Agriculture Secretary Emmanuel Piñol on Thursday said big beverage firms have expressed willingness to buy more locally produced sugar – at lower prices.
Piñol said Coca-Cola FEMSA Philippines and Pepsi Cola plan to purchase their sugar requirements for next year in advance, to ease the pressure on sugar planters who have been complaining of the drop in prices of the sugar because of the entry of high-fructose corn syrup (HFCS) from China.
HFCS, the Cabinet official noted, accounts for 90 percent of Coca-Cola’s production. Sugar accounts for the rest, 10 percent.
“They (Coca-Cola) offered to increase their consumption of local sugar from 90:10 to 80:20,” Piñol said in a media briefing at the Department of Agriculture central office in Quezon City.
To do this, both softdrinks manufacturers, which have relied on HFCS since 2010 when prices of local sugar doubled, would need at least six months to restructure their production processes.
“They just need enough time to adjust their processing, manufacturing process… they need to install new clarification machines to convert raw sugar to syrup that can be used in their softdrinks,” Piñol explained.
Coca-Cola earlier said it would spend millions of dollars for the retrofitting of its processing plant to help local sugarcane farmers.
Piñol said even higher utilization of locally produced sugar would be possible if beverage companies get access to “D” sugar or sugar for export to non-US markets, which costs lower than “B” or domestic sugar and “A” sugar or sugar for the US market.
“The increase in HFCS consumption by these companies was prompted by the lower cost of HFCS over sugar.
You know how things go in business world… it’s always profit. Kung saan sila makakatipid, doon sila gagamit [They will use whatever will cut their costs],” he said.
“I asked for higher utilization of sugar to 70:30. But it was only a request I made, and you have to understand they are businessmen,” Piñol said. “But if they will be given access to ‘D’ sugar, they can further increase the share of sugar and you’ll be surprised with the number.”
The policy of the Sugar Regulatory Administration (SRA), however, allows “D” sugar only for products intended for export, he said.
Piñol said he had instructed SRA Administrator Anna Rosario Paner to review Sugar Order (SO) No.3, which regulates the entry of HFCS to the country.
“All stakeholders agreed that SO 3 is valid and legal. But that does not preclude the opportunity and the possibility of amending it to respond to the concerns of the sectors,” he said.
The Agriculture chief also said HFCS shipments that arrived in the country before March 10 should be allowed to leave the yard, noting that some 300 containers were being held up by port authorities because of lack of permits from the SRA.
A source privy to the matter said there was no need for a six-month reprieve for beverage companies to retrofit their facilities, claiming that was just an excuse to dispose of their high inventory of HFCS, including those held up at ports of entry.
“They have been processing sugar. The facility is still there,” the source said. “They are just buying time to at least dispose of their HFCS inventory before they could go buying local sugar.”