Coca Cola Femsa Philippines Inc. and Pepsi-Cola Products Philippines Inc. agreed to buy in advance their sugar requirements for 2018 to lessen the pressure on prices of sugar as some millers resorted to dumping the commodity outside their warehouses because of the glut amid the entry of imported sweeteners.
Agriculture Secretary Emmanuel Piñol said Thursday the two beverage companies made the commitment during a meeting with officials of the Sugar Regulatory Administration, industry stakeholders, sugar millers and planters and representatives from the Trade and Agriculture Departments who were trying to resolve the current crisis.
“We all started with the premise that there is no crisis which cannot be solved. The sugar industry is complaining that they have oversupply of sugar right now,” Piñol said.
“One miller showed us sugar being dumped outside of their warehouse, because it [warehouse] is already full and because of that they tried to discover what were the contributory factors dragging down the price of sugar,” he said.
Piñol said the use of high fructose corn syrup could be a possible cause behind current low sugar prices as beverage companies were using HFCS in place of sugar to produce softdrinks.
“Coca Cola now is using 90-percent HFCS and just 10 percent sugar. So I found valid grounds on the complaints of sugar farmers but my point is, the use of HFCS was prompted by the lower cost of the HFCS over sugar,” he said.
“We asked Coca Cola to increase their consumption of local sugar from 90-10 [90 percent HFCS and 10 percent sugar] to 80-20. They also agreed that to diffuse the pressure, they promised to make advance purchase of sugar requirement for 2018 this time,” said Piñol.
The agriculture chief said the two companies agreed to increase utilization of local sugar provided that they were given access to “D” sugar, referring to local sugar output for exports.
“They said that if we can assure them they will have access to ‘D’ sugar, they will increase their consumption provided we give them enough time to adjust their processing,” said Piñol.
The SRA issued Sugar Order No. 3 on March 10 to regulate the entry of imported HFCS.
“All stakeholders agreed that Sugar Order no. 3 is valid and legal but that does not preclude the opportunity and the possibility of amending it to respond to the concerns of the sectors [beverage]. We were able to determine that the HFCS of Coke and Pepsi before March 10 are not covered by SO 3 and therefore should be released from customs pending the necessary documents,” Piñol said.
Pinol said Coca Cola will write officially to SRA asking for a clarification on the coverage effectivity of the SO 3 which is March 10, and seeking clarification that shipments which came before the issuance of the order should not be covered by SO 3.
“ Effectively that addresses the problem of Coca Cola right now that they have 300 containers for release. With that they also agreed to withdraw the legal case,” he said.
Pinol said all sugar stakeholders also agreed to form a sugar industry consultative council under Philippine Council for Agriculture and Fisheries subsector to
look into the productivity of the sugar industry.
“ In fact mechanization and modernization and even irrigation these are the things we need to implement we have to be competitive. With asean integration we must be competitive we must produce sugar at the competitive price with our neighbor otherwise we will have problems all the time,” said Pinol.