Shadow

SRA clarifies ‘unfounded’ statements, says no evidence of sugar hoarding

The Sugar Regulatory Administration said on Friday, June 24, that there has been a lot of false information regarding Sugar Order No.3 series of 2021-2022 and the sugar situation of the country.

“There are again a lot of unfounded statements and accusations being hurled and spread,” the SRA said in its statement.

The SRA said the following are its answers to the “unfounded “ statements:

Unfounded Statement #1:
There is plenty of sugar, we have 60 million metric tons of sugar.
Fact:
There was never a time in history that the Philippines was able to produce 60 million metric tons of sugar. Our highest production ever recorded was 2.5 million metric tons.

Sugar data is available on the SRA website under Historical Statistics and Industry Update. As of June 12, 2022, our final estimated production of raw sugar is 1.8 million metric tons while our estimated demand for raw sugar is 2.03 million metric tons.

We had a carry-over stock from the previous crop year of 228,000 metric tons. For refined, our carry-over stock was 148,000 thousand metric tons, our estimated refined sugar production is 783,000 thousand metric tons and our estimated demand for refined sugar is 943,000. This production and demand covers September 1, 2021 until August 31, 2022, the entirety of CY 2021-2022.
This does not include the buffer stock necessary to cover demand while we wait for most mills to start and build up their production. Doing the math, it quite obvious that by August, we will have a negative balance and no sugar to carryover while we wait to have enough local production for our local demand which may take around 2 months for raw sugar and 3 months for refined sugar.

Unfounded Statement #2:
Importation of 200,000 MT under Sugar Order No. 3 s.2021-2022 is poorly timed. It should arrive at the end of milling.
Fact:
Importation under SO 3 was calibrated by SRA to arrive during the time that the milling season is winding down or at the time that our monthly production is not as much as the monthly demand. Under SO #3, first batch was to arrive from March 1, 2022 onwards and the 2nd batch was to arrive from May 1, 2022 onwards.

Historical data will show that some mills end as early as March and April, most mills end by May and June, and very few continue to mill up to July. Imported sugar takes time to arrive hence we need to plan early. This is to avoid a situation where there will be no sugar. SRA also saw an alarming rise in sugar prices right after typhoon Odette and the price of sugar continued to climb from that time up to the present.

Hence something had to be done as soon as possible. Unfortunately, SRA’s efforts to timely mitigate the situation was impeded by a certain group, hence the price of sugar continued to rise and our sugar stock continued to be depleted that it is now at a critical level.

Unfounded Statement #3:
Sugar importation during the peak milling season will depress prices that sugar planters can fetch for their crops.
Fact:
Historically, SRA is able to manage the balance between supply and demand such that prices are reasonably profitable for producers but fair to consumers. One of the tools used by SRA to balance supply and demand is to import when there is a deficit in local sugar production. Even with importation, sugar prices remained profitable to producers. For the past three years, mill gate raw sugar price was maintained between P1400 to P1600 per 50 kilogram sack while the retail price of raw sugar was always maintained within the Suggested Retail Price (SRP) of P45 per Kg of raw sugar.

Unfounded Statement #4:
SRA should not call to declare a shortage when sugar mills are still in operation. It has always been standard practice at the end of milling that a notarial survey of all sugar mills be initiated to determine the outstanding sugar stocks of raw and refined on all sugar mills. That is the only time you will know for sure if there is a surplus or shortage. Then and only then can you initiate the next steps
Fact:
Imported sugar takes time to arrive. If we wait until the end of the milling season to see if there is a shortage, we will have to wait 1-2 months before the sugar arrives and while waiting, there will be no sugar to use for our food and drinks. SRA has all the sugar situation data nationwide historically and on a weekly basis making it able to analyze the trends and project the supply and demand situation even before the milling ends.

SRA has always been projecting the supply demand situation which includes production, withdrawal and stock balance even at the start of milling. The projected production, withdrawal and ending balance forms an integral part of Sugar Order No. 1 which determines the sugar allocation for the crop year and is issued at the start of the milling season.

