A vice chairman of the House Committee on Agriculture and Food wants the national government to “end the sugar cartel among licensed importers” by instituting an auction system for sugar import slots, whenever a new Sugar Order authorizing importation is issued.
Albay Rep. Joey Sarte Salceda made the remarks during the 31st North Luzon Area Business Conference (NLABC) last September 17, where he was tapped to be the keynote speaker on the topic of agricultural modernization.
“What keeps the sugar import cartel alive is their special privilege to import and be allocated slots every Sugar Order. It’s an old boys’ club, basically, and it’s killing Philippine food industries,” he said in a statement.
The solon was referring to the Sugar Regulatory Administration’s practice of allocating import slots for each Sugar Import Order supposedly on a “pro-rata basis.”
“Pro-rata for the cartel, sounds like. That’s what I’m hearing. Because of course there is an incumbency advantage for those who have already been allowed to import in the past,” he said.
“And those who are allowed to import are able to sell sugar at three to four times the world or Thailand prices. That is an egregious, highly inequitable arrangement. It has to go.”
While Salceda admitted that “there seems to be a real structural sugar deficit…a very privileged few get to corner the profits.”
“What’s more, an SRA sugar import permit appears to be a smokescreen for smuggling beyond the quantities allowed by the permit, as we can see from the recent sugar warehouse raids.”
To replace the current system, the lawmaker proposed an auction system, where interested importers make bids for import slots, which will be given to parties who can deliver the highest auction fees for the government.
Salceda said he believes that auction fees could be as much as P27 to P33 per kilo, given the significant price difference between local and world prices.
“We could impose an auction system that could conservatively generate almost P5 billion in additional annual revenues for sugar sector development, just on PBBM’s allowed 150,000 metric tons of imports,” he said.
“This would be around 4.2 percent of production value in additional funds for sugar industry development. That will be close to the kind of support the rice sector gets. It will also help protect domestic prices from getting too depressed, as auction fees would be a pass-on cost, like tariffs, while ensuring fair allocation of imported supply.”
According to the lawmaker, the auction revenues can be used as a “Sugar Farmer Financial Assistance Fund,” which would make outright payments or subsidies to domestic farmers, and help millers innovate and modernize their equipment.
“The current system leaves nothing for domestic farmers, and nothing for the country. An auction system will allow anybody willing to pay to import, and will end the dominance of the cartels in sugar imports. It will cut off the snake’s head.”