Planters vs. food processors

By: Modesto P. Sa-onoy

IT HAD been that way for many years – planters want a high price while food processors and consumers want cheaper price. This is natural in an economy under a free enterprise. The Sugar Regulatory Administration was established with the main task to balance the conflicting interest of the two parties. The SRA is supposed to represent the government that is neutral to insure that one party does not unreasonably profit at the expense of the other.

At least that is the theory in principle but ever since SRA and its predecessor, the National Sugar Trading Corporation, were formed it was perceived to be inclined more to favor the food processors or manufacturers and the consumers. The consumers, however, has a different view – the government favors the planters or producers because of their political clout.

A report last week says that the Confederation of Sugar Producers Associations has raised a complaint against the move of the food processors to deregulate the industry and allow open importation of sugar.

According to the report that came out June 12, Confed spokesperson Raymond Montinola said “it seems that the lobby to liberalize sugar importation in the country has been resurrected through food processors and manufacturers who comprise a miniscule market in terms of sugar usage.”

In that score, Montinola is right but in the game of economic maneuvers, this small group carries a great clout not only because of their money but also because of their closeness to power. On the other hand, if they use only a minimal quantity of sugar, how can they adversely influence the market as to compel the government to allow a liberalized importation of sugar? There must be more than the question of the size of this market.

Montinola reportedly quoted Philippine Food Exporters Inc. president Roberto Amores saying “domestic processors are hurting and high cost of sugar in the local market is killing the local industry but favoring foreign competition.”

In rebuttal, Montinola disagreed claiming that mill-gate sugar prices have not increased drastically in the past months to consider the cost of domestic sugar as prohibitive.

The processors are comparing the prices in Thailand and the Philippines, but surely we cannot compare pricing in one country with another because the situation there is different from here.

I recall a speaker in our conference in Stockholm saying that when consumers were complaining that a pound of potatoes in Bangladesh is cheaper than in Sweden, the businessmen told the critics to buy their potato there.

Thus to compare the price of our sugar with Thailand, Australia, India and Brazil is illogical. These processors can manufacture their products there rather than compel the Philippine sugar industry to sell at the same price as those in other countries.

Moreover, Montinola said the SRA has a system that would allow industrial users, like food processors, to get priority for their sugar supply and that the SRA had already mentioned that it will import sugar when the need arises.

All they have to do is ask and consult with the agency that will address their concern and that the SRA has said that it will authorize import sugar when the need arises, Montinola reportedly assured the food producers and in fact, no authority to import has been issued, indicating enough sugar in the domestic market for the food processors.
He also claimed that the food processors are lobbying through the media to call for direct importation although they know that over five million Filipinos directly and indirectly dependent on the sugar industry will suffer.

The claimed dependents, however, have not been authenticated but even if true, the processors can claim a larger size of constituencies consisting of millions of consumers and retailers and lost opportunities due to an uncompetitive product.

This issue cannot be resolved until the production cost of Philippine sugar is reduced to the level of the other exporting countries. For now, the consumers have accepted this reality and are not bashing the industry. The food processors can do the same. If the small guys can help carry the burden why not the mega rich?

Montinola reportedly said that they “suspect that there are larger groups behind this move and that cheap imported sugar goes into the local market. Isn’t it time to collect from Tatak Kalamay?

But let’s resume tomorrow.