BUSINESS groups are urging the government to allow importation of sugar to address the shortage in supply and the increasing prices of refined sugar, sweetened food and beverage products.
With the new order of President Ferdinand “Bongbong” R. Marcos Jr. to revive and modernize the agriculture sector, business groups hope that the sugar industry will be given the right technology and farming support to increase its production in order to meet domestic requirements.
However, the business groups said, “while we have yet to address the productivity issue, importation at this point is the alternative recourse to mitigate the negative impact on the supply.”
In a statement on Wednesday, the Philippine Chamber of Commerce and Industry (PCCI), Philippine Food Exporters (Philfoodex), and Philippine Exporters Confederation (Philexport) said they are calling on the government to immediately look into the crippling supply of sugar, which they said is expected to hurt both the local food processors and manufacturers and the consumers in general.
According to the Sugar Regulatory Administration (SRA), the cost of refined sugar in Metro Manila is approximately P115 per kilogram.
“It is likely to spike up if supply is not immediately addressed,” said the business groups.
The business groups stressed that while they recognize the need to protect the country’s sugar producers and millers, “we need to strike a balance and consider expanding our import requirement before the situation worsens, which could lead to higher inflation.”
Refined sugar is an essential component in food manufacturing. Based on Philfoodex data, the annual production is at 771,000 metric tons (MT) with a carryover stock of 144,000 MT. This gives a total refined sugar stocks balance of 915,000 MT.
However, the business groups said the country’s demand for annual refined sugar is at 943,000 MT. At the same time, the monthly estimated demand is 83,000 MT.
The business groups said in December 2021, the government allowed the importation of 200,000 metric tons. “This amount was only distributed to and consumed by industrial users, and no imports had reached the domestic food processors and retail market.”
According to SRA, the sugar shortage has worsened as local production missed forecasts due to a delay in planned imports.
“The raw sugar output on August 31, which is the crop ending year, is estimated at 1.8 million tonnes. This is below the previous estimated 1.98 million tonnes, compared with the average annual demand of 2.03 million tonnes in the past three years,” said the business groups.
In terms of employment, the business groups noted that 2019 SRA data showed that around 700,000 and almost 6 million Filipinos were directly and indirectly employed in sugar production, respectively.
Further, Food and Beverage manufacturing companies are responsible for sustaining 4 million jobs while Food and Beverage alone employs 3.2 million, and its retail sector accounted for the most considerable portion, employing 2 million people.
The business groups said that since 2015, they have been asking SRA to allow domestic food manufacturers and processors to import low-cost sugar to help them level the playing field against imported sugary products entering the country at cheaper prices.
However, the business groups stressed this “long-standing advocacy” has not progressed, and SRA instead issued Sugar Order No. 1, which they said intends to allocate 100 percent of sugar production to the domestic market for Crop Year 2021-2022.
“In our March 2022 joint letter to SRA, we requested an allocation of 10,000 bags of 50 kg/bag of refined sugar per month to serve the needs of the local food processors due to this new policy,” said the business groups on Wednesday. But, while they believe that the new sugar allocation may benefit and protect the farmers, they said “it puts the greater majority of consumers and the food manufacturing sector at a disadvantage.”
The business groups explained that this is because the “B” sugar allocation will be based on current domestic prices, which are considerably higher, ranging from P85 to P115 per kilo compared with world market prices which only cost around P32-P35 per kilo.
They said this is putting the country behind its ASEAN counterparts which enjoy lower costs of sugar inputs sourced from the world market.