DTI: Deregulation of sugar industry won’t pull down local sugar prices

By Elijah Felice Rosales, Business Mirror, Jun 12, 2019

Workers cook brown sugar in a factory in Bacolod, Negros Occidental. Trade Secretary Ramon M. Lopez told the BusinessMirror the government remains firm in keeping sugar prices low by shunning plans to liberalize the sugar trade industry.

Sorry, food processors. The government is shunning plans to liberalize the sugar trade industry, as it instead wants to deal with producers and traders in keeping prices competitive and supply sufficient.

Trade Secretary Ramon M. Lopez told the BusinessMirror the government is determined to pull down sugar prices, as requested by food manufacturers, but not through deregulation. The Department of Trade and Industry (DTI) is looking into probable manipulation on the part of traders that could be the reason for the higher cost of local sugar.

“As a policy, directionally, we want to make sure that sugar prices will be competitive,” Lopez said.

“To the extent that the local sugar producers can assure a competitive pricing and supply, then frankly there is no need to liberalize. We may not need liberalization,” he added.

Last week food exporters asked the government to expedite efforts to liberalize sugar trade, as it is becoming difficult for processors to compete with their regional counterparts due to the higher cost of local sugar.

For Lopez, this is no longer needed as long as producers and traders commit to keep prices of refined sugar below P2,000 per 50-kilogram bag. He said this price range is reasonable, and should keep food manufacturers competitive.

The average price of refined sugar in Metro Manila is P2,214 per 50-kg bag as of June 4, according to the price monitoring report of the Sugar Regulatory Administration. “If producers and traders can give us the price below P2,000 per sack, I think it is what we can consider as an acceptable competitive sugar costing. Apart from that, we are working on several reforms to keep prices competitive,” Lopez said.

The trade chief added the DTI tapped the assistance of the National Bureau of Investigation (NBI) to look into allegations that traders are involved 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 we are working with the NBI, as it requires intelligence work to help us in that aspect,” Lopez explained.

Asked if the government’s determination to deregulate sugar trade remains the same, he replied, “the determination is to make sure sugar prices will be competitive.”

“When we say that, we have to have that commitment from producers and traders to give us the competitive price. If they can, there is no need to liberalize, no need to put in place like a rice trade liberalization program,” Lopez said.

In a statement, the Philippine Food Exporters Inc. (Philfoodex) appealed to the government to expedite measures that will deregulate sugar trade and allow the open importation of the staple.

Philfoodex President Roberto C. Amores said small firms are most injured by the import restriction, as it makes them less competitive in Southeast Asia. He claimed refined sugar in Thailand is priced between P31 and P34 per kilo, cheaper than the P60 to P65 per kilo range in the Philippines.

Food processors are hoping the government can make good on its commitment to liberalize sugar trade, as pronounced in January by then-Budget Secretary and now Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno.

“Our domestic processors, comprised mostly of small entrepreneurs, are really hurting from Asean competition. The high cost of sugar in the local market is killing the local industry, but favoring foreign competition,” Amores said.

In response to proposals to allow open importation, National Federation of Sugar Workers Secretary-General John Milton Lozande in February said it could result in the displacement of over 700,000 sugar workers and 75,000 planters.

This could spell the doom to the agriculture sector, Lozande warned. He said this will add up to job losses in agriculture that went up to 1.8 million from July 2016 to July 2018.