Food processors seek sugar import allocation

Published October 14, 2019, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

Amid the rising opposition against the liberalization of sugar industry, local food processors yesterday changed tune saying they only seek an annual sugar import allocation to stabilize supply for manufacturers and improve their global competitiveness.

An import allocation of as much as 105,000 metric tons (MT) of the sweetener every year would be enough for them, officials of Philippine Chamber of Agriculture and Food Inc. (PCAFI) and Philippine Food Processors & Exporters Organization (Philfoodex) said.

In a joint statement, Philfoodex President Roberto Amores and PCAFI President Danilo Fausto said they will soon seek the approval of President Rodrigo Duterte for an annual sugar import allocation, which will help stabilize their manufacturing input and raise their global competitiveness with heftily lower cost.

“We’re not requesting for liberalization. We’re requesting for import allocation for stabilization for the cause of processors,” said Amores.
PhilFoodex is composed of as much as 12,000 micro, small, medium and large scale food manufacturers and exporters.

At present, 68 percent of the country’s sugar output goes to industrial users like Cola FEMSA Philippines and Pepsi Cola Products Philippines, Inc., while 22 percent of the supply is bought by institutional customers like pastry shops and bakeries. Only 13 percent of the supply goes to household.

But, food processors argue that the allocation they get from the local production is not yet enough to bring down their operation cost. This, as the price of locally produced sugar is higher than imported sugar.

According to PCAFI, an annual sugar import allocation will cut sugar cost for food manufacturing from P55 to P60 per kilo locally to P28 to P30 per kilo.
Fausto said this petition of PCAFI and Philfoodex for an import allocation will be accompanied by an implementation mechanism to ensure it does not adversely affect local sugar farmers’ plight.

“We will propose an implementation mechanism that will ensure this allocation will not go to the retail market but rather help our food producers become competitive,” said Fausto.

The Sugar Regulatory Administration (SRA) that is mandated by the law to regulate the supply of sugar. It is also the government agency tasked to determine when is the best time to import sugar and make such order.

Amores lamented that while the SRA had once approved sugar importation for 170,000 MT, this volume has not benefited food processors.

Rolandy Dy, Head of University of Asia & the Pacific Center for Food & Agribusiness, said the sugar import allocation for local food processors is necessary.

“The problem is we’re not competitive in products like biscuits, candies,” said Dy. “I’m talking about those 4,500 food processors who are paying P55 versus P28.”

For instance, Dy said, when Apollo biscuits from Malaysia or Indonesia arrive here, it would only cost P10. To produce the same product here, a Filipino processor would have to spend P15.

To recall, it was the Department of Finance (DOF) that suggested the liberalization of sugar industry as this could bring down the retail cost of sugar in the local market.

The agency stressed that the high effective protection rate (EPR) of the Philippine sugar industry has been penalizing consumers and deterred the growth of downstream industries.