Mere deferment of the proposed liberalization of the sugar industry is not enough to address supply and price issues and should be accompanied by parallel reform measures, Financial Secretary Carlos G. Dominguez III said over the weekend.
While he supports a deferment, he told financial reporters other industry reforms have to be pursued, particularly in addressing supply and production issues.
Dominguez pointed out the country’s growing population and its growing needs already surpass sugar supply years earlier.
“Our population has grown. It’s already at a 105 million and we’ve seen (that) in this last two to three years there’s always a shortage (in sugar) and the domestic price is double the world market. That’s one problem on the supply,” Dominguez said.
He stressed he respects the Senate decision deferring the planned sugar liberalization but while at it, other issues such as enhancing the mill-planter relationship should be also pursued.
“We respect the desire of the Senate to discuss this at length and I think it’s the right move,” Dominguez said.
For him, liberalization is also about improving the efficiency of the sugar mills, how to incentivize them.
According to Dominguez, the current system that regulates the relationship between the sugar mill and the planter is a problem that “has to be changed” as it doesn’t encourage millers to invest given its smaller share of the profits.
“The problem is the legislation that regulates the relationship between the planter and the mill… Because of that, the mills have no incentive to put in capital as one is only able to recover 30 to 40 percent because the balance goes to the sugar planter. Why should they put 100 percent of the capital and only reap 30 to 40 percent of that?” the Finance chief said.
“We should also think about a new kind of relationship between the mill and the planter so that the mill is also incentivized to be more efficient, so they spend for the necessary technology and the capital to extract more sugar from the cane,” he added.
On whether pushing reforms for sugar is harder than it was for rice, Dominguez replied in the negative as long as everyone involved is reasonable.
“I don’t think so. If everybody sits down and be reasonable, I think we can arrive at a good solution. Basically, improving yields from the farm and yields from the mill and satisfying the local demand and possibly even exporting and being competitive worldwide,” he said.
Earlier, Senate Majority Leader Juan Miguel Zubiri proposed to delay liberalizing the sugar industry, saying this would spell the end to the local sugar industry and unduly pressure local farmers and industry workers.