PH food products seen losing out to imports due to sugar woes

by Roy Stephen C. Canivel, Inquirer, Sep 18, 2018

Sugar-based food products made here in the Philippines might lose to their imported counterparts from Southeast Asia partly due to the prohibitive price of domestic sugar.

Leaders of the Philippine Food Processors and Exporters Organization Inc. (Philfoodex), the Philippine Exporters Confederation Inc. (Philexport), and the Philippine Chamber of Commerce and Industry (PCCI) said this in their recent letters to Agriculture Secretary Emmanuel Piñol and Sugar Regulatory Administration head Hermenegildo Serafica.

The letters offered a glimpse of tough situation the local firms were in, as they risk losing their edge against imported products that had access to cheaper sugar and other inputs.

These products from the Association of Southeast Asian Nations (Asean) can easily come into the local market given the low barrier to entry. Tariff was pegged at 5 percent under the Asean free trade deal, the letters read.

Asean food processors buy their sugar at the equivalent of P26 to P28 a kilo, cheaper than the P60 to P65 a kilo of sugar in the Philippines.

To address the issue, the business groups are asking the government to allow food processors to import half of their total sugar requirements.

The government has yet to act on the appeal. While Piñol hinted at some form of concession over the weekend, it remained to be seen if the business groups’ request would be acted upon.

On Sunday, Piñol said on his Facebook page that sugar planters had volunteered to sell refined sugar at P48 a kilo and that the government would allow the importation of some 300,000 metric tons of sugar.

He said, however, that this should be for the “consumer market,” without clarifying if this could be used also by domestic manufacturers.

Nevertheless, the groups were willing to commit to two safety nets for sugar farmers.

First, the imports would be used only as inputs in manufacturing products for both domestic and export markets. Second, manufacturers would not be allowed “to act as traders.”

Philfoodex, Philexport and PCCI blamed the rising cost of production of food manufacturers to the “already unreasonable protection” that the government provided to the domestic sugar industry.

Consumers would feel the brunt of higher prices, the groups said, especially since about 4,000 to 5,000 domestic food processors use sugar as an ingredient in their products.

On the other hand, the sugar planters have the option to shift to high value crop production.

“While we agree that our farmers need some assistance, we can no longer justify coddling an industry at the expense of the greater majority of Philippine consumers and food manufacturing sector that are bearing the brunt of the high cost of this protection,” the groups said.