By: Modesto P. Sa-onoy
The cane purchase system that Finance Secretary Carlos Dominguez is mulling about as a solution to the problems of the industry is not new. When it was proposed on several occasions, it was rejected by the planters for good reasons. To shift to this system would be tectonic and if adopted with survival in mind, it would change the industry.
Under the present system, the planters cultivate farmlands and send their canes to the mill for processing into sugar. The sugar is divided between the planters and the millers on a ratio agreed upon in a milling contract. It can be as low as 60% for the planters but due to the provision of RA 809 that determines the minimum planter’s share is based on mill capacity, the sharing is acceptable though it passed through a gauntlet.
The planter’s share does not only involve sugar but molasses and even bagasse when the latter is also sold. That is fair enough and we have peace in the sugar industry.
If this system is changed with the mill purchasing the cane, then the planters receive the price of the cane and nothing else, not the molasses, the bagasse and anything produced from the cane. He will also lose a say in the efficiency of the mill, but this will not matter anymore because, after the sale, everything is the mill’s responsibility.
On the other hand, the planter will also decide whom and when to sell and for how much. He will not be bothered by milling schedules or transport of the cane from the farm. He can sell the standing cane or cut it and deliver and get paid on a tonnage or cane quality at an agreed price.
This system had remained an idea although there was an attempt to buy the canes, it caused a lot of trouble not only because the planters as a group opposed it but also because the processes are not acceptable as credible measures.
However, RA 809 is not only about sharing the sugar. It includes the share of the farmhands, the farmworkers in what is called the Social Amelioration Fund which was adopted after RA 809. This fund is based on the sharing process in a similar ratio to sugar. The SAF requires a separate discussion.
When the cane is purchased and the planter does know how much sugar is produced, what will be the planter’s basis for paying the SAF? The only way out of this is for the SAF to be abolished lest it causes labor conflict in the industry. And once the SAF is abolished, what is the replacement and who will shoulder that cost? The resistance of the labor sector will surely fan discontent with its unpredictable course.
No two farms or volume of cane produce the same quantity of sugar thus the mill will have to introduce core sampling to be able to assess its juice or sugar content and determine the price of the cane. This was tried before but abandoned. There are many problems attributed to the process, but I think it is more of an issue of trust in the integrity of the mill.
However, I also believe that in the long run the sampling will be accepted universally. Planters with large plantations can afford to buy their own sampling equipment but most would be unable to afford or would not even bother if “the price is right”.
There is a political dimension in the cane purchase system. The present practice is for the planters to have a representative in the mill’s laboratory to monitor and safeguard the interest of the planters – that he is not cheated with his cane’s purity. Once the cane purchase system is adopted, there will be no need for such a representative.
The representative is employed by the planters’ associations and for this service as well as for others, the planter must be a member of an association, sometimes in more than one depending upon where he mills. As a member, he pays a “fee”, the main source of the association’s fund. The bigger the production of the members, the richer the association. Because of its large coffer and membership, the more influential the association is with politicians.
If the cane purchase system is adopted, the association loses its clout and leaves the industry with little protection.
