The price of refined sugar that would be imported through the minimum access volume (MAV) could be P7 per kilogram (kg) cheaper than prevailing local retail prices, based on estimates made by an international agency.
In a report, the United States Department of Agriculture-Foreign Agricultural Service in Manila (USDA-FAS Manila) disclosed its computations on the possible wholesale price of imported sugar in the local market.
The USDA-FAS Manila computed the wholesale price using three different tariff levels that the Philippines currently extends to its trade partners: the Atiga rate of 5 percent for Asean sources, 50 percent for imports within minimum access volume (MAV) and 65 percent for outside the MAV.
The USDA-FAS Manila’s report came a few weeks after the national government announced that it is planning to utilize the MAV for refined sugar imports to boost domestic supply and arrest the skyrocketing price of the commodity. (Related story: https://businessmirror.com.ph/2022/12/22/government-to-tap-mav-scheme-for-sugar-imports/)
Based on its report, the USDA-FAS Manila’s computations showed that the derived wholesale price of imported sugar within MAV would be at P4,141.54 per 50-kg bag, P358.46 cheaper than the prevailing Manila wholesale price of P4,500 per 50-kg bag.
On a per kg basis, the wholesale price of imported sugar under MAV mechanism would be P82.83 compared to the prevailing P90 per kg price in the market.
Refined sugar imports that would enter outside the MAV mechanism, meanwhile, do not have a difference in terms of the prevailing wholesale price. The USDA-FAS Manila’s computation showed that the derived wholesale price of P4,470.82 per kilogram.
Meanwhile, the USDA-FAS Manila report showed that the cheapest imported sugar would be the ones arriving from Asean member-countries, which are levied with just a 5 percent tariff.
Based on its computations, the wholesale price of imported refined sugar from Asean would be P3,153.7 per 50-kilogram bag or just P63.074 per kilogram.
“If the Philippines were to honor its commitments under the WTO (World Trade Organization) and Asean, retail sugar prices are estimated to decline by $480/MT (metric ton) from Asean and $128/MT, at 50 percent tariff or break-even at 65 percent tariff, if outside Asean,” the USDA-FAS Manila said in its Global Agricultural Information Network (Gain) report published recently.
Sugar millers’ opposition
Meanwhile, the Philippine Sugar Millers Association (PSMA) has expressed opposition to the proposed importation of 64,050 MT of refined sugar through the MAV mechanism.
In a letter addressed to Senior Agriculture Undersecretary Domingo F. Panganiban, the PSMA said it “respectfully” requests the reconsideration of the directive of President Marcos Jr. to allow the additional refined sugar imports.
The PSMA explained that the industry is currently at the peak of its milling season and prevailing prices for raw sugar have started to dip since November.
“To help calm the market, the PSMA recommends that the Sugar Regulatory Administration comes out with its latest estimated production and ending balances for the crop year, and based thereon formulate an import program—for consultation with stakeholders and for implementation at close of milling—that adequately addresses any deficiency in production of raw and refined sugar and is equitable to producers and consumers,” it said in its letter, a copy of which was obtained by the BusinessMirror.
The BusinessMirror earlier reported that the Department of Agriculture was still contemplating the most efficient way of bringing in the additional sugar imports that will help temper local retail prices. (Related story: https://businessmirror.com.ph/2023/01/02/govt-mulling-over-mav-scheme-for-sugar-imports/).
Image credits: Nonie Reyes