Philippines faces worsening sugar woes

• Aug 08, 2022

MANILA, Philippines — The country has been reeling from a sugar shortage in the past few months following the sector’s missed production target caused by weather disturbances and high input costs, as well as delayed implementation of an order to import the sweetener.

This has pushed retail prices of sugar beyond P100 per kilogram in wet markets and grocery stores, adding to concerns of Filipinos already reeling from the impact of soaring food prices.

Latest data from the Philippine Statistics Authority (PSA) showed the inflation rate accelerated to 6.4 percent in July, driven mainly by the faster increase in food and non-alcoholic beverage prices.

Inflation for food and non-alcoholic beverages went up to 6.9 percent last month from six percent a month ago. In particular, fish, chicken, sugar, and bread and baked products – which heavily use sugar – contributed to the higher inflation.

As a stopgap measure to address the supply deficit and spike in prices, the Sugar Regulatory Administration (SRA) is pushing for the importation of 300,000 metric tons (MT) of sugar.

The volume was based on recommendations of stakeholders from meetings conducted by the agency and the Department of Agriculture (DA) in the past two weeks, SRA administrator Hermenegildo Serafica said in a phone interview with The STAR.

“There’s no approval yet. This will be presented to the (SRA) board and the President,” he said.

In a text message to The STAR, National Federation of Sugarcane Planters (NFSP) president Enrique Rojas said there is an existing shortage in the domestic supply of sugar, both refined and raw, as evidenced by the spike in retail sugar prices, which has already reached an unprecedented P100 per kilo for refined sugar.

Prices have doubled from the P50 per kilogram suggested retail price for refined sugar and P45 per kilo SRP for raw sugar due to tight supply and higher demand as the economy opened further.

SRA data showed that as of July 29, retail prices of raw sugar in Metro Manila reached a high of P80 per kilo in supermarkets and P82 per kilo in wet markets – compared with a high of P56.85 and P48 per kilogram, respectively, last year.

Prices of refined sugar, on the other hand, peaked at P115 per kilo in supermarkets from just P60 per kilo last year, and soared to as high as P96 per kilo in wet markets from P68 per kilo a year ago.

“This price level is a huge burden to the budget of ordinary households, particularly now that our country is still reeling from the effects of the COVID-19 pandemic,” Rojas said.

Apart from consumers’ needs, there is a massive need for sugar on the industrial side as they need to make their manufacturing plants run for employees to help keep their jobs, Serafica said.

The SRA expects the current crop year to drop further to 1.982 million MT—from an earlier estimate of 2.072 million MT—due to the onslaught of typhoons and effects of La Niña.

As of July 24, SRA data showed sugar production   reached 1.792 million MT, 16.18 percent lower than the 2.139 million MT produced in the previous crop year.

In line with the lower sugar production estimate, the SRA implemented in February a sugar importation program for 200,000 MT of refined sugar under Sugar Order 3 (SO3).

However, its implementation was stalled by temporary restraining orders (TROs) issued by two regional trial courts (RTC) in Negros Occidental as sought by some sugar groups.

For now, Serafica said there is no other way to address the problem but to import sugar.

To determine the country’s sugar needs, he said industrial users have been told to submit their usage data—their actual usage from January to July and their projection of usage until December—until Tuesday.

Sugar producers said that importation would help ease the shortage and arrest the increase in the retail prices of sugar.

In a text message to The STAR, Luzon Federation of Sugarcane Growers Association (LuzonFed) president Arnel Toreja said there is a need to import refined sugar to immediately address the rising domestic prices and stabilize supply.

Rojas said the NFSP is amenable to importation to ease the burden on household consumers and industrial users.

“We consulted our members nationwide, and we have reached a consensus to allow the importation of 300,000 MT of sugar, half of which should be for household consumers and the other half for the industrial users, in consonance with the production figures and projections presented to us by the SRA,” he said.

However, Rojas said imports should arrive not later than September 30 so that the incoming sugar supply would not adversely impact the millgate prices at the start of the new milling season.

