Republic of the Philippines f 08 May 2012

HOUSE OF REPRESENTATIVES
Quezon City i

FIFTEENTH CONGRESS
Second Regular Session

3413
HOUSE BILL No._°*

AN ACT STRENGTHENING THE DEVELOPMENT OF THE SUGAR CANE
INDUSTRY, ESTABLISHING THE SUGAR CANE INDUSTRY
DEVELOPMENT FUND, AMENDING FOR THE PURPOSE PRESIDENTIAL
DECREE NO. 1890, PROVIDING FUNDS THEREFOR AND FOR OTHER
PURPOSES

Introduced by Honorable Alfredo “Albee” B. Benitez
3rd District, Negros Occidental

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.

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 “ALBEE” B. BENITEZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

5113

HOUSE BILL NO.

AN ACT STRENGTHENING THE DEVELOPMENT OF THE SUGAR CANE
INDUSTRY, ESTABLISHING THE SUGAR CANE INDUSTRY DEVELOPMENT
FUND, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 1890,

PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES

Introduced by Honorable Alfredo “Albee” B. Benitez
3rd District, Negros Occidental

SECTION 1. Short Title - This Act shall be known as the “Sugar Cane
Industry Development Act of 2012”.

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 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, earns for the country foreign reserves
from exports to other countries, and is vital for food sufficiency and energy
security of the country.

For the reasons stated, it is hereby further declared that the development
and diversification of the sugarcane industry shall be directed primarily to the
increase in incomes of the farmers, the enhancement of the productivity of
sugar planters and sugar mills and the improvement in marketing and trading
practices 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 Sugar Cane Industry—
The main focus of the development of the sugar industry shall be on the
following measures, programs and projects:

A. Industry-wide development

1, In general, the transformation of sugarcane industry from the limited
“raw and refined sugar production” into a diversified industry
producing not mainly raw and refined sugar, but also power, waste
disposition and other possible biochemical products primarily through
integration of by-products production with sugar processing;

2. The establishment of Special Economic Zones for Sugarcane Industry
pursuant to R.A. No. 7916 (Special Economic Zone Act of 1995),
and/or the designation and establishment of nuclear farms/Agro-
Industrial Districts for Sugarcane Industry to be entitled to the
existing fiscal incentives under Book VI of Executive Order No. 226
otherwise known as the Omnibus Investments Code of 1987 as well
as Sections 4,5, 6 and 7 of R.A. 10000 (The Agri-Agra Reform Credit
Act of 2009), promoting, among others, block/corporate farming to
achieve economies of scale;

3. The development of programs that are environment friendly and will
attract investment in the development, production, or manufacture of
products derived from sugarcane, sugar, molasses, cane juice, crop
waste, bagasse, filter mud and other by-products and co-products of
sugarcane milling:

4. The institution of marketing programs that will lead to expansion of
markets for sugarcane and by-products;

5. The building and/or improvement of existing trans-loading ports for
export or coast-wide transport of sugar and its by products in key
sugar producing areas through various programs or projects of other
government agencies such as NEDA, DOTC and PPA;

6. The development of a sugar cane industry that shall benefit sugar
farmers, planters and mill workers;

7. The encouragement and intensification of farm productivity
improvement, including but not limited to farm mechanization,
organic farming, fertilization, irrigation, intensified inter-cropping,
and dispersal of planting materials and improved high yielding
varieties;


8. The sustained  support/conduct/sponsorship of research and

development on the sugar cane industry including, among others,
high yielding varieties, farm implements, farm methodologies, by-
products profitability and marketing/promotion techniques, new
manufacturing chemical and biotechnologies for bagasse, molasses
and other by-products, weather monitoring and soil fertility mapping;

B. Regulation of sugar industry

t.

The effective monitoring of the withdrawal, transfer, transport and
movement of sugar and premixes; provided, that, all sugar
warehouses and storage facilities are required to register with SRA.

. The classification of imported sugar and premixes as either “C”, “D”, or

“E” when imported at a time when there is a sufficiency sugar stocks;
provided, that the Bureau of Customs (BOC) shall not release
imported sugar and premixes without requisite SRA clearances and
classification;

. The export of refined sugar to the world market shall be subjected to

VAT zero percent rate from the time it is withdrawn or release from
the sugar mill/refinery including refined sugar withdrawn for
constructive export to CBW warehouse of food processors that are
duly licensed and registered with SRA;

. The wastewater discharge of mills that meet the standard of the

Department of Agriculture on safe re-use of waste water for irrigation
and other agricultural purposes shall not be imposed any discharge
fee.

