By Modesto P. Sa-onoy
We can summarize the mechanics of this anomalous transaction that Steven Chan exposed: manipulate the data to show there is enough sugar to justify the allocation of a percentage of production to the cheap US market. When the reality of limited domestic supply starts to be felt, SRA calls for importation to fill the shortage but sell the cheap import at current higher Philippine market. The import quota is given to the same people who had been granted the privilege of exporting to the US. This scheme is called, “export replacement” – replacing by imports the sugar unnecessarily exported to the US.
The privileged few buy the US export sugar at a low price, a disadvantage the producers and sell it to the US at higher prices. Then they turn around and import cheaper foreign sugar to “replace” the sugar they exported to the US on the excuse to prevent a domestic shortage.
Feigning to help the consumers when the shortage arises as it was planned to occur, these same traders are granted importation rights.
The streetwise guys call this operation as “lagare” – you push the saw and get something; you pull the saw and get some more.
Chan identified the operators of this scheme as a “select group of import/export traders being granted the privilege” and that the Sugar Alliance is part of this game as they are also engaged in the sugar import and export trade.
Since the beginning, we have cited the data that Steven Chan wanted the public to consider. Let us cite some more of his statistics to illustrate his point.
When SRA issued its annual Sugar Order for CY 2020-2021 in late August, SRA “engaged in a media blitz proclaiming a large surplus in our sugar supply. The motive was obviously to condition the public that the country has to export raw sugar.”
With this premise – excess supply – SRA “flushed out” the supposed surplus, otherwise sugar producers would suffer.”
The statistics makes a lie of the SRA statement about a surplus because there had been a continuing shortage for the last five years as data indicate – there never was a shortage.
To “show” there was a shortage, SRA kept the real data on consumption by simply writing a false estimate. For instance, SRA estimated consumption to be only 1.970 million tons, when it should be 2.483 million tons. In order not to get caught, SRA used the phrase, “raw sugar withdrawals” and peddled it as consumption.
This is trickery, a blatant falsehood that Congress and the proper investigating agencies should look into. This scheme is clearly intended to give undue financial benefits to the “select group”.
But as the native saying goes, “ang guinamos mabaho guid”. And when the shortage could not be covered up indefinitely, SRA was forced to issue SO 1-A to stop allocating 7% of the sugar produced during the last few weeks of the crop year to the US market.
The SRA played again with its own statistics. Blaming the pandemic, SRA claimed there was a drop in consumption. If this were true, should there not be more sugar around? Why increase the domestic supply?
On the other hand, SRA claimed that there was a drop of 90,000 tons in production because of the pandemic but “consumption remains at 1.970 MT.”
Chan claims that from SRA records the estimated production is “down to 2.10 million tons and the latest data show that consumption is 2.407 MT, a deficit of 307,000 MT. Usually, this deficit is covered-up by importation but circumstances forced SRA to reallocate the 7% US quota sugar to the domestic market.
The actual deficit, according to Steven Chan is 341,000 MT but there are still 69,000 MT tons of unshipped “A” sugar that he suggests “should be used to reduce our deficit to 272,000 MT” and bring down the “killer imports” while “stabilizing the domestic market.”
SRA must convert the “A” to “B” to reduce our deficit and “finally stop” negotiating behind closed doors” but grant the import awards via public auction.
However, he said, “SRA has always refused to do this.” They “want their export/import traders to first bring in their imports for bigger profits,” like the pork importers.
If SRA refuses to do this, there is more urgency for Congress to step in.
