it has not yet been fully implemented. Institutional support needs to be streamlined.

Regarding access to credit, Landbank should update its lending windows and shorten loan processing time, and should have minimum documentary requirements.

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Rachel J. Bradford