PHL faces raw sugar shortage as demand surges

Aside from refined sugar, the Philippines may also suffer from a shortage of raw sugar due to higher demand from processors and manufacturers amid thin domestic supply and lower output.

Sugar Regulatory Administration (SRA) chief Hermenegildo R. Serafica said industrial users and manufacturers are now buying raw sugar just to meet their demand for the sweetener, putting more pressure on the country’s raw sugar supply.

“Manufacturers who didn’t buy raw sugar historically are now buying even raw sugar to have the raw sugar processed as refined sugar for their consumption,” Serafica said in a statement.

“So now there is also going to be a shortage in raw sugar. The high demand, low supply situation is being felt now with the high prices of sugar.”

Serafica said the situation was caused by the stalled implementation of the government’s refined sugar import program due to legal impediments.

He said the country could have avoided a “double whammy” if the sugar import program, which calls for the purchase of 200,000 metric tons (MT) of refined sugar under Sugar Order (SO) 3 had pushed through.

“If SO 3 had been implemented according to schedule, we would have been able to address the demand of the manufacturers early on, prices would not be this high and our raw sugar and refined sugar supply would not be at this critical volume,” Serafica said.

“By addressing the need of the manufacturers, we would have alleviated the demand and the retail market would have stable sugar supply and prices. It is because SO3 was stalled, that manufacturers have been willing to buy sugar at whatever price to ensure that their factories don’t run out of sugar.”

The average retail price of refined sugar in Metro Manila wet markets has reached a fresh record high of P72.73 per kilogram while its average price in supermarkets is now at an all-time high of P74 per kg, based on SRA data.

SRA data also showed that refined sugar sold in Metro Manila markets was sold for P62.50 per kg to P90 per kg.

The average retail price of raw sugar in Metro Manila wet markets is now at P59.53 per kg while its average quotation in supermarkets is at P61.93 per kg.

The average wholesale price of refined sugar as of June 17 reached a new record high of P3,479.29 per 50-kg bag, 50.7 percent higher than last year’s P2,308.75, SRA data showed. Also, the average wholesale price of raw sugar rose by half year-on-year to a record P2,731.67 per 50-kg bag.

Logistical concerns

AS the implementation of SO3 was resumed just last month, Serafica said “it will take time” before the entire import volume could be shipped into the country “due to logistical concerns.”

“Due to the delays, it is only now that imported sugar is starting to trickle in,” he said. “In fact, it would take a minimum of 3 weeks for a sugar shipment from Thailand to arrive in the Philippine ports.”

Before imported sugar can be used locally, Serafica said traders the shipment must first undergo a series of bureaucratic processes.

“The imported sugar must be issued clearances and released from the BOC [Bureau of Customs], then these will be issued approval for classification to B sugar so they may be used for local consumption,” he said.

“Classifying sugar is one of SRA’s tools to balance the sugar supply and demand. The imported sugar comes in as C sugar (reserved), it is then converted to B sugar (for domestic use) when the sugar supply situation demands or when we need to augment the local supply.”

Last week, the BusinessMirror broke the story that the Philippines has started to approve the arrivals of imported refined sugar in the country, especially from Thailand, to boost the country’s domestic supply and temper rising prices. (Related story: https://businessmirror.com.ph/2022/06/14/phl-clears-sugar-importsfrom-thailand-as-prices-rise/)

Serafica said the projected raw sugar output at the time SO 3 was crafted was at 1.982 million MT (MMT). Based on the latest SRA estimate, final crop output in the current crop year would settle at 1.8 MMT, lower than the estimated sugar demand of about 2.03 MMT.

“SRA is also fast tracking all the requests for clearance to import and reclassification of imported sugar to B. We are processing these requests as soon as possible,” he said.

The country’s raw sugar production as of June 12 declined by 15.63 percent year-on-year to 1.789 MMT, based on SRA data. During the period, the country’s total raw sugar inventory was at 267,005.02 MT, down by 39.75 percent from last year’s 443,129.11 MT.

SRA data showed that the country’s refined sugar output fell by 2 percent on an annual basis to 714,912.3 MT while the country’s total refined sugar stocks declined by 60.25 percent to 128,598 MT from last year’s 323,519.15 MT.