Sugar rush

The row over sugar imports has but one bone of contention: Is there really a shortage of sugar?

We really need to first grasp this basic question.

Any other issues regarding the sugar fracas — like presidential embarrassment over “illegal” actions of government functionaries and proclivities of sugar smugglers — are entertaining peripherals. Why do you think Mr. Marcos Jr. is leaving the probe of such issues to Congress clowns?

Anyway, if we are to go by the rare joint statement of the country’s top soft drinks makers, there is a shortage. In their case, a refined sugar shortage, an ingredient with which they can’t do without. Pretty much the same goes for the country’s candy makers, too.

Mr. Marcos Jr., however, insists the country has a sufficient supply of sugar and there is no need to import just yet.

But after sitting down with food manufacturers on Monday, Mr. Marcos Jr. broadly hinted of a looming sugar shortage when he suggested his government might import 150,000 metric tons of sugar in the event supplies dwindle in October.

Did he have a change of heart? It certainly did look like he did since Mr. Marcos Jr.’s remarks buoyed sentiments of food processing companies.

“The importation will give the food processors a breather,” Philippine Chamber of Commerce and Industry president George Barcelon says.

Nonetheless, another food industry group says the October import plan might come too little, too late for some smaller food processing industries.

Kissinger Sy, president of the Philippine Confectionery, Biscuit, Snacks Association also points out the import plan coincides with the sugar harvest season, and he fears any large drop in local sugar prices could trigger angry responses from sugar farmers.

“The best time to import would have been in June, July and August when the sugar mills are closedt,” Sy says.

With this observation, we now need to straighten out some basic facts about the present state of the sugar industry.

The country is not a regular sugar importer and only allows importation of the commodity when the government declares a shortage.

In past years, the sugar industry ably satisfied local sugar demand. This despite the fact that for nearly a decade local sugar prices were way above world prices on sugar.

Such high domestic sugar prices have not been adequately explained nor addressed. But there are hints the inefficient industry — also notorious for paying sugar workers a pittance — is a powerful cartelized industry dictating prices and supplies many politicians court.

Anyway, the industry went on its merry way. It even got a big boost when a Duterte-era tax law imposing excise taxes on drinks containing high fructose corn syrup forced large sweetened beverage companies to switch to local sugar to avoid taxes.

But this year, sugar production fell off, leading to marked shortages in recent weeks and retail prices soared to as much as P100 per kilo in wet markets and grocery stores.

Mr. Barcelon claims production fell largely because the industry suffered from recent typhoons and galloping costs of fertilizers.

Government data does show sugar production in the first quarter of 2022 slid down 10.1 percent year-on-year to 10.46 million metric tons.

As such, in a report released last April, the US Department of Agriculture said it forecasts Philippine sugar production to fall to two million metric tons for marketing year 2023 (September 2022 to August 2023) due to expensive fertilizer and fuel.

To bridge this year’s shortfall, the Philippines is forecast to import 275,000 MT of sugar, up from the 175,000 MT shortfall of the previous year, the USDA said.

Experts say bridging shortfalls is merely a stop-gap solution. It does not in any way detract from the need to have higher and efficient productivity in the sugar industry. Upping productivity, however, needs time and effort.

Apparently, however, sugar barons didn’t see it this way. Probably fearing imports will further erode their clout, they managed to stop sugar imports, which the previous government set in motion last year, compounding supply woes.

But Philippine Sugar Millers Association president Pablo Lobregat on Monday admitted importation is now necessary since that earlier import order stopped by the courts resulted in high sugar prices and shortages.

So, will there be sugar imports soon, albeit in lower volumes? I believe so.



Leave a Reply

Your email address will not be published. Required fields are marked *