PHILIPPINES: Sugar importers told not to hoard supplies

Published: 07/11/2018, 11:12:03 PM

The Department of Agriculture (DA) has delivered a stern warning to accredited sugar importers as tight supply has sent prices rising and the users complaining: Deliver the committed volumes to your buyers, or we will allow industry users of sugar to import directly, according to the Philippines' Business World newspaper.

Agriculture Secretary Emmanuel F. Piñol said on Wednesday that international traders participating under the Sugar Regulatory Administration (SRA) importation program must ensure that the supply intended for bottlers and processors is delivered.

"For traders who won the CORR [certificates of reclassification rights], you have to make sure that the intended volume to supply the bottlers and processors must be delivered to them. Because if you don't, then the government reserves the right and power to allow these bottlers to import directly," he told reporters in an interview on July 10.

"And if we do that, you will lose profits because you will not be able to sell your imported sugar," he added.

Pinol said the option of allowing industrial users to directly import the sweetener is always among the options being considered by the government.

"I am giving this warning to traders: that you better make sure that the volume you import in the name of bottlers and the processors go to them. We have to protect the interest of these companies by considering the option [to allow them] to directly import," he said.

"Do not play this game on us. Do not play with the situation to import sugar in the name of the companies and then you will hold back the supply just for the prices to increase," he added.

Furthermore, Piñol said they are reviewing the current reclassification rights system being imposed by the SRA in its sugar importation program.

Piñol wants to reform the system into a mechanism that ensures that royalties under the importation program really go to the planters. Furthermore, the reclassification rights system defeats the purpose of bringing down the retail prices of sugar as it instantly puts a mark-up on the imported sweetener, according to Piñol.

"First of all, I made this clear during my meeting with stakeholders: that how sure are we that the royalty being given to planters and farmers association really filtered down to the individual sugarcane farmers?" he said.

"By the looks of it, is it our intention to bring down the cost of sugar by giving the allocation to planters and farmers associations? But them selling [their rights] to traders and processors would already mean a mark-up for imported sugar- it defeats the purpose of why we should import sugar," he added.

Under the Sugar Order 10, the SRA required traders to buy the  CORR of planters and millers who produced "D" sugar, or those for export to the world market, to participate in the importation program.

The CORR contains the corresponding importation volume allocation of a specific planter or miller as computed by the formula provided in SO 10. The price of each CORR would depend on the negotiations between the trader and holder of the CORR.

This system, the SRA noted, would allow them "to effectively regulate the importation."

"The program shall require a certificate of reclassification rights in order to effectively regulate the importation; provided that any importation must be reasonably profitable to sugar producers, who have been experiencing low prices of sugar for the last two crop years as a result of importation of cheap subsidized high-fructose corn syrup," the SRA said.

Piñol also disclosed that Coca-Cola Femsa Philippines (KOFPH) talked to Finance Secretary Carlos G. Dominguez III to directly import their sugar requirements. "They are saying that the local supply of sugar is unreliable and they will lobby to directly import their sugar requirements," he said.

In a statement sent to the BusinessMirror, KOFPH said it has been coordinating with government agencies, including the DA and Department of Finance, to address its supply chain issues.

"We have expressed that, similar to the thrust of the government, we are seeking the immediate resolution to this issue, to ensure a robust and stable sugar supply in the local market," KOFPH Corporate and Regulatory Affairs Director Juan Lorenzo Tañada said.

"In light of this, we have been working closely with the Department of Agriculture and our local sugar suppliers. We are very grateful for the guidance of the Cabinet secretaries for their assistance in this evolving situation, as both the government and the private sector work together to resolve this pressing concern," Tañada added.

SRA Board Member Roland B. Beltran told the BusinessMirror that consumers should expect the retail prices of sugar to decline in the next days as soon as the imported sugar arrives in the country.

Beltran added that the 200,000 metric tonnes of sugar allowed by the SRA to be imported have been fully allocated among traders.

"We are pleased to note that the 200,000 tonnes of sugar allowed to be imported have been fully allocated to different importers," Beltran said.

"We thus expect that market forces will correct itself soon as the imported sugar starts arriving and brings the much-needed stability in sugar prices," Beltran added.

Beltran said the SRA board will ensure that the imported volume of sugar will go to intended users.

The SRA has allocated the 100,000 tonnes of sugar to be imported for bottlers' grade refined sugar, while 50,000 tonnes would be standard grade refined sugar and 50,000 tonnes raw sugar for domestic consumption.

"Bottler's grade will go to industrials. The Sugar Board will not allow reclassification from C to B if there is no proof that the bottler's grade sugar are sold to the industrials," he said.

The SRA board has approved via referendum the import clearance for 2,000 tonnes of bottler's grade which is expected to arrive within this week until next week, according to Beltran. Of the figure, about 750 tonnes will arrive this week, and the remaining 1,250 tonnes next week.

"We expect that more requests for import clearances of imported sugar will be forwarded to the Sugar Board for approval via referendum in due course," Beltran said.

Beltran explained that the SRA board is approving import clearances via referendum to fast-track the importation program. "It means that requests for import clearance need not wait for the regular board meeting before it is acted upon."