Build not on protectionism

Funny, after exchanging harsh rhetoric that drove them apart like archenemies, Agriculture Secretary Emmanuel F. Piñol and the local sugar producers ended up last week like bosom friends, with the good secretary using a cliché lifted from Shakespeare’s lesser known play but popularly quoted title to sum up the sordid episode: “All’s well that ends well.”

In the heat of the tiff, Piñol called the sugar planters “spoiled brats.” They called him antifarmer and a lackey of foreign beverage companies.

The local sugar planters further accused him of being brazenly bribed—by Coca Cola and Pepsi—after he “countermanded” the hotly contested Sugar Order (SO) No. 3 of the Sugar Regulatory Administration (SRA), which seeks to regulate the entry of high fructose corn syrup (HFCS) or corn sugar.

SO No. 3 was issued last month to stem the growing inventory of sugar. It placed a cap on the volume of HFCS to be imported, while imposing stiff tariff and duties.

Local producers said the “unabated” importation had pulled sugar prices down to P1,300 per bag from P1,800 per bag, leading to potential revenue losses of about P20 billion.

Beverage makers and food processors were said to have imported almost 800,000 metric tons of HFCS in the past six years. The local industry claimed this had displaced the demand for 23-million 50-kilo bags of locally produced sugar, depriving the country and the sugar industry about P35.2 billion in potential income.

Beverage companies use the product as a significantly cheaper alternative to sugar. Its use has also been encouraged as research has shown that sugar and HFCS (namely HFCS 55, the corn sugar used in beverage-making) have the same effect on human health and metabolism. No evidence has yet to suggest that one is worse than the other.

In the ongoing impasse, Coca-Cola and Pepsi blinked last Thursday. Coca-Cola dropped its lawsuit against SO No. 3.

The world’s giant beverage producers committed to buy more sugar from local planters. In return, they would be granted a six-month period to acquire and install the needed equipment to process local sugar.

The retooling would force the beverage makers to spend “a few million dollars” more. They said they were willing to make the sacrifice just to show President Duterte they were helping the local industry.

Happy, the local industry pledged unwavering loyalty to the President.

Bottom line spin

Piñol hailed the outcome as a “win-win solution.” He also attributed the happy ending to the “high degree of maturity and cordial negotiations” exhibited by all the parties.

The outcome of the controversy may look good on the outset. The local sugar producers got what they wanted, and the SRA stood as hero to local cause.

The beverage companies, despite what they described as a “disastrous prospect, irreparable damage and loss, and inordinate time to adjust” if forced to use locally produced sugar, still acceded to the proposition.

This just showed they have big margins. That notwithstanding the added costs, they would still be making money.

This could explain why they had no hard numbers presented to support their petition for a halt order against SO No. 3.

Behind this happy picture, however, things seemed not all was well. The fact still remained that “our sugar prices are still double to that of sugar coming from other countries.”

Piñol and the SRA should think more carefully of the implications of their recent victory to address the problem of local sugar planters. What transpired was just a band-aid solution to the most disturbing problem of the sugar industry: to produce at competitive prices.

Both must look harder at their mandate, which is to “build competitive readiness, not protectionism.”