"The fact of the matter is that DA and SRA have for years been unable to secure an ample supply of sugar for the Filipino people."
The Department of Agriculture (DA) and the agencies under its control and supervision have several major responsibilities under the Constitution and the laws that created them. Unquestionably, the most important of those responsibilities is the maintenance of a supply of agricultural products – rice, corn, sugar, meat, etc. – sufficient to meet the demand of the population.
How is demand computed? The Secretary of Agriculture answered the question clearly and unequivocally in the course of his 12 April 2021 testimony before the Senate on the issue of whether pork should be imported to cover the supply deficit created by the African swine fever (ASF).
William Dar, Ph.D., said this to the senators: “Our supply is composed of local production plus imports. That gives you the supply to meet the demand.” Secretary Dar was merely reiterating the definition that has always been used by the FAS (Food and Agriculture Service) of the world’s most important department of agriculture, namely, the U.S. Department of Agriculture (USDA).
Regretfully, Mr. Dar’s definition of “oversupply” of sugar is not reflected in the way that the national sugar supply is computed by the SRA (Sugar Regulatory Administration), the Philippine sugar industry’s regulator, SRA does not include imports of sugar in its computation of total sugar consumption; as a result, total sugar consumption is lower that if imports were included in the computation.
This non-inclusion has a profound impact on the determination of whether the domestic sugar supply is or is not adequate. Obviously, SRA cannot allow exports if the domestic sugar supply is inadequate; under Executive Order No. 18 Series of 1988, DA and SRA are mandated to “ensure an ample supply of sugar.”
The fact of the matter is that DA and SRA have for years been unable to secure an ample supply of sugar for the Filipino people. Statistical data unrefuted by DA and SRA indicate that this country’s total annual sugar consumption has averaged 2,406,700 metric tons (MT) during the five crop years (CY) ending CY 2019-2020.
A sugar CY ends on August 31. The highest consumption took place in CY 2016-2017, when Filipinos consumed 2,686,231 MT. Yet, SRA, in its Sugar Order No. 1 dated 1 September 2020, placed estimated total consumption – which it chooses to call “domestic raw sugar withdrawals” – to be 1,970,000 MT.
And what is the purpose of the gross understatement of national sugar consumption? The clue to the answer is the same Sugar Order’s estimate of raw sugar production in the current year: an estimated raw sugar production of 2,145,000 MT. would give rise to a “surplus” that can be exported to the U.S. In SRA terminology export sugar is “A” sugar, while sugar earmarked for the higher-price domestic market is “B” sugar.
Under Sugar Order No. 1 seven percent of the estimated CY 2020-2021 production has been designated “A” sugar.
Recently, SRA dug itself into a deeper computational hole. Citing an estimated production drop of 90,000 MT, dropped the seven-percent-for-export scheme. But it stuck to its consumption and production figures. The alleged surplus had become even less credible.
As a result of the recently adjusted raw sugar production report, this country faces a 341,000 MT supply deficit in the rest of 2021, knowledgeable industry people say. Yet, rumors are rife that one way or another SRA will allow the still-unshipped 34,000 MT of “A” sugar to be exported
This must not be allowed to happen. Not only will the supply deficit bring about a rise in sugar prices for both consumption and production – with the implications of this for the CPI (consumer price index) but allowing the exports will also mean additional fast-footwork traders know how to exploit the difference between low export prices and high domestic-market prices.
Paging Senator Lacson.