By Modesto P. Sa-onoy
News report last week said that the Sugar Regulatory Administration revised its sugar allocation for this crop year – 100% goes to the domestic market. The 7% original allocation for the US market will now be stopped and all sugar produced to the end of milling as of April 4 will be classified for local consumption. The order is intended to “ensure a stable supply of the commodity” in the domestic market.
Is there a shortage? Or is this subterfuge?
Most of the cane fields in Negros had been harvested and only 93 % of it was allocated for the local or “B” market. Thus only the late harvesters and those who kept their quedans will be benefitted.
The real beneficiaries are the traders with insider information that the cheaply priced “A” of US market sugar will be converted to the more pricey “B” sugar. Don’t be surprised, sugar trading needs market intelligence to get the maximum, just like any other traders.
According also to the news report, the SRA said “the initial projection of national sugar production of 2.19 million metric tons has dropped to 2.10 million MT due to the prolonged La Niña weather phenomenon that has affected sugar-producing provinces, especially in Negros Occidental, particularly in Silay, E.B. Magalona, Victoria, Manapla, and Cadiz.”
It explained that the La Niña “was more severe than initially expected and it brought heavy rains in all sugar-producing regions, even flooding in several sugarcane fields” and “lowering the sugar content in cane — from 1.87 LKg/TC (50-kilo bag per ton cane) to 1.71 LKg/TC.”
The Philippine sugar crop year starts in September and ends in August of the following year. Just before the start of the crop year, SRA issues an order indicating how much of the country’s expected sugar production will be for domestic consumption and how much will be exported to the world market. This crop year SRA allocated 97% for the domestic market and 7% for the US market. The price paid to producers is lower for the US than the local market, in effect, subsidizing the export to the US. The producers get a composite price for their sugar.
The news said the SRA decision was “due to the drop in sugar production.” But this decision is late in the game; it could have been done since five years ago when the SRA board came into power.
For years we have pointed out that all our sugar should be sold to the domestic market because we don’t produce enough and it is priced higher, but SRA prefers to allocate part of our production for the US. It persistently and obstinately insisted on shipping to the US. Why?
SRA’s mandate is to protect the local market and the producers. By allocating part of our insufficient production to the cheaper export market SRA financially disadvantaged the producers.
The key to this allocation system is the SRA data given to the public. Majority of the planters today are small ones and they could not make out the statistics. Moreover, they rely on what the SRA says because they have no direct access to the bases of SRA’s data. So, what SRA says, goes.
Two advertisements came out in the local papers last week, placed by A. Steven Chan of the Passi Sugar mill. One advantage of the millers over the planters is that millers have better means of collecting data, but most keep silent for whatever reason, I will not speculate. Most millers have closer relationships with SRA than the planters despite their number. Some leaders of the planters organizations have also close ties with SRA officials as several are traders.
There should be transparency in the SRA because the members of its board come from the industry and should represent the producers. The consumers are represented by the government which is not really a big thing. I believe our readers can understand the reasons.
Theoretically everyone is represented but we know better. As French Prime Minister Georges Clemenceau said “War is too important to be left to the generals”. Similarly, we cannot leave alone the decision-makers in agencies with the power to regulate industries with billions of pesos involved.
Continued tomorrow.
