So now there are moves to ask the Senate to investigate why prices of sugar in the shelves are high (P60/kilo) although the mill gate price is low and there is sufficient supply. If we go by economic theory then the end-user price should be low. This anomalous situation has only one explanation there are manipulators that keep the consumer price high. The Sugar Regulatory Administration and the planters have concluded similarly.
The Senate inquiry will hopefully ferret out the culprit that is skimming off money from rich and poor alike sugar, after all is a basic food and the price does not discriminate social or economic lines. Relatively however, the poor pays more.
The initiative for this probe came from the Sugar Regulatory Administration that is mandated to balance the interest of the producers and the consumers. Consumers want a low price; the producers want the opposite.
At present the producer representatives in the SRA appear to be on the side of the consumers because they are demanding an explanation why the price the consumers pay is high. Although the consumers are not protesting, the SRA seemingly are playing heroes. The Department of Trade and Industry is supposed to protect the consumers, and SRA and the Department of Agriculture are accusing DTI of not doing its job.
Producers also point to the Philippine Chamber of Commerce, Inc. that, quite puzzling is not complaining about the high price. In fact one of its major members, the Philippine Food Exporters buys at a high price when in the past they were vocal when sugar prices spiked. People understand when businessmen do not complain about high prices because they just pass on the cost and gain some more.
This time, however, the producers charged that the silence of the PCCI is a tacit expression of their support for import liberalization. They even insinuate that the PCCI is behind this anomalous situation to convince the government to open the gates for unrestricted importation. Worse, the DTI is accused of supporting the businessmens view, the perceived reason it does nothing.
DTI Secretary Ramon Lopez said DTI cannot regulate sugar prices because it is not authorized by law and that DTI can only regulate retail prices of sugar if the DA or the SRA gives it the authority to do so.
Lopez probably got stung with the SRA and planters claims that he threw back the responsibility to SRA. He said “The SRA, as an agency directly supervised by the agriculture department, should know this very well. We thus strongly advise them to take caution in making pronouncements and ensure its accuracy.”
Clearly the ball is in the SRA court. However there is another aspect in this blame game of supply and prices and whos manipulating the situation.
In an advertisement that came out in a Bacolod paper, a writer claims that since September 2018 Philfodex already imported over 35,000 metric tons and it doesnt stop there. The SRA itself since September 2018 authorized over 500,000 metric tons of imports through two sugar orders. This is all because our average annual domestic consumption the past five years has already reached 2,572,921 MT.
The unsigned ad further said that our domestic consumption for the last 2 years already averaged 2.7 million tons.
Indeed, raw sugar production had been declining in the face of increasing consumption. In Crop Year 2016 -2017, production was 2.5 million tons; the following year, it was 2.084 MT and last crop year, it dropped to 1.661 MT. As I have written many times, this disparity will continue to widen as our population grows and land devoted to sugarcane are shifted for other uses. If we include the decreasing per hectare average output, the situation can only be dimmer.
In CY 2016-17 land devoted to sugar was 421,358 hectares. This declined to 418,215 hectares the next year and further down to 114,980 hectares in 2018-19. The chance of production and acreage increasing is nil but consumption will continue to rise as more babies are born.
The advertisement mentioned above was written by a person with full knowledge of the industry. The writing style is apparent but since the writer prefers to remain anonymous, I shall respect that stance. Nevertheless, his thesis is valid and points to SRA policy and practice.
Well continue next week.