Hiked allocation to local sugar market lifts prices

The local sugar industry has been suffering from low prices. A few months later and a tweak in production allocation, the government is convinced the situation has now improved.

Beginning week ending January 28, 2018, the new sugar production allocation prescribed by the Sugar Regulatory Administration (SRA) through the Sugar Order No. 1-A (SO 1-A) took effect.

To be exact, SRA reduced the allocation of sugar to US ("A") from 10 percent to 6 percent, while the allocation to world market sugar (“D”), or those for export to other countries, was also cut to 1 percent from 10 percent.

The rest, or the 93 percent, of the production gets to stay here for domestic consumption. SRA said the new issuance was carefully deliberated by the Sugar Board, taking into account the sugar production and consumption trend specifically the unfavorable weather conditions, that adversely affect production and the domestic sugar demand, including those of sugar sweetened beverages.

The agency then said that when the new allocation policy took effect, the average composite millsite price of raw sugar increased to R1,359.87 per 50-kilo bag, which is a slight improvement from R1,312.45 per 50-kilo bag prior to the implementation of the order.

"Indeed, prices of sugar have been stable and reasonably profitable since the issuance of SO 1-A," SRA said.

Increase in composite millsite price ranged from R42 to R47 per 50-kilo bag of raw sugar, SRA said.

"This composite price likewise shows that SO 1-A is fair to consumers while at the same time profitable to producers, and more importantly the said sugar order gives the assurance that there is sufficient supply of sugar for the domestic market for crop year 2017 to 2018," SRA said. Numerous Block farms of Visayas, the Iloilo Mill District Development Council and the Jalasig Sugarcane Planters Association supported the new allocation of SRA, stating that this new sugar production allocation has improved farmers’ income and proceeds from sugarcane farming.

SOA 1-A was meant to ensure that there will enough supply for the domestic consumption with a comfortable buffer stock at the end of the crop year.

It is SRA’s priority to ensure that sugar will not dry up in the domestic market, thus, safeguarding the industry from sugar importation which has caused a collapse in the normal sugar supply chain in the past. This has resulted to price uncertainties and instability to the detriment of Filipino farmers, especially the small landholders who are most vulnerable.