BY BEN ARNOLD O. DE VERA Reporter

SMALL food processors and exporters warned a Malacañang order allowing state-run Sugar Regulatory Administration (SRA) to import the commodity on behalf of the private sector may do little to temper domestic prices.

“Based on information that we have been receiving, all allocations [of sugar to be imported by the SRA]—for industrial and institutional users, and food processors—will be based on the domestic “B” price, which is much higher. This defeats the purpose of the planned sugar importation, at least as far as the food processors are concerned,” Jesse Tanchanco Jr., Food Entrepreneurs and Exporters of the Philippines Inc. chairman, told The Manila Times in an e-mail.

“Our only chance to stay competitive in the global market is to be able to access sugar at world market prices,” Tanchanco said.

The government plans to import 150,000 metric tons of sugar in a bid to temper rising domestic prices of the commodity owing to a projected shortfall in local production arising from the El Niño and demand from the nascent ethanol industry. This would be the Philippines’ first big-scale purchase from abroad since the country became self-sufficient in sugar.

Instead of the “B” price, Tan-chanco said the government should allow food processors access to so-called “D” sugar.

“Prices in the world market have increased significantly, but [sugar] is still cheaper if imported duty-free. We are entitled to [‘D’ sugar] because our purchases are subject to liquidation, [while] the other sugar-using sectors are not required,” Tanchanco said.

In a letter to the Philippine Chamber of Commerce and Industry dated February 1, Roberto Amores, Philippine Food Processors and Exporters Organization Inc. president, said, “Continued access to the competitively priced ‘D’ sugar is critical to food processors and exporters as sugar imports are levied a duty of 38 percent,” which is “a protective tariff rewarded until now to the inefficient Philippine sugar industry.”

“Without the ‘D’ sugar, food exporters and processors will be colossally disadvantaged and uncompetitive since sugar as raw material for sugar-based processed products account for 30 [percent] to 40 percent of production cost,” Amores said.

“Asean countries, such as Thailand, Malaysia and Vietnam, whose domestic sugar [prices are] 30 percent lower than ours, are already eating up into our market share in the global market. Moreover, our local producers are already affected by the entry of cheaper sugar-based food products coming from our Asean competitors who are already benefiting a 5-percent tariff under the AFTA-CEPT scheme,” Amores, who is also PCCI vice president for food and agriculture, added.

AFTA-CEPT is the Asean Free Trade Area-Common Effective Preferential Tariff scheme.

Tanchanco said that while SRA last year granted the food processors and exporters’ request for access to the lower priced “D” or exporters’ sugar, the same agency late last year discontinued this access without prior notice or consultation.

He said they were instead given access to “B” or domestic sugar, which is significantly more expensive.

“This act has caused many of our members to entail huge losses as they still had to make good on their commitments to ship their products with prices based on the ‘D’ sugar cost but actually had to use ‘B’ prices, which have actually doubled in price since last year,” Tanchanco said.

“Many exporters have slowed down and many are planning to close down should the continuing upward spiral of the price of sugar not alleviate soon,” he added.