Sugar Prices Surge 42% on Low Supply

(Business Inquirer) – A supply shortage has driven up local sugar prices by as much as 42 percent from last year, according to the Sugar Regulatory Administration.

SRA data showed that as of the first week of July, the average price of raw sugar has reached P2,288 a 50-kilogram bag (LKg) from P1,620 an LKg in the same period last year.

Consequently, the average retail price of raw sugar has climbed to P53.83 a kilo from P48.15 a year ago.

The government is counting on imported sugar to help stabilize the supply and price of the major commodity.

However, the entry of imports faces delays following the traders’ inability to comply with the government’s fortification requirement as well as the continuing port congestion in Thailand where most of the shipments will come from.

Under Republic Act No. 8976 or the Philippine Food Fortification Act of 2000, refined sugar must be fortified with vitamin A.

However, the bulk of the imported sugar—mainly from Thailand—is not vitamin A fortified.

Rudy Delos Reyes, president of trading company Delmax, said in an interview that the vitamin A requirement was “useless” since soft drink bottling companies “neither need nor want vitamin A on the sugar that they were buying because it will alter the taste of their products.”

Half of the sugar imports will be used by industrial companies such as Pepsi-Cola Products Philippines Inc. and Coca-Cola FEMSA Philippines for the manufacture of carbonated drinks.

Two government agencies —the Department of Agriculture (DA) and the SRA—have recommended the lifting of the requirement to fast-track importation.

Letters obtained by the Inquirer showed that the two agencies had asked the Food and Drug Administration to forego the fortification requirement for this round of importation.In a phone interview, sugar board member Emilio Yulo said this was not the first time that industry stakeholders requested the suspension of the requirement.

In 2015—the last time the industry was allowed to import —traders were allowed to go around the existing provision, provided that they secure a letter from industrial users that they won’t need their sugar to be fortified.

The same workaround is expected for this year to ensure that the shipments will arrive by September at the latest.

Sugar prices have been rising since the start of the year, due in part to the shift of industrial companies to local sugar from high-fructose corn syrup to avoid higher taxes brought about by the new tax law.

However, for the current crop year, sugar production dropped to 2.27 million metric tons (MT) from last year’s 2.5 million MT.

To compensate for the lack of supply, the government has allowed imports.