A response to the National Federation of Sugar Workers:

November 5th, 2022

Rep. Joey Sarte Salceda
5 November 2022

First, to clear up some points of fact, my proposal to allow the importation of some 400,000 MT should cover the end of SO2 until the harvest season in 2023. Likewise, my proposal to raise revenues from imports is NOT out of tariffs, but out of auction fees (could be as much as P30/kilo, which will still result in prices that are lower by as much as 33% from domestic retail prices)

That being cleared up, here are the circumstances that we are forced to deal with.

1. Sugar is now the commodity with the highest inflation rate (34%) among all commodities in the CPI.
2. Sugar prices in the world market (P24/kilo according to the Intercontinental Exchange) are as much as 1/4 the price of domestic retail sugar. Even if sugar in the Philippines were enough (and long-term figures indicate that we have a structural deficit of around 200,000 MT), our domestic industries are still constrained from growing due to high domestic sugar prices.
3. High sugar prices constrain us from having a big food export sector. Sugar is a major input in everything from dried mangoes to canned pineapples.
4. Industrial users have as little as 4-7 days of inventories, and manufacturing plants are at risk of closing down due to lack of available domestic sugar.

Moving forward, the national conversation must go beyond whether there is enough sugar to meet our demands. Domestic availability is a limiting constraint, and unless we are able to lower sugar prices, our food manufacturing sector will stagnate if not decline.

Food manufacturers will get the sugar they need, one way or another. If they can’t get it here, they will either smuggle sugar or they will ship jobs abroad by setting up plants there. That is already the case with many of our homegrown brands.

I welcome conversations on this policy question.