Score one for sugarcane producers

By Modesto P. Sa-onoy

The Philippine sugar industry has been under stress since 1987 when the government of President Corazon Aquino included the sugar lands under the coverage of the agrarian reform program. Lands were cut down into small sizes and practically forced the decline in production.

Then came the ethanol program that was intended to reduce our dependence on imported oil and at the same time, lower the cost of fuel pump prices. In both cases, the program failed. The sugarcane planters that were forced to sell their sugar to the ethanol processing plants shouldered part of the cost of ethanol raw materials and got nothing in return, not even a lower fuel price for their operations.

One man refused to be cowed and Steven Chan, President of the Central Azucarera de Bais sued the Sugar Regulatory Board. CAB sought to annul Sugar Order No. 1 series of 2017-2018, SO No. 1-A series of 2017-2018, and SO No. 3 series of 2017-2018 that made available “D” world market sugar of crop year 2017-2018 to ethanol producers accredited by SRA for being beyond its authority.

The “D” sugar was allocated for the world market when we had enough sugar but in 2017, we already have less than what we needed. This sugar is extremely cheap, in effect the producers subsidized the ethanol processors without the consent of the planters.

A news item Tuesday said that on February 16 the Court of Appeals, upheld a lower court order “declaring the Sugar Regulatory Administration’s allocation of world market sugar to ethanol producers null and void for being beyond its legal powers or authority. The SRA blatantly and, without regard to the rule of law, usurped the power of Congress to grant subsidy to the ethanol industry to the detriment of the sugar producers who, under the law, are entitled to equal protection under the Constitution.” The CA also said that the appeal was “an improper remedy.”

The Makati RTC agreed with CAB’s argument “that ethanol producers are not within the regulatory jurisdiction of the SRA. They are not part of the sugar industry insofar as regulation of the ethanol producers are concerned. It is the Department of Energy that is mandated to take appropriate and necessary actions to implement the provisions of the Bio-Fuels Act of 2006.” Anybody who has read EO 18 that created the SRA knows that ethanol is not within its mandate even if ethanol used alcohol. In fact, this EO delineates where the sugar is to be allocated and nothing is mentioned about ethanol.

The RTC further said that “The class F sugar, which is class D sugar labeled an F sugar for ethanol is an invention of the SRA. There is no such F market destination for ethanol provided by law. If it were the intention of the legislature to grant subsidy to ethanol producers by way of purchasing cheap D class sugar destined for the domestic market at less than half the price of B sugar, then the remedy is law reform through an act of Congress – not through SRA’s creation of a fictitious D to F classification of sugar in the guise of regulation.

“The SRA cannot justify the allocation of raw sugar to ethanol producers under its general power to allocate sugar because said allocation does not fall within the ambit of domestic, export or reserve allocation. Ethanol is strictly for local productions and consumption – not for export.”

Now that the allocation for ethanol is illegal, two questions arise” (1) will the planters be compensated for the losses they incurred through the “invention” by SRA of an allocation that is not provided for by law? If so, what will be the price to be used as basis for the compensation? (2) What happens to the ethanol industry that relies on cheap sugar as a feedstock? Unless the government subsidizes this industry, will the fuel price in the pumps be affected?

CAB President Chan deserves praise for standing up to the SRA. He had been critical of the SRA because of several onerous decisions but he did not get the support of the industry leaders. He has raised several issues involving “D” and “A” sugar and the manipulation of prices by the traders, but have we heard the industry leaders supporting him?

I guess that makes crusaders better than most.