Philippines faces worsening sugar problems
MANILA, Philippines – The country has been rocked by a sugar shortage in recent months following the sector’s missed production target due to weather disruptions and high input costs, as well as the delayed implementation of an import order for sweetener.
This pushed retail sugar prices above 100 pesos per kilogram in wet markets and grocery stores, adding to concerns among Filipinos already reeling from the impact of soaring food prices.
The latest data from the Philippine Statistics Authority (PSA) showed that the inflation rate accelerated to 6.4% in July, mainly due to faster increases in the prices of non-food and beverages. alcoholic.
Food and non-alcoholic beverage inflation rose to 6.9% last month from 6% a month ago. In particular, fish, chicken, sugar, bread and baked goods – which use a lot of sugar – have contributed to higher inflation.
As an interim measure to address the supply shortfall and soaring prices, the Sugar Regulatory Administration (SRA) is pushing for the import of 300,000 metric tons (MT) of sugar.
The volume was based on recommendations from stakeholders in meetings conducted by the agency and the Department of Agriculture (DA) over the past two weeks, SRA Administrator Hermenegildo Serafica said during a briefing. a telephone interview with The STAR.
“There is no approval yet. This will be presented to the Board of Directors (SRA) and the President,” he said.
In a text message to The STAR, National Federation of Cane Growers (NFSP) President Enrique Rojas said there was a shortage in the domestic supply of sugar, both refined and raw, as evidenced by soaring retail sugar prices, which have already reached an all-time high of 100 pesos per kilo for refined sugar.
Prices have doubled from the suggested retail price of 50 pesos per kilogram for refined sugar and 45 pesos per kilogram for raw sugar due to tight supply and increased demand as the economy s opened further.
SRA data showed that as of July 29, retail prices for raw sugar in Metro Manila had peaked at 80 pesos per kilo in supermarkets and 82 pesos per kilo in wet markets – compared to a high of 56.85 pesos and 48 pesos per kilogram, respectively, last time. year.
Refined sugar prices, on the other hand, peaked at 115 pesos per kilo in supermarkets from just 60 pesos per kilo last year, and soared to 96 pesos per kilo in wet markets from 68 pesos per kilo there. a year ago.
“This price level is a huge burden on the budget of ordinary households, especially now that our country is still reeling from the effects of the COVID-19 pandemic,” Rojas said.
Along with consumer needs, there is a massive need for sugar on the industrial side as they need to keep their manufacturing plants running for employees to help them keep their jobs, Serafica said.
The SRA expects the current crop year to fall further to 1.982 million tonnes – from an earlier estimate of 2.072 million tonnes – due to the onslaught of typhoons and the effects of La Niña.
As of July 24, SRA data showed sugar production reached 1.792 million metric tonnes, 16.18% lower than the 2.139 million tonnes produced in the previous crop year.
In line with the lower sugar production estimate, the SRA implemented a sugar import program in February for 200,000 metric tons of refined sugar under Sugar Ordinance 3 (SO3).
However, its implementation has been blocked by Temporary Restraining Orders (TROs) issued by two Regional Trial Courts (RTCs) in Negros Occidental, as requested by some sugar groups.
For now, Serafica said there was no other way to solve the problem than to import sugar.
To determine the country’s sugar needs, he said industrial users were asked to submit their usage data – their actual usage from January to July and their projected usage through December – by Tuesday.
Sugar producers said the import would help ease the shortage and stop the rise in retail sugar prices.
In a text message to The STAR, Luzon Federation of Sugarcane Growers Association (LuzonFed) President Arnel Toreja said there was a need to import refined sugar to immediately address rising domestic prices and stabilize the offer.
Rojas said the NFSP lent itself to importation to ease the burden on domestic consumers and industrial users.
“We have consulted with our members nationwide and reached consensus to allow the import of 300,000 tonnes of sugar, half of which should be for domestic consumers and the other half for industrial users, in accordance with the production figures and projections presented to us by the SRA,” he said.
However, Rojas said imports should arrive no later than September 30 so that the incoming sugar supply does not negatively impact 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 according to the intended market so that the imported sugar has the greatest impact in lowering the retail prices of sugar in the domestic market. “, did he declare.
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 factories are about to start milling.
Sugar producers are not against importing, like what happened with SO3 in February, because there is a real need to increase domestic supply.
He said there was vehement opposition to SO3 as the SRA only favored certain sectors such as beverage, biscuit and confectionery companies.
“If it had been properly regulated under the SRA’s mandate, this sugar problem would not have happened,” Toreja said.
For this new round of imports, the LuzonFed official said the SRA should open it to accredited traders with track records and the use should not be limited to a specific sector but to the domestic market as a whole.
“This will ensure a greater impact on domestic prices rather than just reducing production costs for specific sectors, eg beverages/confectionery,” he said.
Meanwhile, Unyon ng mga Manggagawa sa Agrikultura (UMA) urged the government to improve domestic production and find alternatives to importing sugar.
Other possible measures are: the capping of the retail price of sugar, the inventory of the warehouses of traders and millers to determine the exact figures of the buffer stocks, the granting of subsidies to small planters in particular for fertilizers and the elimination quota imposed by the United States. which will make the Philippines less dependent on sugar imports.
“The SRA’s approval to import 300,000 metric tons of sugar would bankrupt the remaining small planters and reduce them to laborers in the cane fields, the majority of whom are paid slave wages,” he said. WBU spokesman John Milton Lozande.
Serafica said the SRA and DA held another meeting with stakeholders this week to discuss the introduction of an SRP of 90 pesos per kilogram on retail sugar prices.
Hopefully the new round of sugar imports will resolve the shortage and temper rising prices of the sweetener at the retail level over the coming weeks and ahead of the next harvest season, the SRA chief said.
With the official growing season next month, some farmers have already started harvesting sugarcane, signaling the reopening of sugar factories.
“There are sugar factories that have started to accept sugar cane. We expect another sugar refinery to start operating this week. This sugar will arrive in Manila in about two weeks as they still have to store in their warehouses, traders will have to bring them here via roro,” Serafica said.
But since importing is only a band-aid solution, the new administration faces the challenge of increasing local sugar production, among other problems in the agricultural sector.
In addition to natural calamities, sugar production – and the entire agricultural sector – is besieged by rising prices for fertilizers and petroleum products.
With the new growing season starting on September 1, Serafica said another meeting is scheduled this week with stakeholders to discuss production estimates and ways forward.
“They will say what their projections are for the next crop year,” he said.
For its part, the SRA is stepping up the distribution of high-resilience seeds to withstand climatic disturbances, but not all areas are yet served.
“The production of sugar cane is very dependent on weather conditions. If there is too much rain, it will affect the yield. If it’s too hot, it also affects production,” Serafica said.
However, UMA criticized the SRA for blaming the country’s low sugar yield solely on the damaging effects of Typhoon Odette.
He added that the low sugar yield was also largely caused by the sharp rise in fertilizer prices, which dampened the production of outgrowers, especially small ones.
“If the SRA had recognized this problem early on, they would not have had to resort to importing sugar,” Lozande said.
The group cited the United Sugar Producers Federation’s (Unifed) call on November 15 for the government to subsidize the cost of fertilizer.
He said the DA could have done this by immediately issuing a voucher for 1,000 pesos per bag of fertilizer, providing relief to sugar growers who had been badly hit by the continued rise in the cost of the product.
A bag of fertilizer now cost 3,200 pesos compared to only 1,800 pesos previously.
Industry sources said the country needs to start modernizing the sugar sector and put in place concrete and sustainable long-term actions to address the crises that continue to plague the agricultural sector.