Agriculture Secretary Proceso J. Alcala has urged sugar industry leaders to modernize and raise ethanol output to compete in a market without a protective tariff shield.

Alcala made this pitch during a meeting with about 100 sugarcane industry stakeholders during a consultation last August 5, 2010, at the Sugar Regulatory Administration (SRA) office in Quezon City.

The agriculture chief initiated the discussion as a follow-up to an earlier meeting held July 8, 2010 at the main office of the Department of Agriculture (DA).

Alcala is seeking ways to increase sugarcane and ethanol production, achieve stable supply and prices as well as raise farmers’ incomes.

The Philippines is under pressure to improve its production system since the implementation of the ASEAN Free Trade Agreement (AFTA) contemplates the scrapping of the current 38 percent import duty for sugar from ASEAN member-countries to only 5 percent by 2015.

By 2012, the rate would be slashed to 28 percent, 18 percent the following year and 10 percent by 2014.

“We have to prepare the country, sugarcane farmers, and everyone. We therefore have to increase the production of sugarcane for both sugar and ethanol,” Alcala warned.

Members of sugar Mill District Development Committees (MDDCs) said government should help provide the necessary equipment, particularly tractors, irrigation systems and trucks

There are currently 30 MDDCs throughout the country, comprised of farmers, millers and other stakeholders.

Other farmers are also clamoring for more farm-to-market roads (FMRs) for faster and more efficient transport of canes to the mills.

The MDCCs propose that the performance bond and service fees from sugar imports be turned over to the SRA.

Currently, sugar imports are done by the National Food Authority (NFA), which receives the fees. MDCCs will submit a resolution to Alcala soon to ask for the transfer of the fees from NFA to SRA. These committees are also optimistic about increasing ethanol output.

Under the Biofuels Act of 2006, fuel companies are currently required to blend ethanol with gasoline at 5 percent this year and 10 percent next year.

Current ethanol demand is estimated at about 219 million liters versus domestic production of 80 million liters, mostly from sugarcane and molasses.

Next year, demand would more than double to 460 million liters.

Members of the Ethanol Producers Association of the Philippines (EPAP) have also complained that the current tariff on imported ethanol is too low at only 1 percent so much so that locally-produced ethanol could not compete.

EPAP proposes that the tariff should be raised to 20 percent to protect the ethanol industry and attract more investors to that sector.

Ethanol producers are asking for the issuance by the Department of Energy (DoE) of a circular on a new set of guidelines for ethanol importation.

The department has conducted consultations on the matter but still has not issued the circular. Importers are using the old DoE guidelines the Biofuels Act of 2006 was enacted.

Finally, small farmers requested for more affordable credit to enable them to buy high-yielding sugarcane seeds, fertilizers, other farm inputs and post-harvest equipment.

Alcala said DA will consider the matter and asked small farmers to organize themselves into clusters or cooperatives so they could avail themselves of financial assistance.