Sugar supply stabilization, not import liberalization, sought by food/agriculture processors, 105,000 MT allocation asked

October 14, 2019

Food and agriculture processors have asked for a sugar import allocation of an estimated 105,000 metric tons (MT) annually to stabilize their manufacturing input and raise their global competitiveness with heftily lower cost.

   The Philippine Chamber of Agriculture & Food Inc (PCAFI) and member  Philippine Food Processors &  Exporters Organization (Philfoodex) is asking Agriculture Secretary William D. Dar to grant a maximum of 10% sugar import allocation.

   This is out of the country’s annual sugar production placed at 2.1 million MT.  However, even just half of this amount, or 105,000 MT will be good enough to significantly raise food processors’ global competitiveness.

   It will cut sugar cost for food manufacturing from P55-P60 per kilo locally to P28-P30 per kilo in other South East Asian countries, particularly Thailand.

   PCAFI President Danilo V Fausto said this petition of PCAFI and PHilfoodex for an import allocation will be accompanied by an implementation mechanism to ensure it does not adversely affect local sugar farmers’ plight.

   “We’ll issue a petition to be submitted to Secretary Dar and President (Rodrigo) Duterte. We will also propose an implementation mechanism that will ensure this allocation will not go to the retail market but rather help our food producers become competitive,” said Fausto.

   Philfoodex President Roberto C. Amores said not even the entire 10% of production will be asked by processors.

   Initially, only 50% of each company’s sugar requirement based on its production program is proposed to be granted to the company.

   “We’re not talking about even 10% of the 2.1 million.  We’re not requesting for liberalization. We’re requesting for import allocation for stabilization for the cause of processors,” Amores said.

   “As a processor, you will submit your requirements based on your production program and sales. And you will be given only 50% of your requirement (not 100%).”

   This initial allocation per processor will establish credibility of the processor. 

   The processor should  guarantee that the sugar import will be used solely as input for its food manufacturing, not for retail to the domestic market (adversely affecting sugar farmers’ income).

   Dr. Rolandy Dy, Center for Food & Agribusiness (University of Asia & the Pacific) chief and PCAFI member, said the sugar import allocation for local food processors is necessary.

   “We’re not competitive.  Never mind (if we’re not competitive in) softdrinks which is not exportable because softdrinks are heavy. The problem is we’re not competitive in products like biscuits, candies,” said Dy.

   Filipino food processors can hardly compete with ASEAN biscuit manufacturers.

   “I’m talking about those 4,500 food processors who are paying P55 versus P28. When Apollo biscuits from Malaysia (or Indonesia) arrive here, it’s only P10. Pero pag gumawa si Mang Pandoy ng Apollo biscuits nya, P15 ang puhunan nya,” said Amores.

   (If Filipino businessman Mang Pandoy produces his own Apollo biscuit, his cost is at P15).

   Some groups have opposed such allocation due to past experiences when some imports for manufacturing input have been diverted to the domestic market. 

   This concerns not only sugar, but other imports such as carabeef (carabao meat from India).

   But a proven effective mechanism to control such diversion is to make the food manufacturers themselves to police their ranks, PCAFI said.

   Fausto said members of PCAFI, Philfoodex, and the Philippine Chamber of Commerce and Industries (PCCI) may be tasked to monitor if the import allocation is being diverted to the market.

   Amores stressed food processors’ import need is not for liberalization.

   “I would like to correct the impression that this is liberalization. The sugar industry in Negros has been writing all over the news that the private sector led by me is espousing liberalization. It’s not,” he said.

   “We all know that since our sugar sector is not competitive, we can’t be self-sufficient in sugar as sugar area is declining.  But we have to admit some traders are riding on this issue in the guise of protecting farmers.”

   Also, it is initially proposed that the state-owned Philippine International Trading Corp (PITC) be the one to do the importation.

   Philfoodex lamented that while the Sugar Regulatory Administration (SRA) had once approved sugar importation for 170,000 MT, this volume has not benefited food processors.

   Since SRA issued a memorandum allowing this volume to be designated as “reserve,” some of this sugar found their way into the domestic market since reserve sugar is allowed to be released domestically.

   “But we have not benefitted from this allocation,” said Amores. (Melody Mendoza Aguiba)

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