Philfoodex chairman Edward David said duty-free sugar imports are critical to raising the competitiveness of food-based small and medium enterprises (SMEs) that are increasingly finding it difficult to battle foreign competition.
David said the current allocation given to Philfoodex members by the Sugar Regulatory Administration (SRA) – about one-half of one percent of domestic sugar production – is inadequate to fill up food exporters’ requirements.
At one-half of one percent, David said this is only 9,500 MT per year of the average local production of 1.9 million MT.
Locally-sourced sugar is also more expensive, claimed David.
"The price remains to be non-concessionary at P600 per bag which our members still have to get in quedan form (these are quedan certificates that represent sugar inventory in sugar mills) and these are raw sugar that need to be refined at an additional cost of P200 per bag.
David said Philfoodex members previously bought 100,000 bags a month or about 500 MT at supposedly concessionary prices about two to three years ago through the National Food Authority (NFA).
Government in recent years brought down the volume to just 20,000 bags or 20 MT monthly as local sugar producers claimed that cheap imported sugar is hurting the industry.
David claimed, however, that the import allocation to food exporters does not hurt the domestic sugar producers because the volume brought in is small and not even enough to meet their requirements. Also, sugar imported by food exporters are not sold in the local market.
On the other hand, SMEs, not the big companies, are the ones that suffer from higher priced inputs.
"If food exporters are given concessionary terms through duty-free sugar imports, government can help the small and medium processors," said David.
Sugar producers want to raise sugar tariff rate to 80 percent from 65 percent and to defer the Philippine government’s commitment to the ASEAN free trade agreement up to 2010.
David said government should consider the situation of food exporters before raising the tariff on imported sugar.
"We have a situation here wherein the cost of imported raw materials or inputs would turn out to be even higher than the cost of just bringing in finished products. It’s short-sighted to just raise tariff because in the end, it’s your market that you’re killing. Food processors use 40 to 50 percent of their product. If this industry dies, they’ll have oversupply," he added.
Philfoodex earlier asked that food exporters, instead of being given B1 (domestic supply) allocation, should be allowed to import duty-free sugar so that food processors can avail of cheaper imported sugar, just like its ASEAN competitors such as Thailand and Malaysia.
David pointed out that Thailand pegs the price of its domestic sugar at P12 to P13 per kilo compared to Philippine sugar which is retailed at about P24 per kilo.
Philfoodex said that if duty-free sugar imports won’t be allowed, the domestic allocation given to food exporters should be priced lower and at more liberal terms.