Industrial users to get allocation from sugar imports - Favila

MANILA, Philippines -  Trade and Industry Secretary Peter Favila is in favor of allocating a portion of the planned 150,000 metric ton (MT) importation of sugar for industrial users, contrary to the Sugar Regulatory Administration’s position not to do so.

In an exclusive interview with The STAR, Favila said that the government would import the whole 150,000 MT and would allocate a portion for industrial users who have been clamoring for sugar.

According to Favila, the government would evaluate the food product that would need the sugar allocation.

“We will decide whether the food product is a consumer staple,” Favila assured, brushing aside the SRA’s fear that allowing industrial users to avail of the duty-free sugar would “ruin the industry.”

Favila assured that Finance Secretary Margarito Teves and Agriculture Secretary Arthur C. Yap support his position and that it was Yap who had initially recommended the importation of sugar to meet consumer demand.

Following a perceived sugar shortage in the domestic market that may have caused sugar prices to rise, Yap mid last week ordered the SRA to reallocate the SRA’s strategic supply of sugar to the domestic market, to help ease an unexplained tightness in sugar supply and an increase in sugar prices.

At the same time, Yap also endorsed the need to import sugar to ease domestic demand and ease pressure on domestic sugar producers to supply the domestic market and allow them to set aside some sugar stock to meet an expected increase in the US sugar quota allocation by April this year.

The Board of the SRA last week agreed to endorse the duty-free importation of between 60,000 to 150,000 tons of preferably raw sugar to arrive starting April to July this year, to ease rising domestic sugar prices.

According to SRA head Rafael Coscolluela, the SRA prefers the importation of raw sugar, rather than refined sugar, to give some benefit to local millers.

“It makes no sense to bring in refined sugar when we are in a position to do it ourselves,” Coscolluela said.

He added that the imported sugar is intended first for consumers.

Coscolluela is against allocating the imported sugar to industrial users, warning that “it would ruin industry.”

Coscolluela feels that industrial users have the capacity to import their own sugar.

The Government, he said, would ensure the proper distribution of the imported sugar so that “no special area benefits.”

The sugar to be imported would initially be sourced from the Philippines ’ ASEAN (Association of South East Asian Nation) neighbors.

The National Food Authority (NFA) would do the importations.

The  duty-free raw sugar to be imported would make use of the Tax Expenditure Fund (TEF). Thus, the Government would be subsidizing the importation.

However, based on the SRA’s computation based on London sugar prices as of Jan. 11, at zero tariff, the imported sugar would still retail  at P50.86 per kilo.

If the value-added tax (VAT) is also eliminated, the price of the imported sugar would go down to P46.49 per kilo.

Coscolluela explained that the proposed importation of up to 150,000 tons of raw sugar was based on a 13 percent to 15 percent increase in actual purchases and consumption.