RECENT data from the regional chapter of the Confederation of Sugar Producers' Association Inc. (CONFED) suggests that sugar production may drop by 15-20 percent compared with last year.

If this regional trend is repeated nationally, then this suggests that last year's bumper production of 2.4 Metric Tonnes (2.4m MT) may be followed by an output of around 2.0 million MT this year.

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What then are the consequences?

Firstly, we need to gain an understanding of the amount of sugar we consume. This data is notoriously hard to obtain due to the fact that the market is impacted by an uncertain amount of smuggled sugar.

But in 1997, it was estimated that the national sugar consumption was approximately 1.75m MT. The population then was 70 million, suggesting a per capita consumption of 25 kgs. We believe that per capita consumption has neither increased nor decreased markedly since 1997. Since the population is now 90 million, then we estimate that national consumption is around 2.25m MT.

So imports, whether licit or illicit, are necessary.

International Aspects

Our burgeoning population is making food self-sufficiency problematic. We are already the world's largest importer of rice.

We now have 90 million souls living on 300,000 sq km (30 million hectares) of land, including uninhabited and uninhabitable land. Our population density, therefore, is 300 people per sq km; more than double that of Thailand (140 per sq km). Thailand has an annual sugar production of around 5.5 million MT.

Thailand has a reasonably well-developed secondary sugar industry. For example, the international conglomerate, Kraft Foods, manufacturers in Thailand the popular powdered drink, Tang. Produced in a wide variety of flavors, all of which contain 97% sugar, it is an effective way of gaining much added value with little effort.

Despite the buoyant secondary sugar-fuelled industry in Thailand, there remains a surplus of sugar there, some of which is smuggled here.

When the world market price is only around US$0.12 per pound (P700 per 50 kg bag) compared with an internal Philippine price of around P1,000 per sack; when we have a tariff of 38 percent; when Philippine domestic demand usually exceeds domestic supply, then it is difficult for some to resist the temptation to smuggle sugar into our archipelagic country with its many remote beaches and some allegedly bribable officials.

The question of disparity between our own price and the world market price needs examination. The disparity varies, but the current level where the world market price is 30 percent less than our domestic price is not untypical.

Pricing difficulties can occur, particularly with the sometimes extremely high retail prices. In November 2007, for example, the world market price was around P12 per kg but the retail price in the Philippines was P40. This difference meant that Pinoys were paying more for sugar in supermarkets than Americans earning an average, 20 times as much.

It should not be beyond the capability of our government to ensure fair play to the 90 million consumers as well as those in the industry.

Asean

In 1995, the Association of South East Asian Nations (Asean) reached a general agreement that by 2007, there would be no tariffs on any goods between member states. Some years later, the Philippines negotiated to extend its tariff on sugar until 2010. Now there are observations by Senator Mar Roxas and others that the Philippines should renegotiate to extend its 38 percent sugar tariff to beyond 2010.

If the Asean is to be more than a talking shop (and there are mutterings from some member states that it is close to being just that - a talking shop), then there comes a time when all members have to accept the implementation of free trade. This time is maybe now.

At a marketing conference at the University of St La Salle, Bacolod on October 8-9, Lito Coscoluella, head of the Sugar Regulatory Authority (SRA) addressed the issue of cheap sugar imports from 2010. The main theme of his presentation was that improved competitiveness is the way forward.

Is this a subtle signal that the government accepts the current Asean agreement that the tariff will be the 0-5 percent range from 2010?

For more Philippine news, visit Sun.Star Manila.

(November 10, 2008 issue)
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