Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

‘ 5
HOUSE BILLNO. er

Introduced by Honorable Alfredo “Albee” B. Benitez

EXPLANATORY NOTE

Traditionally, the Sugar Industry has been given extraordinary support by the
government through various legislations and financial accommodations, primarily
because of the critical contribution of the Sugar export industry in the country’s
economic development. Hence, in 1937, the Philippine Sugar Administration was
created, renamed it as the Sugar Quota Administration in 1957, followed by the various
Presidential Decrees during the Marcos Administration and finally the Sugar Regulatory
Administration (SRA) Executive Order 18 in 1986 was established.

The volatility and fluctuations of the price of sugar (raw and refined) in the
world market had resulted in the various phase of government's interference over the
years. The apparent neglect of the development of the Sugar by-products further
aggravated uncertainty in the future of the sugarcane industry.

By 2015, the tariff on sugar shall be finally lifted. This scenario has spawned
numerous reactions of uncertainty from the sugar planters, millers and consumers
alike.

It is therefore, incumbent upon our policy-makers to institute measures, both by
legislation and executive implementation of specific programs and projects that will
cushion if not counter the possible destabilization effects of the 2015 “no-tariff”
provision of the sugar cane industry as a whole.

This bill therefore aims to revitalize and strengthen the Sugar cane Industry
through a diversification, development, and financing program promoting the interests
of sugarcane farmers/planters, mills workers and consumers as well as contributing to
the food security objectives of the national government.

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Specifically, programs and projects to diversify sugar cane production involving
not only raw and refined sugar but also its by-products namely bagasse, molasses and
filter mud, among others shall be identified, developed, promoted and implemented
starting 2013. Additionally, funding for these programs and projects shall be assured
through the establishment of a Sugar Development Fund.

In view of the foregoing, approval of this bill is earnestly sought.

ALFREDO) ALBER) B. BENITEZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. _* a2

Introduced by Honorable Alfredo “Albee” B. Benitez

AN ACT STRENGTHENING THE SUGAR CANE INDUSTRY BY ESTABLISHING THE SUGAR
CANE INDUSTRY DEVELOPMENT FUND, PROVIDING FUNDS THEREFORE AND FOR
OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title - This Act shall be known as the “Sugar Cane Industry
Development Act of 2013”.

SEC 2. Declaration of Policy. ~ It is hereby declared the policy of the State to provide
policy directions and support programs / projects for the sustained development and
diversification of the Philippine sugarcane industry inasmuch as the industry provides
employment and livelihood to a sizeable number of Filipinos in the agricultural sector,
contributes significantly to the national economy as well as local economies of host
provinces, generates foreign direct investments, earns foreign reserves from exports
under the US quota and the world market, contributes in maintaining the country's balance
of trade and is vital for maintaining the food self-sufficiency and energy security of the
country.

It is hereby further declared that the development and diversification of the
sugarcane industry shall be directed primarily to the increase in income of the farmers, the
enhancement of the productivity of sugarcane planters, sugar mills and other
manufacturers of products from sugarcane and sugar and the improvement in the trading


and marketing practices of products derived from sugarcane and sugar in terms of
administrative, policy directives and financial assistance to the sugarcane industry in
support of the food security objectives and environmental concerns of the national
government.

SEC. 3- Development of the sugarcane industry - The priority measures,
programs, projects of the sugarcane industry shall be focused on the following:

A. Industry-wide Development

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The transformation of the sugarcane industry from the limited “raw and refined
sugar production” into a diversified industry producing bioenergy such as
biofuels and biomass power and other biochemicals, if financially and technically
feasible, primarily through the integration of co-products production with sugar
processing and proper waste disposition / utilization;

‘The establishment of “Special Economic Zones’ for the sugarcane industry
pursuant to R.A. 7916 (Special Economic Zone Act of 1995), and / or the
designation or establishment of nuclear farms to be called “Agro-Industrial
Districts for the Sugarcane Industry” that shall be entitled and included as one of
the priorities to existing fiscal incentives under Book VI of Executive Order No.
226 otherwise known as the Omnibus Investments Code of 1987, as amended, as
well as Sections 4, 5, 6 and others of R.A. 1000 (The Agri-Agra Reform Credit Act
of 2009), promoting among others, block or corporate farming to achieve
economies of scale;

