MANILA, Philippines?Faced with a chain reaction that can affect even the smallest of consumers, the Department of Agriculture will make a recommendation next week on what the ?reasonable?? price for sugar should be, given the current supply-and-demand situation.

In an interview on the sidelines of Friday?s National Price Coordinating Council meeting, Agriculture Secretary Arthur Yap said the suggested retail price, which would be submitted to the Department of Trade and Industry, would most likely range from P45 to P48 a kilo.

This suggested price range would be implemented ahead of the arrival of 150,000 metric tons of imported sugar from May to August, he said, to facilitate the release of existing stocks into the domestic market.

According to monitoring by the Bureau of Agricultural Statistics, the prevailing price of refined sugar stood at an average of P52 a kilo, with a high of up to P60 a kilo.

Just last week, the prevailing price of the product was pegged at P50 a kilo. A month ago, refined sugar sold for only P45 a kilo, while the year-ago rate was at only P36 a kilo.

Vice-President Noli de Castro said in a separate interview that the planned sugar imports were necessary to augment local supply and stabilize prices.

Although not really faced with a supply shortfall, he said local sugar millers preferred to export their output, considering the high demand for the sweetener in the world market and the high price it currently fetches.

``We expect prices to go down when the imported sugar comes in,?? he said.

Trade Secretary Peter Favila had earlier challenged local millers to just export all their sugar, as the government could take care of domestic sugar supply via government-to-government import deals.

The government?s planned importation, however, was also hinged on private sector initiative and support, Yap said.

?The private sector will take care of [determining the source of the imported sugar]. If the private sector needs sugar and they want to import, then let them spend for it so we won?t have to spend government money,?? he said.
The government incentive for sugar imports, he said, would come in the form of a tax expenditure subsidy, which would take the 40-percent tariff component out of the sweetener?s cost.

The value-added tax on the product, however, would still have to be paid, he said.

To prevent the re-exportation of the duty-free sugar, he said, those who would import the commodity for sale in the domestic market would have to shell out a service fee of P2-P3 a kilo.

?If you?re importing several thousand metric tons, [the service fee] easily amounts to several millions. You won?t see your millions again if the sugar that you imported doesn?t reach the domestic market,?? he explained.

He said specific amounts of imported sugar would be allocated to local food processors, institutional buyers, and consumers, following guidelines set by the Sugar Regulatory Authority.

With sugar prices remaining high, bakers have threatened to push through with their planned price increase by mid-February, this time by an even higher increment than initially planned.

Philippine Baking Industry Group president Walter Co said the price of a loaf of bread would have to go up by P2 and that of a 10-piece pack of regular-sized pan de sal by P1 each, to enable bakers to recover their costs.

``Last week we said the increase would just be P1.50 for loaf bread and 75 centavos for pan de sal. But that was when sugar was selling at P48-P50 a kilo. Now sugar is priced at P52 a kilo, even reaching P60. The costs that we have to recover have gone up because of the increase in the price of sugar,?? he said in a separate interview.