Sugar industry future

FOUR things came out of the news last week that are closely related to the future of the sugar industry. Not that these are new but that they had been repeated quite often we wonder why they remain, like the rock that Sisyphus keeps on pushing up and only for it to roll down the mountain. Is the problem or situation of the sugar industry a burden decreed as if to Sisyphus and thus unending until the gods lift the punishment?

First, there was the statement from UNIFED President Manuel Lamata predicting the collapse of the sugar industry because sugar prices seem to have frozen at P1,200 per P50 per kilo bag.

Second, labor groups insist that there is a cartel that controls sugar prices; third, the Sugar Regulatory Administration is urging planters to avail of soil a laboratory so they could determine the kind of fertilizer to use and improve production; and fourth, President Duterte is urging for greater economic integration in ASEAN with US President Trump responding that he will study the possibility of free trade between the Philippines and the US.

Though seemingly unrelated, they do tell us the state of the industry and where that future will go considering the convergence of events beyond the control of the industry or the government. Will it be as Lamata predicts? Will we finally relegate sugar into a minor, nay even an insignificant portion in our economy? Has SRA really become redundant as to be unable to control or effectively influence the situation? Will the loosening of trade barriers like import control result in the collapse or redirection of the industry?

A close look at these reports will tell us that there is nothing new in the industry. The prediction of Lamata that the industry will collapse has been said many times since the end of the Spanish regime. In fact, it almost died in 1900 and took 15 years to recover and bounce back to unexpected wealth. Can this happen? Maybe, maybe not. Are we at death watch? If we think in terms of the present situation without apparent factors available to overcome the problems that might be just what we are witnessing.

UNIFED, and I think all other planters’ associations and federations, blame the continued importation high fructose corn syrup for the stagnant mill gate sugar prices. Reports say 37,900 MT tons of HFCS were imported, meaning legally brought into the country. The control mechanism for its importation, SRA’s Sugar Order No. 3 has just been declared binding, so why is there continued importation?

Surely the Bureau of Customs knows this Order and still HFCS came in. The reported importation came in last October. Was there a complaint by SRA? Or, was SRA aware of the importation that ought to be cleared by it? I think SRA has plenty of explaining to do considering that it has issued an order against entry of HFCS that the planters learned only from media. If this HFCS was cleared surely the industry wants to know who imported and perhaps add another to a list of products or companies to boycott. That seems to be the only weapon left in its arsenal except that the industry leaders are not looking at the other HFCS users that include bake shops and makers of cakes and pastries and other sugary foods.

The planters seem to peg their belief on HFCS importation as the cause of the drop in sugar mill gate prices. On the other hand, workers claim that while the price at the mill is low, sugar retail price is high. Their suspicion for this disparity is the operation of cartels that are euphemistically called “traders.”

Like their counterparts since Spanish times, these cartels control vital phases of the industry, from financing to transport and distribution and packaging. Along the way, mark ups are imposed, thus increasing the cost from the mill to the store. In short, the so-called cartels are necessary to bring the sugar from the mill to the table. Without them sugar cannot reach the market. But what makes the prices go higher than what the consumers think is fair is that there is no control mechanism, not even by the Department of Trade and Industry that can only issue the ineffective “Suggested Retail Price” or SRP. Beyond that, it has no control.

We resume tomorrow.

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