Sugar ‘smuggling’ hurts both farmers, consumers
THE local market is still dominated by imported, “cheap” sugar even in the midst of the harvest season, negatively affecting local sugar producers but not benefiting consumers either, the head of the Cebu-based sugarcane farmers said on Wednesday, Dec. 20, 2023.
Bogo-Medellin Sugarcane Planters Association Inc. president Al Lim, in a message to SunStar Cebu, questioned why despite the presence of imported sugar in the local market, retail sugar prices remain at an average of P4,000 per 50-kilogram bag, which is high considering that, according to him, sugar traders buy newly milled sugar from the local farmers at only P2,500 per bag.
“Where does the very big margin go?” Lim said.
On Nov. 24, Lim told SunStar Cebu that local sugarcane farmers were experiencing low production yields, which should have led to prices rising amid the low supply, but farmers wondered why sugar farmgate prices remained low.
“The consequence is low production; therefore, (there should be) higher prices because of lack of supply. But as it is now, low production but still low prices. So it must be smuggled sugar which is covering for the lack of production,” Lim said.
A 50-kilo bag of raw sugar, he said, is currently priced at around P2,600-P2,700, around P300-P400 lower than last year’s price, which was P3,000 per bag.
Therefore, Lim agreed with the appeal of the Sugar Council to President Ferdinand Marcos Jr., through Agriculture Secretary Francisco Tiu Laurel Jr. and Sugar Regulatory Administrator (SRA) Pablo Luis Azcona, to adopt “timely government intervention” to ensure the survival of the industry.
The Sugar Council—composed of the Confederation of Sugar Producers’ Associations Inc. (Confed), the National Federation of Sugarcane Planters (NFSP), and the Panay Federation of Sugarcane Farmers (PanayFed), comprising more than half of national sugar output—has urged the National Government to stop the decline in farmgate sugar prices and bring the retail prices to more reasonable levels.
“It’s about time that the government has to do something, or the sugar industry will collapse, and we will be completely reliant on imported sugar,” Lim said.
Lim is currently the vice mayor of the municipality of Medellin, regarded as the “Sugar Bowl of Cebu.”
The sugarcane planters’ group has 98 members tilling around 2,500 to 2,800 hectares of sugarcane plantation in Medellin.
Recommendation
The Sugar Council pushed for (a) the National Government to maintain a balanced supply-demand situation, (b) the crafting of a transparent and rationally calibrated importation program, (c) and the enhancement of the long-term viability of the industry.
The Sugar Council said the Sugar Regulatory Administration has a mandate to establish and maintain the balance between production and requirement of sugar and marketing it to ensure stable prices that are reasonable for producers and fair to the consumers.
A calibrated importation program, in terms of timing and volume based on historical numbers and current market movements, must not coincide with the milling season but rather be used for buffer stocks only between the end of the preceding milling season and the start of the succeeding milling season.
“But it might be what this government wants, because they don’t have any other solutions if agricultural production has a problem. It’s always importation instead of going to the source, the farmers who are the backbone of food sustainability,” Lim said.
Imported sugar
According to SRA records, the council said, the millgate raw sugar prices per 50-kilo bag dropped from an earlier average high of P2,825 per bag in week ending (WE) Sept. 10, 2023, to an average of P2,552 (WE, Oct. 10) and P2,564 (WE, Nov. 19). This was in comparison to the price in the WE Nov. 20, 2022, which averaged P3,380.56 per bag.
However, the retail price of sugar in the local market remains high at P80/kilo for raw and P100/kilo for refined sugar, which the council said did not benefit the farmers or the consumers.
The council stressed the rise in production and labor costs adding to the farmers’ constraints as threatening the viability of succeeding production.
It added that there was an indication that traders prioritized cheaper imports, as more imported refined sugar was being withdrawn from warehouses compared to locally refined sugar, according to SRA records.
The council noted that the SRA’s sugar supply and demand situation report as of Nov. 19, 2023, showed that out of 232,279 metric tons of refined sugar withdrawals, only 33 percent (76,254 mt) were locally refined while the huge majority or 67 percent (156,025 mt) consisted of imported refined sugar.
A 70:30 ratio between imported and locally refined sugar withdrawals was seen by the council as having affected the demand for domestically produced sugar.
As of Dec. 3, the SRA’s sugar supply and demand situation report showed that out of the 284,536 metric tons of demand for refined sugar, only 98,536 metric tons was locally sourced in comparison to 186,000 metric tons of imported refined sugar.
The same report indicated the prevailing retail prices of raw sugar and refined sugar as P82 and P95 per kilo, respectively, while it placed their wholesale prices at P3,150 per 50-kg bag (or P63 per kilo) for raw sugar and P3,700 per bag (or P74 per kilo) for refined sugar.
In Cebu, Department of Trade and Industry 7 Development Specialist at the Consumer Protection Division chief Ines Cajegas said last Nov. 22 that a kilo of refined white sugar in the local market was priced between P78 and P84, compared to the peak of high prices when a kilo of refined white sugar reached up to P120.
While the current prices have not yet returned to their original level of P65 in the early months of 2022, Cajegas considered them stable and improved, especially since she anticipated an increase in prices during the Christmas season.
Top producers
The quarterly crop bulletin from the Philippine Statistics Authority from April 2023 to June 2023 showed that three regions combined accounted for 78.1 percent of the country’s total sugarcane production.
Western Visayas continued to be the top sugarcane-producing region in the country with 1.34 million metric tons or a 47.2 percent share, followed by Northern Mindanao and Central Visayas with production of 516,790 metric tons (18.3 percent) and 355,410 metric tons (12.6 percent), respectively.
The Philippines has 17 regions.
Sugarcane production from April to June 2023 registered at 2.83 million metric tons, an 11.3 percent decline from the 3.19 million metric ton output in the same quarter in 2022, the statistician added.
For the full year 2022, Central Visayas produced 2,258,640 metric tons of sugarcane.