Direct sugar procurement budget of P5B equivalent to 10-15% of harvest, SRA says

THE Sugar Regulatory Administration (SRA) said that the government’s direct procurement plan with a budget of P5 billion will have the capacity to acquire 10-15% of the sugar harvest directly from farmers.

The funding level for the program implies a capacity to purchase 1.75–1.8 million 50-kilogram bags of sugar, SRA Administrator Pablo Luis S. Azcona said on Monday.

“The P5 billion, for the sugar industry, that’s a very limited budget. It could take out roughly 10-15% of the remaining production,” Mr. Azcona told reporters.

Mr. Azcona said that the current harvest is now at 60% as of Jan. 15. This translates to about 1 million metric tons (MT).

At the start of the harvest, the regulator estimated production of 1.85 million MT during the crop year.

Last week, the government said it allocated P5 billion for the direct purchase of sugar from farmers to close the gap between farmgate and retail prices. The plan was adopted after consulting with the Department of Agriculture, the Philippine International Trading Corp. (PITC), and industry representatives.

He added that PITC will oversee the sugar purchasing, which will either be sold directly to retail markets or used as a buffer stock to ensure adequate supply.

“We are discussing whether PITC will purchase at a higher price. The farmers were hoping for P2,700 to P2,800 (per 50-kilo bag) or better,” Mr. Azcona said.

Current trading prices for raw sugar range from a low of P2,200–P2,300 per 50kilo bag to a high of P2,500. This is below the P3,000 per 50-kilo bag the regulator projected at the start of the milling season.

He added that purchased sugar could be refined and sold at a retail price of P85 per kilo.

He said the SRA is seeking industry recommendations on how to execute the sugar procurement in a manner that will reduce retail prices.

“We were tasked to do it as quick as we can. The plan is everybody hand-in a written recommendation, and we all sit down within this week to work out all the other suggestions and issues involved,” he said. “We are trying to get this out before the month ends.”

Mr. Azcona added that the SRA will also be meeting with the national price council to address the prevailing high sugar prices.

“We have a very ample supply, and there is no reason for the retail price to remain high,” he added.

Late last year, industry groups called for government intervention to stop the declining trading prices of sugar.

The United Sugar Producers Federation of the Philippines said that raw sugar has declined to P2,300–P2,500 per 50-kilo bag, which is below the cost of production.

Meanwhile, Mr. Azcona said that there has been a decline in the demand for sugar since September.

“There is about a 20% drop in the demand for sugar. We are thinking that manufacturers are finding alternatives to sugar… We are trying to find out. We need to take a look at our numbers again,” he added.