C. Fund management

1.

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

1, 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 held in trust by the Philippine Sugar Corporation
created under P.D. 1890.

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

a. Finance the establishment of Special Economic Zones,
nuclear farms/Agro-Industrial Districts as provided for in
Sec 4 (2. a) of this Act;

b. Provide financial assistance to the sugar farmers, planters
and mills covering purchase of seedlings, cane varieties,
pesticides and fertilizer; acquisition of farm machinery
and equipment; construction of farm to market roads;
and construction or building of irrigation or water
impounding facilities and water distribution networks;

c. Provide financial conduiting/resources for industries
harnessing the efficient use of the energy potential of the
sugar cane (e.g. the Ethanol program) and utilization of
farm wastes (e.g. bagasse as raw material for pulp and
paper, boards and furfural and animal feeds) and other
by-products using chemical and biotechnologies;

d. Conduct researches or feasibility studies to improve
efficiency and productivity of farms and mills, identify
areas for diversification, identify and develop other
markets for sugar and it by-products and co-products
particularly in the area of renewable energy and
biochemical industry;

e. Training of mill personnel on current technologies on
efficiency, productivity and diversification;

f. Finance socio-economic programs for sugar farmers and
mill workers including but not limited to livelihood
programs and trainings in addition to the programs under
Republic Act 6982 (Strengthening the Social Amelioration
program in the sugar industry);

g. Scholarships for deserving university/college students
taking relevant degrees to the sugar cane industry; and

3. The Sugar Fund shall be constituted and collected from the
proceeds of fifteen percent (15%) of:

a. The Value Added Tax (VAT) on the sale and importation of
refined sugar, and sugar cane by-products; and

b. The total tariff collected on the importation of raw sugar
(AHTN 1701.11.00), refined sugar (AHTN 1701.99 and its
subheadings), and premix sugar (AHTN 1701.91.00 and
2106.90.52).

All the proceeds collected from the above sources shall be
remitted in full by the Department of Finance to a separate trust
fund maintained by the Philippine Sugar Corporation (PhilSuCor),
created under P.D 1890, on or before August 1 of every year;

4


provided, that the PhilSuCor shall utilize and disburse such trust
fund in accordance with the purposes enumerated in Sec. 3 of this
Act and its Implementing Rules and Regulations; provided further,
that only the interest earnings of the trust fund shall be available
for the operational expenses of implementing the purposes of the
trust fund; provided moreover, that the year-end cumulative
financial balance of the trust fund shall constitute as the minimum.
matching amount of credit available to the sugarcane industry
under Sec. 6 of R.A. 10000 (the Agri-Agra Reform Credit Act of
2009); and provided finally, that this trust fund shall be audited
by the Commission on Audit separately from the other
funds/accounts of PhilSuCor.

SEC. 5. Members of the Board of the Philippine Sugar Corporation--
Section 8 of P.D. 1890 is hereby amended as follows:

“(a) THE ADMINISTRATOR OF THE SUGAR REGULATORY
COMMISSION SHALL BE THE CHAIRMAN OF THE BOARD’;

‘ “(b) XXX

“(c) THE ADMINISTRATOR OF THE SUGAR REGULATORY
COMMISSION SHALL BE THE CHAIRMAN OF THE BOARD”;

ALL THE ELEVEN MEMBERS OF THE BOARD SHALL BE
NOMINATED BY SRA OF WHICH FIVE (5) SHALL COME FROM
THE SUGAR FARMERS SECTOR, FIVE (5) FROM THE SUGAR
MILLERS SECTOR AND ONE (1) FROM THE INTERNATIONAL
TRADER SECTOR;

SEC. 6. Transitory Provisions. - Upon the effectivity of this Act, the
positions in the Board of Directors of PHILSUCOR shall be deemed vacant, and
the President shall appoint new members based on the provision of this Act;
provided, however, the members of the Board shall hold over until the new
members are appointed.

SEC. 7. Implementing Agency. — The Sugar Regularoty Administration

+ (SRA) shall be the primary implementing agency of this Act. The SRA, together
with the PhilSuCor and representatives of sugar farmers, planters and mills,
shall formulate the implementing rules and regulations that shall, among
others, identify and establish the requirements and restrictions governing the
execution of the above purposes no later than three (3) months from the
effectivity of this Act.


SEC. 8. 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. 9. 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. 10. Effectivity. — 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,