Farmgate raw sugar prices seen returning to ‘fair’ levels
The Sugar Regulatory Administration (SRA) expects farmgate prices of raw sugar to return to “fair” levels for sugarcane farmers as the government greenlit a program that would temporarily siphon off 300,000 metric tons of supply from market circulation.
The SRA board, led by Agriculture Secretary Francisco Tiu Laurel Jr., issued Sugar Order (SO) 2 that allows traders to secure an import allocation privilege in future import programs on the condition that they would procure raw sugar at “premium” prices.
The maximum 300,000 MT of raw sugar will be held off for domestic use as they will be classified as “C” sugar or reserved sugar for 90 days unless approved by the SRA board for earlier reclassification, based on SO 2.
Sugar traders who will purchase 1.5 kilograms of raw sugar will be allowed to import one kilogram of the commodity in the future, according to SO 2 or the voluntary limited volume purchase program.
These premium prices, SRA administrator and CEO Pablo Luis Azcona said, is between P2,700 per 50-kilogram bags and P2,800 per 50-kilogram bags, which is about P54 to P56 per kilogram. At this price range, Azcona said it would stabilize the retail price of refined sugar at P85 per kilogram, which he noted is the “fair” price for consumers.
Azcona said the country has sufficient raw sugar stocks despite the classification of the 300,000 MT of the sweetener as reserved stocks.
He said that the SRA board can reclassify the stocks even before the 90-day holding period if necessary to ensure sufficient raw sugar stocks circulating in the domestic market.
Under SO 2, the purchasing program will cover a maximum of 60,000 MT of raw sugar covered by quedans on or before the week ending Jan. 28. Meanwhile, a maximum of 240,000 MT of raw sugar covered by quedans on or after the week ending Feb. 3, are eligible for the program.
The participation of eligible participants will be on a first-come, first-served basis.
The purchase program will be open to farmers, farmers’ groups, farmers’ cooperatives, farmers’ associations, sugar millers, manufactures and beverage makers as long as they are SRA-licensed domestic or international sugar traders in good standing.
Azcona explained that the purchasing program is the “fairest” compared to previous programs of the SRA since it gives the privilege to import to traders who are helping the farmers through local procurement.
Furthermore, he pointed out that this is also the first time the traders would be required to procure more raw sugar first before getting a prospective import allocation or privilege.
SRA data showed that the farmgate price of raw sugar immediately returned to P2,500 level in the week of Feb. 11 after staying within the range of P2,375 and P2,490 for 10 straight weeks following disclosure of the prospective purchasing program by the SRA.
As of Feb. 18, the farmgate price of raw sugar has increased to P2,566 per 50-kilogram bags, based on SRA data.
The STAR broke the story last month about the SRA’s plan to implement the purchasing program in the current crop year.