Economic managers differ on sugar lib plan

By Elijah Felice Rosales, Business Mirror, Jul 2, 2019

THE standoff on the sugar trade liberalization has begun. Economic managers are headed for a collision course on whether or not to allow the open importation of sugar.

In a news briefing on Monday, Finance Secretary Carlos G. Dominguez III stood firm on the economic team’s position to push for the deregulation of sugar trade. Food processors, he argued, are experiencing difficulty competing with regional counterparts due to the higher cost of local sugar.

“What we have seen is that the domestic price is double the world market price,” Dominguez said.

“As a result, our food processing industry, which uses a lot of sugar in its processes, has not really taken off as an industry. Compare it to, say, Thailand, they have a very, very healthy food and fruit processing industry [there],” he added.

According to Dominguez, the government is investigating the sugar supply chain to identify if there are manipulations on the part of traders, resulting in higher prices of the staple.

“We are looking at this and, maybe, we should really closely look at who is benefiting from these restrictions here. Maybe some kind of liberalization will actually
benefit more the country as a whole,” Dominguez said.

Govt interventions

HOWEVER, Trade Secretary Ramon M. Lopez, who changed his position on the matter, said government interventions on the production and trading of sugar must be implemented to pull down prices of the staple.

On the sidelines of the news briefing, Lopez said there is no need for liberalization for as long as producers and traders can commit competitive sugar pricing.

In an earlier interview with the BusinessMirror, he pegged P2,000 per 50-kilogram bag for refined sugar as a reasonable price range that should keep food processors competitive. “I used to be pro-liberalization. However, my premise now is if producers and traders can commit to make prices of sugar competitive, then there is no need for liberalization. We just need that commitment from the suppliers,” Lopez said.

The average price of refined sugar in Metro Manila is P2,230 per 50-kilo bag, according to latest price monitoring of the Sugar Regulatory Administration. On the other hand, mill-site price declined 24.33 percent to P1,530 in the third week of June, from P2,022.54 during the same period last year.

The Department of Trade and Industry (DTI) is working with the National Bureau of Investigation (NBI) in investigating possible involvement by traders in manipulation and overpricing.

“The DTI is also now looking into the issue on traders to make sure no manipulation or overpricing is happening. That is an effort [where] we are working with the NBI, as it requires intelligence work to help us in that aspect,” Lopez earlier said.

Food processors and exporters are claiming injury, especially among small firms, from the import restriction, as it makes them less competitive in Southeast Asia.

They said refined sugar in Thailand is priced between P31 and P34 per kilo, cheaper than the P60 to P65 per kilo range in the Philippines. However, the industry is missing out the point that is sugar production in Thailand is heavily subsidized.

Bangkok last year approved some $212.74 million of financial assistance to its sugar farmers for this year’s crop activities, as well as government subsidy of about $297.83 million.