A local sugar producer told President Ferdinand Marcos Jr. that stocks in the country are enough to satisfy market demand and that importation will not be needed if sugar allotted to the United States is reclassified to allow its supply to the domestic market.
The Sugar Regulatory Administration, the agency regulating the sector, however, had resisted the conversion and preferred that the product be imported.
Central Azucarera de San Antonio Inc. chairman and president Antonio Stephan Chan, in a letter dated 4 July 2022, wrote Mr. Marcos to divulge that warehouses of affiliated firms CASA and Central Azucarera de Bais Inc. alone have 9,679 metric tons of outstanding and unshipped export raw sugar in the country that could be tapped by the SRA to augment domestic sugar supply.
In the letter, Chan said the sugar shortage situation “is a product of the SRA’s policies that favor traders at the expense of both the producers and consumers.”
Both sugar mills, two of the 27 existing local producers, are owned by the family of popular Filipino singer Jose Mari Chan.
Chan said the SRA had projected a sugar supply deficit as early as last January which was the same month that sugar producers appealed to the SRA administrator and the agency’s board, then headed by Agriculture Secretary William Dar, “to authorize the reclassification of 9,679.232 metric tons of outstanding Class A to Class B raw sugar to be sold in the domestic market in order to ease the shortage situation.”
Without stating a reason, SRA Administrator Hermenegildo Serafica, who recently resigned over the controversy on Sugar Order 4, cited an SRA board resolution on 13 June 2022 denying the proposal.
“It is incomprehensible that the said request was denied even after the SRA has officially announced in the print media that there is a severe shortage and we shall run out of ‘even of raw sugar’ by August 2022,” according to Chan.
Chan added: “No sugar-producing country in the world exports their sugar when domestic prices are higher and when the sugar supply is clearly insufficient to cater to the needs of the domestic market.”
The Philippines is a major participant in the US sugar quota scheme and has previously exported half of its production to the country, although its allocation has declined radically over the years.
In 2019, the United States was the only export market for Philippine raw cane sugar, valued at approximately $36 million, and accounting for 3.5 percent of total US sugar imports.
Philippine raw sugar output from 2019 to 2020 declined from 2.1 million MT to 2.025 million MT, the lowest in a decade.
The letter also revealed that “there is raw sugar quedanned as Class A that was bought cheap from local producers, found their way into the domestic market and sold at a much higher price.”
Chan said the SRA before the term of Serafica and Dar, “implemented what is known as a conversion program whereby raw sugar, previously quedanned as Class A for export to the US market were recalled and reclassified as Class B raw sugar so that the same can address shortages in sugar supply.”
“The SRA’s propensity to allocate export sugar, compounded by its import and export replenishment programs contributed to the current shortage situation,” he explained.
Local sugar sector slumped
Daily Tribune columnist and industry commentator Bernie Lopez related that over the last two decades, the Philippines has experienced a growing deficit in sugar production due to factors such as the failure of land reform, inadequate government support, increasingly unpredictable weather conditions, and industry-wide resistance to change. The Philippines sank from Asia’s largest exporter down to a net importer. Thailand, which in the ‘60s learned from the local expertise in sugar production, now supplies the country with most of its imported sugar.
Over the last decade, the SRA had kept a policy of allocating 5 percent to 10 percent of locally-produced sugar to fulfill the US export quota. Thus, the industry exports even with the local shortage.
“SRA’s pretext was, if we fail to fulfill the quota, the US would permanently remove our quota,” he noted.
A letter dated 9 January 2013, from the Office of the United States Trade Representative to Harry Kopp, Washington representative of the US-based Sugar Alliance of the Philippines, belied the SRA claim that the quotas need to be fully met each year.
The letter signed by USTR chief Agricultural Negotiator Ambassador Islam Siddiqui said, “if the Philippines were to elect not to fill its quota share in 2013, it would not affect its quota allocation in subsequent years.”
Chan said if importation is needed, it should be a calibrated program.
“For instance, the bulk of sugar importations would enter the country during the off-season months from July to September, with smaller volumes entering during the lean production months of May, June or October,” according to the letter.
He added that “absolutely there should be no importations” scheduled “during the peak season months of January to April.”