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2022–2023 Philippine sugar crisis

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There has been a noted shortage of supply of sugar in the domestic market of the Philippines after a poor harvest of for the 2021–22 crop year. This led to the price increase of the commodity and there has been suspicions of traders taking advantage of the situation through hoarding and/or smuggling.

2022–2023 Philippine sugar crisis
Date2021–22 crop year[a] – present
LocationPhilippines
CauseLow production of sugar
Alleged hoarding
Participants

A plan to import 300,000 MT of sugar through Sugar Order No. 4 was subject to controversy which led to the resignation of officials of the Sugar Regulatory Administration (SRA).

A subsequent SRA Sugar Order, specifically Sugar Order No. 6 dated February 6, 2023,[1] also became subject of a Senate inquiry, in aid of legislation, through Senate P.S. Res. No. 497 filed on February 21, 2023[2] by Senator Risa Hontiveros and before the Senate Blue Ribbon Committee.[3]

Cause

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Low output

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Sugar Regulatory Administration (SRA) administrator Hermenegildo Serafica noted a decrease of sugar output in the Philippines for the 2021–22 crop year. Only 1.8 million metric tons (MT) was produced by June 15 in contrast to the 2.12 million MT output produced by June 13 of the 2020–21 crop year. An unusual decline of sugar production was noted for Negros according to the March 2022 to May 2022 production data. This was attributed to the onslaught of Typhoon Rai (Odette) which damaged the leaves of sugarcane plants in the island.[4] Negros Occidental is the country's top sugar-producing province. According to the SRA's Sugar Regulatory directory, the province hosts five out of 12 active sugar refineries for the 2021–22 crop year.[5]

The Philippines is not a regular importer of sugar and only imports whenever needed. Thailand, the second-largest producer in the world after Brazil, is the top source of imported sugar in the Philippines.[6]

Hoarding

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There are suspicions that the crisis is caused by hoarding.[5][7] United Sugar Producers Federation (Unifed) President Manuel Lamata, insisted that unspecified traders are engaged in "manipulation and hoarding" and claimed that there is no shortage at all.[8][9]

According to Executive Secretary Vic Rodriguez, the government is investigating reports of traders lobbying for the importation of 300,000 MT of sugar so that they could use the additional sugar supply as a cover to sell their hoarded sugar.[10]

After raids conducted in separate locations in August 2022 which yielded 10,700 MT of sugar, the Philippine government concluded that the shortage is "artificial".[11]

Smuggling

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State-sponsored sugar smuggling has also been alleged as a key cause of the Philippine sugar crisis.[12] Senator Risa Hontiveros, through Senate P.S. Res. No. 497 filed on February 21, 2023[2] and before the Senate Blue Ribbon Committee, alleged that the Sugar Regulatory Administration's Sugar Order No. 6 permitted the smuggling of four hundred forty thousand (440,000) metric tons of sugar by and in favor of three (3) only three importers under terms that are contrary to law, including the Anti-Agricultural Smuggling Act.

Impact

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Food inflation has increased as a cause of the sugar crisis. In May 2022, the overall price of consumer goods rose by 4.9%. The retail price of sugar itself has also increased.[13]

Due to the sugar shortage, soda manufacturers Coca-Cola Beverages Philippines, Pepsi-Cola Products Philippines, and ARC Refreshments Corporation released a joint statement on August 16, 2022, that they are experiencing a supply shortage of refined sugar or bottlers' grade sugar.[14] According to 2nd Albay district representative Joey Salceda, soda manufacturers may shift to high-fructose corn syrup if the sugar supply issue continues, which is taxed heavier under the Tax Reform for Acceleration and Inclusion (TRAIN) Law. Manufacturers as a result may increase prices of their products to compensate in an event of a shift to the more heavier taxed sweetener.[15]

The crisis has also threatened the operations of Cebu province's oldest and only sugar milling company, Bogo-Medellin Milling Company, Inc. (Bomedco) in the town of Medellin.[16]

Salceda warned against relying on sugar imports to alleviate the sugar crisis, pointing out that the sugar is a "political and social issue" since the industry directly employs 700,000 people. According to him, overreliance on imports might affect the livelihood of these people.[15]

Average retail sugar prices in Metro Manila per kilogram
Crop Year Date Market Raw Washed Refined Ref.
2020–21 August 18, 2021 Supermarkets / groceries ₱46.99 ₱50.81 ₱54.46 [17]
Public wet markets ₱45.36 ₱46.43 ₱53.00
2021–22 August 18, 2022 Supermarkets / groceries ₱74.11 ₱77.05 ₱99.38 [18]
Public wet markets ₱72.43 ₱74.64 ₱97.21

