EDITORIAL - Staying high

Sugar producers say their output is sufficient to meet national demand, and the millgate price does not justify the prevailing retail prices. Supermarket owners say retail prices reflect the current high prices from wholesale dealers.

The 150,000 metric tons of imported sugar arrived over a month ago, and there has been no typhoon to disrupt the ongoing sugarcane harvest and milling season. Local producers say even with the surging costs of imported fertilizer and fuel driven by Russia’s invasion of Ukraine, and with other expenses factored in, the millgate price has been reasonable. So why do sugar prices refuse to come down?

The government plans to import another 64,050 metric tons of refined white sugar under the Minimum Access Volume mechanism in an effort to bring down prices. The MAV refers to the volume of agricultural products that may be imported with lower tariff to promote global trade. Local producers, however, point out that the latest white sugar importation of 150,000 MT has translated to less revenue for the government without the expected price reduction in the markets.

The Department of Agriculture said yesterday that the importation of another 65,050 MT of white sugar under the MAV was still being discussed. DA officials may also consider the suggestion of the domestic producers to call a multi-stakeholder meeting to determine why market prices refuse to go down below P96 a kilo. At some outlets, the price is P108 a kilo.

Local producers say players at every step of the value chain can explain at the meeting the reasons for their pricing, which can then indicate if the prevailing market prices are reasonable. Based on millgate prices and with inputs such as fuel and repacking factored in, the producers say retail prices should be only around P80 a kilo for refined white sugar.

Another suggestion is to impose suggested retail prices for sugar. This can promote hoarding and an artificial shortage, but authorities will just have to step up the campaign against such illegal activities. The DA was supposed to announce SRPs for sugar last month, but this did not push through for still unclear reasons.

Sugar prices were a big factor in food inflation that drove the 14-year-high 8 percent inflation rate in November. Apart from possible price caps, agriculture officials can consider the suggestion to meet with sugar industry stakeholders across the value chain. It shouldn’t take rocket science to determine if prevailing market prices are reasonable, or if they need drastic cuts.