NFA to intensify sugar procurement activities

The National Food Authority (NFA) will intensify its sugar-procurement activities in a bid to prop up low millgate prices.

"We will be buying more in the coming weeks and that should help arrest declining sugar prices," NFA Administrator Arthur T. Yap said.

NFA, an attached agency of the Department of Agriculture, was ordered by President Arroyo to buy from sugar producers at least 70,000 metric tons (MT) of sugar at a minimum price of P700 per 50-kilogram (kg) bag. Malacañang issued an exeucutive order (EO) about two weeks ago authorizing NFA to buy sugar.

Yap said that depending on the location, NFA’s buying price could go up by as much as P720 per 50-kg bag.

Sugar Regulatory Administrator James Ledesma said the sugar to be acquired by the NFA will come from "C" or reserve sugar representing 20 percent of total sugar production. This is equivalent to 70,000 MT or 1.4 million 50-kg bags of sugar.

"The producers still have the option … to sell to NFA or not. The price offered by the NFA could be considered as the floor price and it gives producers an alternative market for his quedans," Ledesma said.

Ledesma said that since NFA started buying last week, a total of 40,000 bags were disposed of by sugar millers. He said the NFA’s procurement target is 200,000 bags or 10,000 MT each week.

The NFA’s intervention in the market should last four about a month and with the benchmark price of P700 per bag, the SRA believes this will be enough to siphon off excess sugar as sugar traders compete for the limited volume in the market, and raise sugar prices again.

Ledesma said that while sugar prices have not moved up significantly, NFA’s buying should start reflecting in the market by the end of this week.

"The sugar industry is hopeful that by the end of the month or April, sugar prices will start to go up" Ledesma said, adding that anything beyond P700 which is the sugar miller’s breakeven price should be adequate to stabilize prices again.

The sugar industry lobbied to have the NFA bail it out as domestic prices hit rock bottom last Feb. 5 as millgate prices of sugar plunged to P638 to P660 per bag.