Bongbong’s Sugar Problem
Running the ag agency may not be as easy as it looked
Philippine President Ferdinand “Bongbong” Marcos may be having second thoughts about having appointed himself Secretary of Agriculture in his administration. He has thus found himself in the middle of one of the first crises of his term but one which reflects years of failure of local agriculture to keep up with the growth of population, let alone the demands of consumers.
The country has been facing a shortage of sugar, once one of the nation’s leading exports. Not only have prices risen as a result but big-name soft drinks producers have been unable to get as much of the refined product as they need. But when the Sugar Regulatory Administration which comes under the Ministry of Agriculture, authorized the import of 300,000 tonnes there was outrage from sugar producer interests. Marcos was forced to claim that he had not authorized the import. Whether the politically attuned officials of the SA would have made such authorization without the boss’s knowledge is debatable but nonetheless they were dismissed from their posts.
Marcos then appointed as head of the SRA the representative of the one of the largest groups of sugar producers in the country, the Negros-based Asociacion de Agricultores de la Carlota y Pontevedra. In short, Marcos seems to be siding with the producers who claim that any shortage is temporary and that milling will surge in September. Even so imports would almost certainly be necessary and Marcos agreed to 150,000 tonnes.
The big sugar interests of Negros in particular are politically influential despite or because of their poor record in land productivity, more efficient milling and the welfare of farm workers who are among the poorest in the nation and where militancy is endemic and extrajudicial killings occur of those including doctors and lawyers trying to help the poor. Decades of protection have enabled the big planters to do well enough without undue effort while smallholders have low yields, often from hilly land. The retail price of sugar per kilo is PHP70 or more, or nearly twice the average for Indonesia, Malaysia and Thailand.
There is a constant tug-of-war between the interests of the farmers and those of the consumer which are not confined to sugar but run all the way through the food chain, starting with rice due to the high cost and low productivity of local agriculture. The situation is in one way worse in the case of sugar than of rice. The Duterte administration pushed through, against much opposition, a tariff in place of regulations to protect local rice farmers. That is set at 30 percent for ASEAN imports and 50 percent for that from elsewhere. It is still blamed for hurting farmers, but few ask the question of why it costs so much more to produce rice in the Philippines than in Indonesia, Thailand or Vietnam despite more government money being spent on the rice industry than the rest of agriculture combined.
Sugar meanwhile has remained subject to the dictates of the SRA and hence is a political football and is likely to remain so unless Marcos can summon up the courage and congressional support to get rid of it and rely on tariffs.
High prices for rice and sugar feed through the whole economic chain, contributing to the high levels of malnutrition among children and formal labor costs which are mostly higher than in neighboring countries. Low productivity also characterizes the coconut industry, the third most important agricultural crop after rice and corn. Although it remains a significant exporter, growers are mostly among the poorest farmers. Despite its tropical location, particularly in Mindanao, the Philippines is also a net importer of palm oil as well as of wheat and corn for human and animal consumption.
Aquaculture is steadily expanding but sea catch is at best static due to depleted resources, Chinese occupation of coastal waters and competition with several countries for tuna. While Philippines remains a major banana exporter, it has lagged neighbours in selling durian, mango and pineapple.
Marcos’ assumption of the agriculture portfolio may be a recognition of its importance. But his early encounter with the sugar issue shows just how difficult, it is whether from a short-term political standpoint or the long term efforts needed to raise productivity and hence the substandard living standards of those, urban and rural, on the lower rungs of the income scale. Reducing the gap between local and international food prices would have another benefit – less incentive for smugglers.