Press Releases

Salceda on proposed SRA reforms: “Not far enough, won’t make a dent” on sugar prices

November 1st, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) called the proposed reforms to the charter of the Sugar Regulatory Administration “immaterial to actual sugar prices and supply” as the agency issued a Memorandum Circular seeking comments on the recommendations made by the Senate Blue Ribbon Committee Report No. 3, following hearings on the sugar imports issue.

“The recommendations might or might not be good. Some of them make sense, although not urgently. But, I can definitively tell you that they will do nothing of immediate consequence to address ongoing sugar supply or price issues,” Salceda said.

The recommendations include “incorporating transparency and accountability” provisions in the process of issuing import permits and other critical issuances, including the SRA’s audit processes, procedures and public consultations.

The proposal also adds expanding the membership of the SRA Board from two to eight members with additional members coming from the following sectors: industrial and household consumers, sugar industry workers, sugar transportation sector workers, other relevant stakeholders.

It also seeks to prohibit the SRA board from “delegating its authority to reclassify sugar,”

“It might make sense to include more consumer representation in the SRA board, but they’ll keep getting outvoted anyway, if the basis of import orders is still arbitrary. The question should be simple for the SRA board: Is there a sugar shortage or not? And have we no other immediate recourse but to import? Those are yes-or-no questions. They need technical answers,” Salceda said.

Salceda adds that the proposals “do not address the urgent problems of consumers or industrial users.”

“Refined sugar is now up to P120 per kilo. Industrial users have 4-5 days’ worth of inventory, and several bottling plants have ceased or downscaled operations. These are immediate price and supply problems, and the answers aren’t going to be in increasing representation in the SRA board. That might be good. But the good that comes out of that will take months if not years.”

Alternative proposals

Instead, Salceda proposes more sweeping changes to the SRA’s rules, “so that pressing issues are addressed without delay.”

“First, the stakeholders should have the right to call the SRA board into a meeting as often as once-a-month on top of their regular meetings. If the industrial inventories or consumer prices are in trouble, their representatives have a ‘golden buzzer’ to call for a board meeting and propose an immediate supply solution.”

“Second, a technical panel of experts composed of the DA, DTI, and NEDA should have motu proprio powers to determine, based on official statistics, whether a sugar shortage exists. That should be the basis of all sugar import orders. Acting on a shortage is not something you can compromise on in a committee. A shortage is a shortage.”

“Third, import allocations should be auctioned off, and the schedule of arrivals should be more flexible. That prevents fly-by-night traders from cornering import allocations. An auction, in economics, is always the most transparent way to allocate scarce resources. So, if the SRA is serious about transparency, an auction is the best way to allocate import space. It also ends alleged corruption in the arbitrary grant of import allocations.”

“Fourth, the SRA itself should have the ability to import sugar over and above its sugar import orders during emergency situations, such as thin industrial inventory. They should be able to import and sell the imports to industrial users, if they will not allow industrial users themselves to import. That will prevent closures of food manufacturing plants. Ideally, they should allow industrial users to import when the technical panel determines the existence of a shortage.”

“Fifth, and finally, the SRA’s capacity to spend the Sugar Industry Development Fund should be improved. Reforms should include allowing the SRA to transfer funds from the SRA to DA Field Offices for sugar sector programs. The SRA Board can continue providing the policy direction for programs but DA Field Offices are better at implementation. If they do that, I will be the strongest in Congress to push for earmarking sweetened beverage taxes towards the domestic sugar sector, as we do with tobacco taxes.”

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