The government must allow the importation of 100,000 metric tons (MT) of refined sugar to immediately fill up the demand of industrial users for the sweetener and halt the surge in local sugar prices.
The Philippine Sugar Millers Association (PSMA) said this was the recommendation of the Philippine Sugar Refiners Institute (PSRI) to the Sugar Regulatory Administration (SRA).
PSMA Executive Director Francisco D. Varua said the PSRI submitted its recommendation to SRA Administrator Hermenigildo R. Serafica on May 24, a day after the agency ordered the conversion of unshipped “D” sugar into “B” sugar to boost domestic supply.
“The recommendation of the PSRI to the SRA is to allow the immediate importation of a minimum of 100,000 MT of refined sugar. This was with the backing of the whole sugar industry,” Varua told the BusinessMirror on Thursday.
“[That volume] will put [enough] supply in the market and make it available to industrial users,” he added.
Varua said the Philippines could source from Thailand, where sugar is cheaper.
The PSMA official is optimistic that the SRA will support the PSRI’s recommendation as it has the backing of the local sugar industry.
“Admin Serafica will see that the industry is in support [of the importation] to address the problems of industrial users,” he said.
Varua added that the local sugar industry is hopeful that their recommendation would immediately reach Agriculture Secretary Emmanuel F. Pinol’s table.
Piñol disclosed on Thursday that Coca-Cola Femsa Philippines had complained to Socioeconomic Planning Secretary Ernesto M. Pernia that sugar farmers are not supplying them with the volume they have committed.
“Coke is complaining to the Neda [National Economic and Development Authority] because the problem right now is that farmers cannot supply Coke,” he told reporters in an interview on the sidelines of the Agriculture Trade and Investment Forum at AG New World Hotel in Manila on May 24.
“Pernia called me asking if there is a sugar shortage. I said, none,” Piñol added.
Pernia confirmed to the BusinessMirror that executives of the beverage giant had approached him to tell him about their sugar supply challenges.
He said Coca-Cola Femsa executives lamented the failure of local sugar suppliers to meet their demands.
“It appears to be [an] artificial shortage as suppliers, traders, millers speculate on rising sugar price. Secretary Piñol is convening a meeting of millers, suppliers, traders, stakeholders to iron out the issue,” Pernia said.
Coca-Cola Femsa Philippines Director for Corporate and Regulatory Affairs Juan Lorenzo Tañada confirmed to the BusinessMirror that the company is experiencing supply issues.
“We’ve expressed some concerns about our supply chain to relevant government agencies, such as the SRA,” Tañada said via SMS.
“As sugar is our main sweetener, we cannot help but emphasize the necessity of its stable supply in order to ensure our continued unhampered operations,” he added.
Tight supply
While the supply of refined sugar is tight, Varua assured that there is enough raw sugar to meet domestic demand. “There are a lot of [sugar] stocks but in raw form.”
“Refining was delayed and refiners lacked bagasse to sustain their operations as a result of lower sugarcane output, coupled with the delay in harvesting due to the lack of sugarcane cutters,” he added.
SRA Board Member Roland B. Beltran told the BusinessMirror that sugar refiners are facing a tightness in supply of raw sugar due to unreasonable high prices.
To arrest the increasing prices of raw sugar, the SRA issued Sugar Order (SO) 9 on May 23, which authorized the conversion of D sugar (for export) to B sugar (for the domestic market), to boost the supply of raw sugar.
“It is in the national interest to institute measures that will bring about stabilized prices of B domestic sugar, which are reasonably profitable to the producers and fair to the consumers,” the SRA said in SO 9, a copy of which was obtained by the BusinessMirror.
“Following the directive of the President to prioritize the needs of the domestic market, the secretary of agriculture directed the SRA to manage the domestic sugar supply to ensure ample and stable supply of sugar for the domestic market, particularly during the off-milling season and early months of the incoming million season,” the SRA added.
Beltran said as of May 24 the SRA has verified 59,189.42 MT of D sugar, while about 14,120.39 MT remained unverified.
Under SO 9, the SRA said the volume that will be allowed to be converted to B sugar are only those D sugar quedans which would be verified until May 31.
However, Varua said the volume of unshipped D sugar to be converted to B sugar is insufficient to meet the demand of industrial users, prompting local industry groups to recommend importation.
He said the importation of refined sugar would allow domestic prices to go back to a “reasonable” level of P1,800 per 50-kilogram bag, from its current average of P2,500.
The attached agency of the Department of Agriculture said that “market forces are driving domestic prices of sugar up due to a drop in the estimated production for crop year 2017-2018.”
Piñol said the tightness in sugar supply was due to traders who resorted to speculation following the rise in the price of the sweetener.
“Local sugar producers speculated because the prices of sugar right now are high. They do not want to sell their committed sugar volume to Coke anymore,” he said.
“I will have to meet with them on Monday. I have called a meeting with the stakeholders and I will ask them if they are reneging on their commitment to supply Coke,” Piñol added.
With Cai U. Ordinario
Image credits: Nonie Reyes