The Department of Finance (DOF) is pushing for the relaxation of import rules on imported sugar to ease the entry of imports to pull down elevated prices of the commodity.
At a news briefing on Tuesday, Finance Secretary Benjamin E. Diokno disclosed that one of the short-term measures to address the country’s accelerating inflation is by removing the quantitative restriction (QR) on sugar.
Diokno said the removal of the QR could be done through an executive order (EO).
A QR is a non-tariff measure (NTM) that limits or restricts the volume of a given commodity or goods that can enter the country.
“The relaxation of quantitative import restrictions on sugar will ease supply pressures and make sugar more affordable for Filipino consumers,” Diokno said in his speech delivered during the sectoral meeting with President Ferdinand R. Marcos Jr. on Tuesday.
“This will also secure the continuous operations and competitiveness of the food and beverages manufacturing subsectors, whose key raw materials include sugar. It is important to note that these sub-sectors account for an average of 52 percent of the total gross value-added of the sector from 2010 to 2021,” Diokno added.
Industry experts told the BusinessMirror that the use of the EO could be aimed at amending the charter of the Sugar Regulatory Administration (SRA), which was created through EO 18 series of 1984.
The present charter of the SRA empowers it to totally regulate the entry and movement of both local and imported stocks in the country. Furthermore, the SRA’s power to control the importation of sugar was strengthened by the Sugar Industry Development Act of 2015.
In the past years, the importation of sugar was only allowed upon the issuance of a sugar order (SO) by the SRA board that would authorize an import program. The absence of such approval would mean that imported sugar that will enter the country is smuggled or illegal.
Citing estimates by the agriculture department, Diokno said the country is set to suffer a shortfall of 73,546 metric tons in refined sugar supply by August 31 or the end of the sugar crop year 2022-2023.
The shortage, Diokno pointed out, would continue to “exert pressure on retail prices of refined sugar” that has remained above P100 per kilogram today due to domestic supply woes.
“With persistently high sugar inflation, which increased by 38.8 percent in January 2023, there is an urgent need to improve sugar supply,” he said.
This was not the first time that the DOF pushed for easing of import controls on sugar or even deregulating or liberalizing the whole industry altogether.
The agency was previously keen on liberalizing the sugar industry akin to what the rice sector experienced in 2019 to improve market competition that could result in more competitive pricing of the commodity in the retail market.
The BusinessMirror earlier reported that the spike in the retail prices of refined sugar last year revived talks among pundits and industry stakeholders to finally open up the domestic sugar market to foreign competition. (Related story: https://businessmirror.com.ph/2022/08/04/skyrocketing-sugar-prices-stoke-industry-liberalization-stakes/
In 2019, the National Economic and Development Authority (Neda) commissioned Brain Trust Inc. to conduct an assessment on the country’s sugar industry. The study showed that SRA’s “tight control” over the sugar industry impeded its growth.
Diokno disclosed that the rice trade liberalization law remains as the key model in opening up the domestic market of other commodities, such as sugar, to foreign competition. In doing so, any tariff collections from imported sugar would be channeled to the domestic sugarcane industry to improve local productivity.
