Government hiking purchase of raw sugar to 500K MT

To keep prices stable

MANILA, Philippines — The government will siphon off as much as a quarter of the country’s projected raw sugar supply as it seeks to propel farmgate prices of the commodity to a level favorable to planters while keeping retail prices affordable to consumers.

The Sugar Regulatory Administration (SRA) issued Sugar Order 2 that outlined the guidelines for the country’s voluntary purchase program at a premium in the current crop year 2024-2025.

This is the second time the government opted to implement the measure to keep farmgate prices of sugar profitable to planters without causing a spike in retail prices of the commodity.

Under the sugar order, the SRA board chaired by Agriculture Secretary Francisco Tiu Laurel Jr. approved the siphoning off of as much as 500,000 metric tons (MT) of raw sugar bought by eligible entities at a premium.

The purchased raw sugar would be held off from market circulation for a maximum of three months unless approved for release by the SRA board. The cap for the voluntary purchase program is 28 percent of the country’s projected 1.78 million MT raw sugar output in the current crop year.

Tiu Laurel said the higher purchase volume was meant to create a more predictable market and prevent price speculations while the program is ongoing.

SRA administrator and CEO Pablo Luis Azcona said the cap on the voluntary purchase program was also raised to prevent erratic fluctuations in the farmgate prices as eligible participants would have to compete with each other if the volume was retained at 300,000 MT like last year.

Farmgate price of raw sugar spiked to P2,900 per 50-kilogram bag at the end of January as traders have speculated ahead of the issuance of SO 2. The price was P500 higher than the P2,400 per 50-kilogram bag average quotation recorded at the end of December last year.

Azcona noted that sugarcane planters are hoping for a stable price of raw sugar around P2,800 per 50-kilogram bag, which is considered by industry players as fair to both farmers and consumers. The monthly average price of sugar has been below P2,800 per 50-kilogram bag in the past three months beginning November.

If the limit of the voluntary purchase is hit, then participants of the program would be eligible to import as much as 250,000 MT of raw sugar based on the approved 2:1 purchase-import ratio.

The purchase-import ratio was also revised from last year’s 1.5:1 to stretch the duration of the voluntary purchase program while ensuring that the domestic market would not be flooded with prospective imported supplies to the detriment of the sugarcane planters, according to sources.

Furthermore, SO 2 stipulated that only raw sugar enrolled in the voluntary purchase program would be allowed to be shipped to the US in fulfillment of the country’s tariff-rate quota allocation should the SRA board open an export program in the current crop year.

“In the event that an export program in fulfillment of the 2025 US quota allocation is undertaken, only sugar enrolled under Section 3.4 (i) of this Sugar Order shall be eligible to be exported to the United States of America under the 2025 US Quota Allocation,” the document read.

Under the SO, a maximum of 120,000 MT of sugar covered by quedans issued on or after the week ending Dec. 22, 2024 but not later than the week ending Feb. 23 would be enrolled in the program. Meanwhile, a minimum volume of 380,000 MT of raw sugar covered by quedans issued on or before June 8 can be part of the voluntary purchase program.

Azcona explained that the SRA board decided to include a tie-in provision on voluntary purchase program with the export program to prevent double dipping in the possible import allocation that an eligible entity could get in future import programs.