Response

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Unauthorized Sugar Order No. 4

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Sugar Order (SO) No. 4 was released by the Sugar Regulatory Administration (SRA) on August 9, 2022, which directed the importation of 300,000 MT of sugar to the Philippines. It was intended to "fill the gap in production". The order was signed by SRA administrator Hermenegildo Serafica, and board members Roland Beltran (miller's representative) and Aurelio Gerardo Valderrama Jr. (planters' representative).[19] Agriculture undersecretary Leocadio Sebastian also signed the order in behalf of President Bongbong Marcos, who also concurrently serves as SRA chairman and agriculture secretary.[20]

However, Press Secretary Trixie Cruz-Angeles released a statement that President Marcos did not authorize or sign the order.[19] SRA administrator Serafica resigned on August 10, 2022, over Sugar Order No. 4 (SO 4) which was approved by President Marcos and publicized six days later.[21][22] Agriculture undersecretary Sebastian,[20] and SRA board member Beltran also resigned from their positions.[23]

The directive was scrutinized in both houses of the Congress; the House of Representatives[24] and the Senate (through the Blue Ribbon Committee).[25]

Sebastian cited a July 15 memorandum by Executive Secretary Vic Rodriguez when asked why he signed SO 4 in behalf of Marcos. He was questioned by members of the House of Representatives for his decision believing he did not have any explicit authorization from Marcos. Sebastian maintained that he signed the order in good faith and conceded that he might have "misread" the intention of Marcos, Rodriguez, and other SRA officials.[26]

In a letter to explanation address to Marcos, SRA board member Valderrama maintained that the importation order is based on SRA official data, supply and demand analysis, as well as prevailing high market prices and it was done with consultations with sugar traders.[27] Serafica speaking before the Senate Blue Ribbon Committee admitted he did not consult the board when he drafted SO 4 itself, though he pursued the order following an SRA online meeting with stakeholders including traders on July 29, 2022.[28]

SRA reorganization

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President Marcos announced that he would reorganize the SRA amidst the SO 4 importation controversy.[29] Marcos appointed David John Thaddeus Alba as acting administrator, and Pablo Luis Azcona and Maria Mitzi Mangwag as board members.[30]

Other response

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Despite the averted Sugar Order No. 4, President Marcos in mid-August still raised the possibility of importing sugar to the Philippines to address the sugar crisis.[31][32] He said that around 150,000 MT of sugar could be imported to address the country's needs for the rest of 2022 and projected the current supply to last until October.[32] Marcos is also looking to secure concessions from traders to keep the price of sugar at a "reasonable" rate and has considered allowing manufacturers to directly import sugar to fulfill their own needs.[33]

Aftermath

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In December 2022, the Office of the President (OP) dismissed the case against former officials of the Department of Agriculture and SRA, including Sebastian, Serafica, Beltran, and Valderrama, on grounds that there was no clear evidence that the respondents signed the 300,000 metric tons sugar importation in bad faith. The OP also noted that former Executive Secretary Vic Rodriguez's memorandum dated July 15, 2022 was the source of the miscommunication for the respondents.[34]

See also

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Notes

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  1. ^ The crop year for sugar in the Philippines lasts from September 1 to August 31. The sugar crisis was first noted during the 2021–22 crop year.

