RP prepares sugar industry for Afta-CEPT tariff reduction

THE government is looking at implementing a host of measures, including the provision of the necessary farm equipment, to prepare the sugar industry for a free-trade scheme among member-countries of the Association of Southeast Asian Nations (Asean).

Agriculture Secretary Proceso J. Alcala met with sugar-cane farmers, millers, ethanol producers and other sugar stakeholders on Thursday to discuss forms of assistance which the government can provide to ensure the competitiveness of the industry once sugar tariff under the Asean Free-Trade Area-Common Effective Preferential Treatment (Afta-CEPT) goes down to 5 percent by 2015.

“We have to prepare the country, the sugar-cane farmers and everyone [involved] to ensure the country’s competitiveness,” said Alcala in an ambush interview.

Tariff rates on imported sugar from competing Asean countries will be gradually reduced. By 2012 the duty on Asean sugar will go down to 28 percent, to 18 percent by 2013 and 10 percent by 2014.

Low or zero tariff could encourage the entry of more imports since users can already afford to buy from neighboring Asean countries such as Thailand.

In a dialogue on Aug. 5, the Department of Agriculture said sugar-cane farmers and other industry stakeholders have indicated that “mechanization and ethanol production are keys to a more sustainable and globally competitive sugar-cane industry.”

Sugar-cane farmers, particularly members of sugar Mill District Development Committees (MDDCs), said the government should help provide the necessary equipment, particularly tractors, irrigation systems and trucks. There are currently 30 MDDCs throughout the country, composed of farmers, millers and other stakeholders.

Other farmers also clamored for more farm-to-market roads in major sugar-producing provinces for faster and more efficient transport of canes to the mills.

As source of fund to bankroll their equipment needs, the MDCCs propose that the performance bond and service fees from sugar imports be turned over to the Sugar Regulatory Administration (SRA).

Currently, the importation of sugar is done by the National Food Authority, with the agency receiving the fees. They will submit a resolution to Secretary Alcala for his consideration and endorsement to President Aquino for approval.

Small farmers requested more accessible and affordable credit to enable them to buy high-yielding sugar-cane seed pieces, fertilizers, other farm inputs and postharvest equipment.

Meanwhile, members of the Ethanol Producers Association of the Philippines complained that the current tariff on imported ethanol is too low, at only 1 percent, making locally priced ethanol uncompetitive.

They proposed that it should be increased to 20 percent to protect the local ethanol industry and attract more investors into the country.

Further, ethanol producers urged the immediate issuance by the Department of Energy (DOE) of a department circular on a new set of guidelines to import ethanol. They said the DOE has conducted several consultations on the matter, but until now, it has not issued the much-needed circular. Importers are using the old DOE guidelines prior to the enactment of Biofuels Act of 2006.

Under the Biofuels Act of 2006, fuel companies are currently required to blend ethanol with gasoline, at 5 percent this year, and 10 percent next year. Current ethanol demand is estimated at about 219 million liters versus domestic production of merely 80 million liters, derived from sugar cane and molasses.

Next year demand would more than double to 460 million liters of ethanol.

The dialogue between the government and industry stakeholders was initiated by Alcala “to address major concerns and map out industry direction to increase production of sugar cane and ethanol, achieve stable domestic supply and prices of sugar, and increase farmers’ incomes.”

Earlier, the SRA estimated that sugar production for the next crop year ending Aug. 31, 2011 could still be below 2 million metric tons due to the ill effects of the El Niño weather phenomenon.

source: businessmirror.com.ph