“Once the imported sugar enters the country, we expect the SRA to classify the sugar accordingly to the intended market so that the imported sugar will have the best impact on lowering domestic retail sugar prices,” he said.

Moreover, imports should only cover refined sugar and should be regulated to cover all sectors.

Toreja, however, said there is  no need to import raw sugar as some mills are about to start milling.

Sugar producers are not against importation—as what happened with SO3 in February—since there is really a need to augment domestic supply.

He cited there was vehement opposition for SO3 as the SRA only favored certain sectors such as beverage and biscuit and confectionery companies.

“If that was regulated properly as part of SRA’s mandate, this sugar problem wouldn’t have happened,” Toreja said.

For this new round of importation, the LuzonFed official said the SRA should open this to accredited traders with track record and usage should not be confined to any specific sector but to the domestic market as a whole.

“This will ensure greatest impact on domestic prices rather than simply lowering production costs for specific sectors e.g. beverage/confectionary,” he said.

Meanwhile, Unyon ng mga Manggagawa sa Agrikultura (UMA) urged the government to improve domestic production and find alternatives to sugar importation.

Other measures that can be looked are:  price cap on the retail price of sugar, inventory of traders and millers’ warehouses to determine the exact figures of buffer stocks, grant of subsidies to small planters especially for fertilizers, and scrapping the US-imposed quota which will make the Philippines less dependent on sugar importation.

“The SRA’s endorsement to import 300,000 metric tons of sugar would bankrupt the remaining small planters and reduce them to sugar field workers, majority of whom are paid slave wages,” UMA spokesperson John Milton Lozande said.

Serafica said the SRA and the DA have set another meeting with stakeholders this week to discuss putting a P90-per-kilogram SRP on retail prices of sugar.

Hopefully, the new round of sugar importation will address the shortage and temper the rising prices of the sweetener at the retail level in the next few weeks and ahead of the next cropping season, the SRA chief said.

While the official cropping season is next month, some farmers have already started harvesting sugarcane, signaling the reopening of sugar mills.

“There are sugar mills that have started accepting sugar cane. We expect another sugar mill to start operating this week. These sugar will get to Manila in around two weeks because they still have to stock in their warehouses, traders will have to bring them here via roro,” Serafica said.

But since the importation is only a band-aid solution, the new administration is faced with the challenge of raising local sugar production—among other problems in the agricultural sector.

Apart from natural calamities, sugar production—and the whole agricultural sector—is besieged by the rising costs of fertilizer and petroleum products.

With the new cropping season starting on September 1, Serafica said another meeting is set this week with stakeholders to discuss production estimates and ways forward.

“They will say what are their projections in the next crop season,” he said.

For its part, SRA is intensifying the distribution of high resilient seeds to withstand weather disturbances but not all areas can be reached as of yet.

“Sugarcane production is very dependent on weather conditions. If there’s too much rain, it will affect output. If it’s too hot, it also affects production,” Serafica said.

However, UMA slammed the SRA for pinning the blame for the country’s low sugar yield solely on the adverse effects of Typhoon Odette.

It said the low sugar yield was also largely caused by the steep rise in fertilizer prices, which curbed the production of planters, especially small ones.

“Had the SRA acknowledged this problem early on, it would not have had to resort to sugar importation,” Lozande said.

The group cited the call of the United Sugar Producers Federation (Unifed) as early as November 15 last year to government to subsidize the cost of fertilizers.

It said the DA could have done so by immediately issuing a P1,000 voucher per bag of fertilizer, providing relief for sugar farmers who had been gravely affected by the continued rise in the  cost of the commodity.

A sack of fertilizer now stood at P3,200 from only P1,800 previously.

Industry sources said the country needs to begin modernizing the sugar sector and lay down long-term, concrete, and sustainable actions to address the crises that continue to hamper the agricultural sector.

Source: https://www.philstar.com/business/2022/08/08/2201002/philippines-faces-worsening-sugar-woes