‘Unreasonable’ sugar industry protection hit
Amid the high prices of sugar and tight allocation for small confectionery, biscuits and snacks manufacturers, business groups have turned their ire on the sugar industry for enjoying “unreasonable protection” from the government at the “expense” to small enterprises and the Filipino consumers.
In a letter to Agriculture Secretary Manuel Piñol, Business groups Philippine Chamber of Commerce and Industry (PCCI), Philippine Exporters Confederation (PhilExport), and Philippine Food Processors and Exporters Organization, Inc. (PhilFoodex) expressed their support to the Confectionery, Biscuits and Snack Association (PCBSA) to be allowed to directly import sugar for their own use.
“Allowing these producers to import their sugar inputs will mitigate the impact of this new tax policy and will put them in a more competitive position against similar imported food products,” the letter said.
The groups traced the prohibitive price of sugar to the already “unreasonable protection” that the government has been providing to the local sugar industry.
The Philippine tariff on raw and refined sugar imports originating from ASEAN member countries is around 5 percent, while our most-favored-nation tariff (MFN) for raw and refined sugar remains at 65 percent. Importation must also be approved by the Sugar Regulatory Administration (SRA).
“While we agree to some assistance, we can no longer justify cuddling an industry at the expense of the greater majority of Philippine consumers and food manufacturing sectors that are bearing the brunt of the high cost of this protection,” the groups said.
The local food industry is composed of at least 250 small and medium enterprises, mostly under Philfoodex. Sugar is one single biggest component in their production accounting for an average of 40 percent to as much 70 percent of cost.
Worse, early this year, sales of their food and beverage products which are sugar-based are already challenged by taxes under TRAIN 1.
PhilExport President Sergio OrtizLuis Jr. noted, “It is the oldest baby industry in the country and has stunted the development of the food manufacturing industry for decades.”
In addition, the letter said, this situation has likewise become a breeding ground for smuggling.
Bowing to pressure by the PCSBA, the government has finally approved the importation of 200,000 metric tons (MT) of sugar by traders. But the food producers and processors groups were skeptical.
“I don’t think the SMEs will benefit out of this importation as the International Sugar Traders will be given the authority and besides there was no announcement on the prices that these stocks will be sold. Bottom line is our sugar cost is currently at R60/kg vs our Asean neighbors at R28-R30/kg only,” said Philfoodex President Roberto Amores.
Ortiz-Luis also doubted if the local food producers can take part of this importation.
Ortiz-Luis noted that sale of sugar has long been regulated by Sugar Regulatory Administration. Local prices have doubled that of
the price in the international market.
“Because of the high cost of domestic sugar, it is cheaper to produce Tobleron in Thailand than producing ‘bukayo’ in the Philippines,” Ortiz-Luis pointed out.
As of the first week of June, the price of raw sugar per 50-kilo bag already went up to as high as R2,200, compared to its September price — or just when the current crop year was about to start — which only averaged at R1,564.64.
The price for refined sugar, on the other hand, surged to R2,900 per 50-kilo bag, while it averaged around R2,750. This was also higher than the September prices, which only stood at R2,016.67 to R2,040.
This is the first time since 2016 that the prices of sugar breached the level of R2,000 per 50-kilo bag.