The development and promotion programs that are environment-friendly and
will attract investments in the development, production, or manufacture of
products derived from sugarcane, sugar, molasses, cane juice or syrup, crop
waste, bagasse, mudpress and other products and by-products from sugarcane;

The institutionalization of Good Agricultural Practices (GAP), Good
Manufacturing Practices (GMP) and marketing programs that will lead to
competitiveness, market development and market expansion of sugar and other
sugarcane products and by-products;

The construction of trans-loading ports and improvement of existing trans-
loading ports for the coastwise transport of sugar and other products and by-
products derived from sugarcane and sugar in key sugarcane-producing areas
through integration in the various programs / projects of the other government
agencies such as the National Economic Development Authority (NEDA),
Department of Transportation and Communication (DOTC), Department of
Public Works and Highways (DPWH), Philippine Ports Authority (PPA) and
others;


The implementation of programs that shall benefit the sugarcane planters and
workers of the agricultural and industrial sectors of the industry;

The prioritization of farm productivity improvement programs such as but not
limited to farm mechanization, construction of farm-to-mill or to distillery roads,
organic farming, irrigation, intensified inter-cropping, fertilization, and dispersal
of high-yielding or improved sugarcane varieties;

‘The sustained financial and technical support in the conduct / sponsorship of
research, development and extension studies in the sugarcane industry,
including, among others, acquisition /breeding of cane high-yielding or
improved varieties, design of farm implements and farm mechanization
equipment, better and cost-efficient farm methodologies / technologies /
practices, market research and promotion techniques, technical / economic
viability studies in the production of products and by-products from sugarcane
& sugar such as biochemical and biotechnologies from bagasse and other crop
and manufacturing wastes, design and studies on appropriate climate adaptation
and mitigation instruments / technologies and soil fertility mapping /
assessment.

B. Regulation of sugar industry

1.

The institutionalization of an effective monitoring and control system for the
withdrawal, transfer, land transport and coastwise movement of imported sugar
and sugar premixes;

The institutionalization of electronic quedanning, expansion of the quedanning
system to molasses and muscovado and the implementation of the quedan
system under R.A. 2137 (Warehouse Receipts Law);

‘The classification of imported sugar and sugar premixes as “C’", “D", “E”, “F”
(reserve sugar, world market sugar, CBW or food processors/exporters sugar,
bioethanol sugar, respectively) or to any other sugar classification which the
SRA may deem necessary to stabilize the sugar supply and prices in the domestic
market: Provided, that the Bureau of Customs (BOC) shall not release imported
sugar and sugar premixes without the requisite SRA clearances and
classification;

The export of refined sugar to the world market or to any country where the
Philippines has bilateral trade agreement or sugar quota shall be VAT zero-rated
from the time it is withdrawn or released from sugar mills / refinery warehouses
including refined sugar withdrawn for constructive export to Customs Bonded
Warehouse (CBW) operators or food processors/exporters of sugar-based


products who are holders of sugar allocations for import under the CBW
program and/or duly licensed or registered with SRA;

‘The wastewater discharge of sugar mills / refineries that meet the standard of
the Department of Agriculture for re-use as irrigation water or any other
agricultural purposes shall be exempted from any discharge fees.

C. Fund management

‘The management and proper utilization and disposition of the Sugarcane Industry
Development Fund established under Sec. 4 of this Act, with special emphasis on the
industry's contribution to the food security program of the national government.

SEC. 4 -Establishment of Sugar Cane Industry Development Fund

a

Gs

There is hereby established a Sugar Cane Industry Development Fund (“Sugar
Fund’) to support the implementation of the development strategy identified in
Sec. 3 of this Act.

