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Groups warn: Pricey sugar in PH threaten edge of local manufacturers

/ 05:12 PM September 17, 2018

Philippine-made sugar-based food products might lose to their imported counterparts in Southeast Asia partly due to the “prohibitive” price of domestic sugar, business groups have warned.

Recently, the heads of the Philippine Food Processors and Exporters Organization, Inc. (Philfoodex), Philippine Exporters Confederation, Inc. (Philexport), and Philippine Chamber of Commerce and industry (PCCI) sent two letters that offered a glimpse of the landscape that local firms currently face, as they risk losing their edge against imported products that have access to cheaper sugar inputs.

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On one hand, these imported products from the Association of Southeast Asian Nations (Asean) have a low barrier to entry, especially with the five percent preferential tariff under the Asean free trade deal, the letters noted.

On the other, Asean food processors buy their sugar at the equivalent of P26 to P28 per kilo, significantly cheaper than the cost of sugar here.

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“These Asean products have been coming into the country and threatening similar domestic products with sugar inputs priced from P60 to P65 [per] kilo,” the letters, which both had similar content, read.

Appeal to the government 

These two separate letters were addressed to the heads of the Department of Agriculture and Sugar Regulatory Administration on June 20 and August 17, respectively. Copies of these letters were shared to the media.

To address the issue, the groups asked that local sugar processors be allowed to import half of their total sugar requirements. These would then be used for both the export and domestic market.

The government is yet to act on the appeal. While Agriculture Secretary Manny Piñol hinted at some kind of concession over the weekend, it remains to be seen if the business groups’ request would be acted upon.

On Sunday, Piñol said in his Facebook page that sugar planters have volunteered to sell refined sugar at P48 per kilo and to allow the government 300,000 metric tons of imported sugar.

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

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Safety nets 

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

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

This is not the first time that such an appeal was made. To recall, the Philippine Confectionery Biscuits and Snack Association (PCBSA) made a similar request to the government, though their letter was addressed to the Department of Trade and Industry (DTI).

Although additional importations were allowed then, these were coursed through traders who acted as middlemen, instead of being directly imported through the companies themselves as PCBSA requested.

Despite this, the problem of high local sugar prices still persisted.

Stop ‘coddling’ sugar farmers

Philfoodex, Philexport, and PCCI blamed the high cost of sugar 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 around 4,000 to 5,000 domestic food processors currently use sugar as an ingredient in their products.

On the other hand, the sugar farmers — which they estimated to be around 50,000 to 60,000 — can be given an “alternative” by going into 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. /kga

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