This projection is re-validated and adjusted quarterly or as often as necessary when the situation demands. SRA is not aware of a notarial survey but SRA does conduct warehouse stock inventory of the mills and refineries to ensure that their reported production, withdrawal and stock balance tallies with the records of SRA.

Unfounded Statement #5:
The import volume is way too much.
Fact:
At the end of each milling season, we will need about 200,000 to 250,000 metric tons of raw sugar and 200,000 to 250,000 metric tons of refined sugar as buffer stock or carry over balance so that we will not run out of sugar while we are waiting for the next milling season.

The average monthly consumption of raw sugar is 169,000 metric tons (mt) and the average monthly refined sugar consumption is 88,000 mt. Based on SRA data, we will be short of sugar by August hence we need enough volume to cover the demand for August plus the buffer stock while we wait for milling to start and build-up sugar production.

Understanding this, one will know that 200,000 mt refined sugar importation is conservative and because we were not able to import refined sugar on time, even the raw sugar got depleted as manufacturers are now buying raw sugar to refine for their needs so now, even our raw sugar is being depleted.

Unfounded Statement #6:
SRA clearly favors the industrial users, particularly the bottling companies.
Fact:
SRA is the repository of all the Philippines’ sugar situation data. By analyzing all this data, SRA is able to project the supply and demand situation. At that time Sugar Order No. 3 s.2021-2022 was crafted, it was clear that the shortage was in standard refined sugar and bottlers’ grade sugar used by manufacturers, hence the importation was for the manufacturers.

The manufacturers purchase the majority of our sugar production. If we had been able to address their needs through the timely implementation of SO3, there would have been enough supply for the retail market at affordable prices. It is because SO3 was stalled, that manufacturers have been willing to buy sugar at whatever price to ensure that their factories don’t run out of sugar.

Unfounded Statement #7:
SRA is only there to protect the interests of the big industrials to the detriment of the Filipino people
Fact:
Food Security is a top priority of SRA. It is the availability of food at affordable prices for the Filipino people that is the topmost concern of SRA as it implements an importation program at times that it sees a shortage in supply especially at this time when we are at risk of running out of sugar. SRA is here to protect everyone, producers and consumers alike.

SRA is mandated to balance supply and demand such that prices are reasonably profitable for producers but fair to consumers. The sugar prices now are exorbitantly high and worse, there might come a time when there won’t be sugar to buy and factories will have to close down and a lot of people will lose their jobs and starve.

Unfounded Statement #8:
Why not make the importation program all inclusive? Why not allow the major stakeholders to participate in the importation program rather than a select few, favoring a particular class of importers to the prejudice of the sugar industry as well as the economy in general.
Fact:
At the time SO 3 was crafted, data showed that there was already a tightness in refined sugar supply especially bottler’s grade sugar which the Philippines produces in a limited volume. There was also an alarming increase in sugar prices.

A timely importation will address the supply situation. There would of course be additional costs for profit and handling if importation was done through third party traders and there would be no guarantee that the sugar will go to those who needed it at that time.

However, traders were still allowed to import the sugar for the manufacturers who opted to use traders. In fact some big multinational companies and a lot of medium amd small conpanies used services of traders to bring in their import allocation. In reality and as explained in the previous statements the sugarcane industry or the economy was not prejudiced by this program.

Unfounded Statement #9:
SRA seems determined to kill the sugarcane industry.
Fact:
SRA has always been supporting the sugarcane industry as evidenced by all the programs being implemented by SRA while always abiding by its mandate which is to establish and maintain such balanced relation between production and requirement of sugar and such marketing conditions as will insure stabilized prices at a level reasonably profitable to the producers and fair to consumers.