References

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  1. ^ Sugar Regulatory Administration. "Sugar Order No. 06 dated 06 February 2023" (PDF). Retrieved September 18, 2023.
  2. ^ a b Senate of the Philippines. "P.S. Res. No. 497 filed on 21 February 2023" (PDF). Senate of the Philippines.
  3. ^ PhilstarLIVE. "LIVE: Senate Blue Ribbon probe on 'Sugar Fiasco 2.0'". Philstar.com. Retrieved September 18, 2023.
  4. ^ Talavera, Catherine (June 20, 2022). "Philippine sugar output continues to drop". The Philippine Star. Retrieved August 24, 2022.
  5. ^ a b "NegOcc exec seeks reopening of refineries amid 'sugar shortage'". Philippine News Agency. June 29, 2022. Retrieved August 24, 2022.
  6. ^ "Marcos denies approving plan to import 300,000 T sugar". Interaksyon. August 10, 2022. Retrieved August 28, 2022.
  7. ^ Calonzo, Andreo (August 22, 2022). "Philippines Says Sugar Shortage 'Artificial,' Blames Traders' Hoarding". Bloomberg. Retrieved August 24, 2022.
  8. ^ "No sugar shortage, industry says; high prices blamed on 'hoarding'". BusinessWorld. July 14, 2022. Retrieved August 24, 2022.
  9. ^ Gomez, Eireene Jairee (June 30, 2022). "SRA: Sugar shortage is real". The Manila Times. Retrieved August 24, 2022.
  10. ^ Aquino, Norman; Tan, Alyssa Nicole; Atienza, K.A.T. (August 18, 2022). "Agents seize P220 million worth of sugar in three separate raids". BusinessWorld. Retrieved August 24, 2022.
  11. ^ Aning, Jerome; Ramos, Marlon (August 22, 2022). "Sugar shortage 'artificial' – Malacañang". Philippine Daily Inquirer. Retrieved August 27, 2022.
  12. ^ Office of Senator Risa Hontiveros, Risa Hontiveros. "Opening Statement of Senator Risa Hontiveros at the Senate Blue Ribbon Sugar Smuggling Hearing".
  13. ^ Yap, Cecilia (June 22, 2022). "Sugar Shortage Hits the Philippines as Food Inflation Woes Mount". Bloomberg. Retrieved August 24, 2022.
  14. ^ Rivas, Ralf (August 16, 2022). "Coke, Pepsi, RC Cola confirm sugar shortage in Philippines". Rappler. Retrieved August 24, 2022.
  15. ^ a b de la Cruz, Jovee Marie (August 7, 2022). "Boosting sugar supply requires structural reforms–lawmaker". Retrieved August 28, 2022.
  16. ^ Erram, Morexette Marie (August 17, 2022). "Sugar crisis threatens Cebu's oldest and only sugar milling company". Cebu Daily News. Philippine Daily Inquirer. Retrieved August 24, 2022.
  17. ^ "SRA Price Monitoring Report: Average & Prevailing Sugar Prices In Metro Manila" (PDF). Sugar Regulatory Administration. August 18, 2021. Retrieved August 28, 2022.
  18. ^ "SRA Price Monitoring Report: Average & Prevailing Sugar Prices In Metro Manila" (PDF). Sugar Regulatory Administration. August 18, 2022. Retrieved August 28, 2022.
  19. ^ a b "Palace denies Marcos signed sugar order". BusinessWorld. August 10, 2022. Retrieved August 28, 2022.
  20. ^ a b Locus, Sundy (August 11, 2022). "Palace: DA exec apologized, resigned over issue of 'illegal' sugar importation order". GMA News Online. Retrieved August 28, 2022.
  21. ^ "Sugar body administrator resigns amid importation mess". GMA News. Retrieved August 24, 2022.
  22. ^ Gita-Carlos, Ruth Abbey (August 16, 2022). "SRA administrator Serafica resigns". Philippine News Agency. Retrieved August 24, 2022.
  23. ^ Bajo, Anna Felicia (August 15, 2022). "Another Sugar Order 4 signatory resigns from post". GMA News. Retrieved August 28, 2022.
  24. ^ "Solon sees pressure from industries that led to unauthorized sugar import order". CNN Philippines. August 16, 2022. Archived from the original on August 27, 2022. Retrieved August 28, 2022.
  25. ^ Fernandez, Butch (August 23, 2022). "Senators: Was sugar order No. 4 data-driven?". BusinessMirror. Retrieved August 28, 2022.
  26. ^ Panti, Llanesca (August 22, 2022). "Memo from ES allowed me to sign SO 4 —Sebastian". GMA News. Retrieved August 28, 2022.
  27. ^ Bayoran, Gilbert (August 17, 2022). "Valderrama: SO 4 'based on facts, proper consultations'". The Visayan Daily Star. Retrieved August 28, 2022.
  28. ^ Pinlac, Beatrice (August 23, 2022). "Ex-SRA chief Serafica on order to import sugar: I didn't consult the board". Philippine Daily Inquirer. Retrieved August 27, 2022.
  29. ^ Unite, Betheena (August 17, 2022). "Marcos to reorganize SRA this week amid sugar importation mess". Manila Bulletin. Retrieved August 28, 2022.
  30. ^ Gita-Carlos, Ruth Abbey (August 20, 2022). "PBBM names new SRA execs". Philippine News Agency. Retrieved August 27, 2022.
  31. ^ Venzon, Cliff (August 26, 2022). "Philippine sugar 'crisis' tests Marcos' pro-farms push". Nikkei Asia. Retrieved August 27, 2022.
  32. ^ a b "Philippines sugar imports still possible, Marcos says". BusinessWorld. Reuters. August 15, 2022. Retrieved August 28, 2022.
  33. ^ Lopez, Vince (August 17, 2022). "BBM eyes sugar price cut, direct company import". Manila Standard. Retrieved August 28, 2022.
  34. ^ Sevillano, Stephanie (January 6, 2023). "Ex-DA, SRA execs absolved in sugar importation raps". Philippine News Agency. Archived from the original on January 6, 2023. Retrieved January 6, 2023.
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