2022 Philippine sugar crisis

2022 Philippine sugar crisis
Date2021–22 crop year – present
LocationPhilippines
CauseLow production of sugar
Alleged hoarding
Participants

There has been a noted shortage of supply of sugar in the domestic market of the Philippines after a poor harvest of for the 2021–22 crop year. This led to the price increase of the commodity and there has been suspicions of traders taking advantage of the situation through hoarding. A plan to import 300,000 MT of sugar through Sugar Order No. 4 was also subject to controversy which led to the resignation of officials of the Sugar Regulatory Administration (SRA).

Cause

Low output

Sugar Regulatory Administration (SRA) administrator Hermenegildo Serafica noted a decrease of sugar output in the Philippines for the 2021–22 crop year. Only 1.8 million metric tons (MT) was produced by June 15 in contrast to the 2.12 million MT output produced by June 13 of the 2020–21 crop year. An unusual decline of sugar production was noted for Negros according to the March 2022 to May 2022 production data. This was attributed to the onslaught of Typhoon Rai (Odette) which damaged the leaves of sugarcane plants in the island. Negros Occidental is the country's top sugar-producing province. According to the SRA's Sugar Regulatory directory, the province hosts five out of 12 active sugar refineries for the 2021–22 crop year.

The Philippines is not a regular importer of sugar and only imports whenever needed. Thailand, the second largest producer in the world after Brazil, is the top source of imported sugar in the Philippines.

Hoarding

There are suspicions that the crisis is caused by hoarding. United Sugar Producers Federation (Unifed) President Manuel Lamata, insisted that unspecified traders are engaged in "manipulation and hoarding" and claimed that there is no shortage at all.

According to Executive Secretary Vic Rodriguez, the government is investigating reports of traders lobbying for the importation of 300,000 MT of sugar so that they could use the additional sugar supply as a cover to sell their hoarded sugar.

After raids conducted in separate locations in August 2022 which yielded 10,700 MT of sugar, the Philippine government concluded that the shortage is "artificial"

Impact

Food inflation has increased as a cause of the sugar crisis. In May 2022, the overall price of consumer goods rose by 4.9%. The retail price of sugar itself has also increased.

Due to the sugar shortage, soda manufacturers Coca-Cola Beverages Philippines, Pepsi-Cola Products Philippines, and ARC Refreshments Corporation released a joint statement on August 16, 2022 that they are experiencing a supply shortage of refined sugar or bottlers' grade sugar. According to 2nd Albay district representative Joey Salceda, soda manufacturers may shift to high-fructose corn syrup if the sugar supply issue continues, which is taxed heavier under the Tax Reform for Acceleration and Inclusion (TRAIN) Law. Manufacturers as a result may increase prices of their products to compensate in an event of a shift to the more heavier taxed sweetener.

The crisis has also threatened the operations of Cebu province's oldest and only sugar milling company, Bogo-Medellin Milling Company, Inc. (Bomedco) in the town of Medellin.

Salceda warned against relying on sugar imports to alleviate the sugar crisis pointing pointing out that the sugar is a "politically and socially issue" since the industry directly employs 700,000 people. According to him, overreliance on imports might affect the livelihood of these people.

Average retail sugar prices in Metro Manila per kilogram
Crop Year Date Market Raw Washed Refined Ref.
2020–21 August 18, 2021 Supermarkets / Groceries ₱46.99 ₱50.81 ₱54.46
Public Wet Markets ₱45.36 ₱46.43 ₱53.00
2021–22 August 18, 2022 Supermarkets / Groceries ₱74.11 ₱77.05 ₱99.38
Public Wet Markets ₱72.43 ₱74.64 ₱97.21

Response

Unauthorized Sugar Order No. 4

Sugar Order (SO) No. 4 was released by the Sugar Regulatory Administration (SRA) on August 9, 2022 which directed the importation of 300,000 MT of sugar to the Philippines. It was intended to "fill the gap in production". The order was signed by SRA administrator Hermenegildo Serafica, and board members Roland Beltran (miller's representative) and Aurelio Gerardo Valderrama, Jr. (planters' representative). Agriculture undersecretary Leocadio Sebastian also signed the order in behalf of President Bongbong Marcos, who also concurrently serves as SRA chairman and Agriculture secretary.

However Press Secretary Trixie Cruz-Angeles released a statement that President Marcos did not authorize or sign the order. SRA administrator Serafica resigned on August 10, 2022 over Sugar Order No. 4 (SO 4) which was approved by President Marcos and publicized six days later. Agriculture undersecretary Sebastian, and SRA board member Beltran also resigned from their positions.

The directive was scrutinized in both houses of the Congress; the House of Representatives and the Senate (through the Blue Ribbon Committee).

Sebastian cited a July 15 memorandum by Executive Secretary Vic Rodriguez when asked why he signed SO 4 in behalf of Marcos. He was questioned by members of the House of Representatives for his decision believing he did not have any explicit authorization from Marcos. Sebastian maintained he signed the order under good faith and concede that he might have "misread" the intention of Marcos, Rodriguez, and other SRA officials.

In a letter to explanation address to Marcos, SRA board member Valderrama maintained that the importation order is based on SRA official data, supply and demand analysis, as well as prevailing high market prices and it was done with consultations with sugar traders. Serafica speaking before the Senate Blue Ribbon Committee admitted he did not consult the board when he drafted SO 4 itself, though he pursued the order following an SRA online meeting with stakeholders including traders on July 29, 2022.

SRA reorganization

President Marcos announced that he would reorganize the SRA amidst the SO 4 importation controversy. Marcos appointed David John Thaddeus Alba as acting administrator, and Pablo Luis Azcona and Maria Mitzi Mangwag as board members.

Other response

Despite the averted Sugar Order No. 4, President Marcos in mid-August still raised the possibility of importing sugar to the Philippines to address the sugar crisis. He said that around 150,000 MT of sugar could be imported to address the country's needs for the rest of 2022 and projected the current supply to last until October. Marcos is also looking to secure concessions from traders to keep the price of sugar at a "reasonable" rate and has considered allowing manufacturers to directly import sugar to fulfill their own needs.


This page was last updated at 2022-11-11 03:40 UTC. Update now. View original page.

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