Unfounded Statement #10:
SRA is working for the benefit of others instead of the sugarcane industry.
Fact:
SRA has always looked at the bigger picture and the sustainability of the sugarcane industry. SRA knows that having extremely high prices of sugar may pressure the government to open the flood gates and liberalize importation of sugar especially if SRA cannot do its job of stabilizing sugar prices by balancing the supply and demand situation through a controlled importation program.

As such SRA has always done its part to ensure that this does not happen by timely implementing a well-calibrated importation program. In fact despite all the commotion that one group has caused, SRA has kept silent so as not to add to the commotion which may earn the impression that the sugarcane is unruly and earn the ire of the government enough to turn the industry upside down.

Unfounded Statement #11:
They only see the increasing cost of sugar in the market but they do not acknowledge the forces driving those prices up and much of it can be attributed to fertilizers that almost tripled in cost and fuel that has breached the P50 per liter mark.
Fact:
SRA sympathizes with the plight of the farmers and is pushing for ways to mitigate the fertilizer costs such as the provision of free Beneficial Microorganism (BMO) which cuts the fertilizer requirement up to 30 percent. SRA and DA have also proposed to the Office of the President a fertilizer subsidy for farmers.

The price of sugar was already up right after typhoon “Odette” which ravaged the Visayas on Dec 16, 2022. This is because of the shortage in supply due to the damage caused by typhoon Odette. The sugar being harvested this year was planted last year when fertilizer prices were normal. This was all before the Russia-Ukraine war. The millgate price before Odette was around P1600 and millgate price now is around P2,300 this is a 43 percent increase. This is unprecedented in the history of the sugarcane industry.

Unfounded Statement #12:
Some traders are hoarding sugar to manipulate the market as if there was a shortage.
Fact:
There is no evidence of hoarding. All SRA licensed traders are required to have their warehouses registered with SRA. These warehouses are subject to spot inspection of SRA and are required to log all sugar transactions. All these are monitored by SRA and the volume of sugar in all these warehouses are monitored by SRA. As per SRA monitoring team, this is the first time that they see the warehouses so empty or with so little sugar.

Unfounded Statement #13:
It is very frustrating for SRA to make this import order a priority when it has not even addressed our request to urge the Department of Agriculture (DA) and the Department of Trade and Industry (DTI) to cap fertilizer costs.
Fact:
SRA has no power to cap fertilizer costs but the DA and SRA, have proposed to the office of the President a fertilizer subsidy program for farmers.

Unfounded Statement #14:
Someone is out to make money in this exercise knowing that they are on their way out, at the expense of the sugar industry
Fact:
There is no midnight deal. SRA has always been on its toes making sure that we don’t run out of sugar and the same concern is what SRA is trying to address with SO3. SRA has always been transparent with our figures on production and demand and as early as January we have already projected that we will have a deficit in our sugar supply.

SRA acted immediately calling for a consultation with the majority of the sugar producers represented. However, our efforts to mitigate the impending crisis was forestalled hence instead we now have a shortage for both raw and refined sugar. To summarize, there is a shortage in sugar supply and high demand hence the high sugar prices. We need to import so that we won’t run out of sugar.

Unfounded Statement #15:
Manuel Lamata, United Sugar Producers Federation of the Philippines president, said that they have not been consulted on the matter of importation.
Fact:
SRA held a consultation attended by all the sugarcane planters’ federations including the UNIFED, the federation of Lamata. Also in attendance was the Philippine Sugar Millers Association and Philippine Association of Sugar Refineries Inc. at the end of the consultation, SRA Administrator Hermenegildo Serafica requested all those who attended to submit their position and recommendations.

In fact it was Lamata himself who signed UNIFED’s recommendation. For some reason, Lamata wanted “Only sugar traders whom traditionally joined the import programs of SRA.” SRA may seek recommendations from sugarcane industry stakeholders but SRA cannot follow each and every recommendation submitted.

Being the authority on all sugar matters and having all the historical and latest data on the sugar situation of the country, SRA must balance the interests of all concerned and decide the best course of action given all the data it has.*

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