The Sugar Fund shall be administered by a Secretariat under the Sugar
Regulatory Administration. The Sugar Fund Secretariat shall be composed of 7
members, as follows:

(a) The Administrator of the Sugar Regulatory Administration as Chairperson
(b) Two Representatives of sugarcane farmers/planters as member
(©) Two Representatives of sugar millers/refiners as member
(a) Two Representatives of bioethanol distillers as member

Initially, the Sugar Fund shall be utilized for the following specific purposes:

1, Finance the establishment of Special Economic Zones, nuclear farms or
Agro-Industrial Sugarcane Districts as provided for in Section 3.A.2 of
this Act;

2. Provide financial assistance in the form of grant or guarantee fund and
other suitable arrangements (eg. Farmers Trust, Special Purpose
Vehicles) with the sugarcane farmers, planters, millers, refiners and
producers of other products from sugarcane covering the purchase of
seedlings, high-yielding cane varieties, pesticides and fertilizer,
acquisition of farm machinery and implements, construction of farm-to-
mill or distillery roads, construction of irrigation systems, water
impounding facilities and water distribution networks;


Provide financial conduits or resources for industries harnessing the
efficient use of energy potential of sugarcane such as the bioethanol and
power cogeneration programs and utilization of farm wastes (such as
cane trashes and bagasse as raw materials for pulp and paper, fiber
boards, furfural, animal feeds, etc.) and other by-products using
chemicals and biotechnologies;

Conduct researches or feasibility studies to improve farm / mill
efficiencies and productivities, identify areas for diversification, identify
and develop other markets for sugar and its by-products and co-products
particularly in the area of bioenergy and the biochemical industry;

Training of mill and SRA personnel with current technologies on
efficiency, productivity and diversification; and

Finance socio-economic programs for sugarcane farmers through
planters or farmers cooperatives or associations, agricultural /mill
/refinery / distillery workers and other industrial workers of products
directly derived from sugarcane including but not limited to the
programs under RA 6982 (Strengthening the Social Amelioration
Program in the Sugar Industry).

d. ‘The Sugar Fund shall be constituted out of the existing funds and appropriations
for the agriculture and fisheries modernization such as:

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The Agricultural Competitiveness Enhancement Fund (ACEF) - The
Department of Agriculture in consultation with the Congressional
Oversight Committee on Agriculture and Fisheries Modernization
(COCAFM), shalll allocate annually from year 2014-2015 or until all ACEF
funds are exhausted and shall continue with any extension thereof, a
portion of ACEF to fund the infrastructure support projects of the
sugarcane industry such as farm-to-mill or distillery roads and irrigation,
product development, market research and Research, Development &
Extension projects to include all its subsectors, namely, farm sector,
sugar manufacturing sector, bioethanol sector, power generation sector
and farm / mill support industries sectors.

The General Appropriations for the Agriculture Sector - The DA shall
provide allocation to the sugarcane industry and all its subsectors from
its annual appropriations through the General Appropriations Act and /
or from the Agriculture and Fisheries Modernization Act (AFMA) funds
and include the programs / projects of the sugarcane industry in its
annual expenditure prioritization plan for ten (10) successive fiscal years
immediately upon the effectivity of this Act.


3. All sugarcane-producing local government units (LGUs) shall allocate a
portion of their Incremental Reformed-Value Added Tax-Internal
Revenue Allotment (R-VAT-IRA) for infrastructure and Research,
Development and Extension (R, D & E ) projects of the sugarcane
industry to include all its subsectors stated in Section 4.c.1.

SEC. 5. Implementing Agency. - The Sugar Regulatory Administration (SRA) shall
implement the programs / projects funded by the Sugarcane Fund as recommended by the
PMC. The SRA, through the Sugar Cane Fund Secretariat, shall formulate a Ten-year
Sugarcane Industry Development Program (SIDP) which shall be reviewed and updated
annually, in consultation with the major stakeholders of the sugarcane industry and its
subsectors such as but not limited to the sugarcane farmers / planters, sugar millers /
refiners, bioethanol distillers, and others which shall serve as basis for the program /
project proposals that shall be submitted to the COCAFM, the DA, and the LGUs for funding
as provided for in Sections 4.c.1, 4.¢.2 and 4.c.3.

SEC. 6. Separability Clause. — If any provision of this Act is declared
unconstitutional, the validity of the remaining provisions hereof shall remain in. full force
and effect.

SEC. 7. Repealing Clause. — All laws, decrees, executive orders and rules and
regulations or part or parts thereof inconsistent with any provision of this Act are hereby
repealed, modified or amended accordingly.

SEC. 8. Effectivity Clause. — This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least two (2) newspapers of general
circulation.

Approved,