Sugar next on government’s deregulation list after rice — Diokno

THE GOVERNMENT will move to open up sugar imports this year to make the industry more competitive, the state Budget chief said, explaining that President Rodrigo R. Duterte’s administration wants to do the same for other food items.

“We have to deregulate most of the agricultural sector. That’s the direction now of the government, like freer importation of all food products,” Budget Secretary Benjamin E. Diokno said in a media briefing on Wednesday.

Following the proposed rice tariffication law — which will replace import quotas with a regular tariff scheme in a move estimated to slash P7 per kilogram (/kg) off this staple’s retail prices and inflation by 0.7-0.8 percentage point — that now awaits signing into law by Mr. Duterte, the government will now focus on removing hurdles to sugar trades.

“Next is sugar. That’s bloodier than rice. It’s one of the inputs to our potential exports. All the commodities, it turned out… were so restrictive with respect to agriculture,” the Budget chief explained.

“We plan to deregulate or relax that industry. That puts pressure on the domestic economy to compete,” he added, noting that local prices of sugar are “still expensive compared to the global rate.”

Sugar import permits are currently coursed through planters’ groups and traders, a process that incurs additional costs to the detriment of consumers.

Philippine Statistics Authority (PSA) and Sugar Regulatory Administration (SRA) show prevailing retail prices at P60/kg for refined sugar, P50/kg for washed sugar and P48/kg for raw sugar. Those prices compare with refined sugar’s P55.03/kg, washed sugar’s P50.16/ kg and raw sugar’s P47.10/kg in January last year.

Production of locally produced sugar has also been declining, to 2.08 million metric tons (MT) in crop year 2017-2018 from 2.5 million MT in crop year 20162017.

Industry group Philippine Food Processors and Exporters Organization Inc. is projecting a 1 million MT shortfall of sugar in 2019.

Sugar was among the drivers of inflation in 2018 that hit nine-year highs, prompting the SRA to import 150,000 MT of the produce. The Department of Agriculture has also indicated that it is open to importing 100,000 MT more this year if supply is inadequate.

Malacanang in September last year issued orders removing non-tariff barriers and streamlining procedures to ease food distribution and boost supply.

Moreover, Mr. Diokno said that meeting its economic growth and poverty rate targets would depend on the performance of the country’s agriculture sector.

“If agriculture would grow by four percent, the economic growth target of 7-8% is really doable. In 2018 it is projected to hit at least 6.5%,” Mr. Diokno said.

Latest PSA data show production of agriculture — which has historically contributed about a tenth to gross domestic product (GDP) and accounted for a fourth of employed persons — edged up by a nearly flat 0.15% in 2018’s first three quarters, compared to 4.64% in 2017’s comparable period and the 2.5-3.5% annual target for the sector under the 2017-2022 Philippine Development Plan.

Agriculture Secretary Emmanuel F. Piñol said last week that he expects the sector to have turned in one-percent growth for the entire 2018 — due to storms that battered farms — after expressing confidence in late December that two percent would be “doable”.

The PSA will report fourthquarter and full-year 2018 GDP growth on Thursday next week and agriculture’s performance for the same periods days prior.

GDP growth averaged 6.3% in the first three quarters of 2018, short of the downward-adjusted 6.5-6.9% target for 2018. For 2019-2022, the target is 7-8%.

“We really have to focus on mechanization, we have to focus on adopting high-quality seeds, more irrigation… We have to show farmers that these things can really make a difference,” Mr. Diokno said.

“The country’s growth is domestic-driven as we invest heavily in the ‘Build, Build, Build’ program and as we invest heavily in our human capital,” he added.

“Agriculture is the weakest link. That’s also bad in our desire to reduce poverty to 14% by 2022” from 21.6% in 2015. —