The declaration by the Department of Agriculture and Sugar Regulatory Administration that there would be no more sugar importation until the end of the harvest next year has failed to arrest the drop in mill gate sugar prices, two groups said.
The Sugar Council and National Congress of Unions in the Sugar Industry (NACUSIP) aired their concern on the drop in mill gate prices in a press statement on Sunday, Nov. 17.
Agriculture Secretary Francisco P. Tiu Laurel Jr. said last week that there is no immediate need for additional imports, as domestic supply of raw and refined sugar remain stable and sufficient to meet projected needs.
“Given the current situation, (Sugar Regulatory) Administrator (Pablo Luis) Azcona and I agreed that a decision on sugar importation could be delayed until after May, when the current harvest season ends,” Laurel said.
The statement was apparently meant to allay fears that more importation would cause a further drop in sugar prices, but it failed to explain why sugar prices have steadily dropped over the past few weeks, the Sugar Council and NACUSIP said.
“At the Hawaiian Philippine Company sugar prices have dropped from P2,980.88/bag for Week Ending (WE) October 20, to P2,815.99/bag for WE November 10. That’s a price drop of P164.89/bag in only three weeks. In other mills, sugar prices dropped to much lower rates as early as WE November 3,” the two groups said.
An apparent decrease in demand has consequently caused the steady drop in prices, which is a concern which SRA should address, they said.
They reiterated their worry over current over-supply of imported and locally-produced sugar in the local market.
SRA REPLIES
SRA Administrator Pablo Luis S. Azcona said on Sunday that there is no oversupply of sugar in the country.
He said the drop in millgate prices were noted in Hawaiian Philippine Company and First Farmers, but prices were maintained in southern Negros mills and Victorias Milling Co. for two weeks.
Azcona said for the last few weeks the country’s “raw and refined sugar stock has been going down so the lowering of prices is unexplainable”.
SRA has nothing to do with marketing and pricing, he said.
The decision to import sugar was made in an August 6 meeting , which the Sugar Council purposely did not attend, Azcona said.
“It would help in the next stakeholder consultations they would attend so they would know the reasons behind the decisions being made,” he said.
“SRA’s data is accurate , and the declining stock levels are true,” he added.
The country’s refined sugar stock balance as of Nov. 10 this year was 314,817 mt, 191,000 of which was imported, Azcona said.
In the same period last year the country’s refined sugar stock balance was 506,307 mt, he said.
The country produces a lot less sugar than what is consumed so without the importation we would run out of supply, Azcona said.
He also pointed out that the country’s current raw sugar stock is only 147,000 mt.
PRICE DROPPING
The Sugar Council and NACUSIP said the SRA Supply-Demand Situation Report dated October 20 states that of the 240,000 mt imported refined sugar authorized by Sugar Order No. 5, Series of 2023-2024 signed on August 8, only 135,833.20 mt have entered the market and already mill gate prices are dropping down.
There is still a balance of 104,167 mt, they said.
“The Sugar Order recommends to eligible importers to bring their volumes in by Sept, 15, 2024 classified as C-sugar. Does this mean that the balance volume will remain classified as C-sugar until after next year, because of the “no importation” pronouncement of the DA?” they asked.
Significantly, the same SRA report showed that, as of WE October 20, withdrawals for raw sugar dropped by 18.38 percent, while refined sugar withdrawals dropped by 20.18 percent, compared to the same period last crop year, they said.
What is equally worrisome is the fact only 1,314mt of refined sugar was produced by refineries WE October 20. Compare that to 58,990mt in the same period last year. That’s a drop of over 97 percent, the two groups said.
It should be noted that a considerable amount of locally produced raw sugar is withdrawn for refining, but if there is more than enough supply of imported refined sugar, it makes no business sense for refineries to withdraw raw sugar. Hence, demand for it goes down and mill gate prices drop, the two groups said.
“It takes no stretch of the imagination to connect the drops in domestic demand and sugar prices to the entry of imported sugar, aside from sugar substitutes,” the Council and NACUSIP said, adding that “the statement that there will be no importation until the end of harvest next year is therefore a case of closing the stable doors after the horse has bolted.”
“If the ‘no further importation’ pronouncement aims to arrest the drop in mill gate sugar prices over the past weeks,” they claimed, “the fundamentals to firm up prices are woefully absent.”
In its July 18 letter to the DA secretaryA, the Sugar Council reiterated its recommendation that there was no need for importation under the then-proposed Sugar Order No. 5, because existing sugar stocks were projected to last up to December 2024.
The Council and NACUSIP further pointed out that, aside from the increase in supply due to importation and the drop in demand, the industry also has to contend with the widespread use of artificial sweeteners in the beverage industry.
The total importation of the three sweeteners, they said, increased from 950,989 kilos in 2022 to 1,100,783 kilos in 2023.
“In our September 16, 2024 letter to Sec. Tiu Laurel, the Sugar Council and NACUSIP asked for the DA’s help in providing data on the impact of these artificial sweeteners on the consumption of locally produced sugar, particularly the volume of local sugar displaced by the use of these products. Aside from SRA increasing the import clearance fees for High Fructose Corn Syrup (HFCS), we have yet to receive data we requested from the DA and SRA,” the Sugar Council and NACUSIP added.*