Considering the steady weakening that has taken place in Philippine export trade over the years, an announcement by a government entity that a certain Philippine industry has achieved a production sufficient to fully cover domestic consumption and leave some output for export should receive a big welcome and both the industry and the government agency should be commended — the industry for bringing forth the production and the agency for presumably doing a good regulatory job.
Sugar Order No. 1, the first directive of the SRA (Sugar Regulatory Administration) in the current sugar crop year of – September 1, 2020 to August 31, 2021 – is one such announcement.
The Order stated that national sugar production in CY 2020 – 2021 of “more or less” 2.19 million metric tons (MT) would be sufficient to cover projected national consumption of 1.97 million MT, giving rise to a surplus of approximately 220,000 MT that could be exported to the U.S., which every year allots to the Philippines a share – a quota – of the sugar market.
The people who are highly knowledgeable about this country’s sugar industry should have welcomed Sugar Order No. 1 with mitigated delight. But they’re not doing so. Why? Because SRA’s figures for domestic consumption and exportable sugar are false. False, as in untrue.
The problem is not with the estimate of CY 2020 – 2021 total production. The 2.19 million MT estimate, based as it is on actual past production figures, is generally believed to be close to the mark.
SRA’s figure for total domestic consumption during the current crop year – 1.94 million MT – is another matter. It is way off the mark.
Philippine Statistics Authority (PSA) figures indicate that in recent years consumption has averaged 2.5 million MT annually and has not gone below 2.3 million MT. The same figures indicate a steady uptrend since 2016.
To counteract the real consumption figures SRA has taken to talking of “withdrawals.” Common sense indicates that “withdrawals” are mere parts of a bigger item, namely, total consumption.
One does not need a Ph.D. in economics to appreciate that there can be no exportable surplus if domestic production falls short of domestic consumption. But SRA, in Sugar Order No. 1, insists that in CY 2020-2021 there will be approximately 220,000 MT of sugar available for export to the U.S. (designated as “A” sugar by SRA).
If indeed there will be no surplus, the exported 220,000 MT will have to be replaced with other sugar, whether domestically produced or imported.
Why is this happening? What game is being played here?
It is the game of price differentials that is being played. Consider the following prices: On January 17, 2021, the average mill-state price of “A” sugar was P1,270 per 50 kg bag while sugar domestic-market sugar (“B” sugar in SRA terminology) was priced at P1.505. These are SRA-gathered figures.
The answer to the question who pockets the differential should be obvious to a sharp-minded person: those who make the rules using false production/consumption/export data.
Very obvious are the economic ramifications of sugar-industry trickery and fakery. Not so obvious are their social ramifications. DA (Department of Agriculture) and DAR (Department of Agrarian Reform) data that most sugar farms are 10 hectares or less and that the great majority of 5 hectares or less.
The owners of these small farms should be allowed to obtain the maximum value of their sugarcane: but how can that happen when, as a result of the trickery and fakery, they receive P1,270 for every 50 kgs of their hard-won output instead of P1,505?
Chairperson Cynthia Villar of the Senate committee on agriculture and food, Chairman Aquilino Pimintel III of the Senate committee on trade and entrepreneurship and Secretary of Trade and Industry Ramon Lopez should look deeply into this matter.
Let’s not bother asking Secretary of Agriculture William Dar; he is the ex-officio chairman of SRA and he has gone on record as saying that the SRA Board is doing nothing wrong.