"I am all for lessening the cost of intermediation and doing away with the middlemen. I have no objection to that (direct importation of sugar by beverage makers)," Favila said.
Helping lower intermediation cost would cushion the impact of the continued rise in world sugar prices.
Favila was recently informed of the continued rise in world sugar prices by members of the Philippines Sugar Millers Association.
Alfredo M. Yao of Asiawide Refreshments Corp. had recently proposed that food processors should be allowed to import on their own to enable them to lower their manufacturing cost.
According to Yao, "government should allow end-users to import directly from abroad. At present, we have to buy at the market since we cannot import."
Food processors, Yao added, "should also be allowed to import and not only the traders who would only dictate the prices in the end." Asiawide Refreshments Corp., is the manufacturer of RC Cola and Zest-O.
Yao explained that allowing end-users like beverage producers to import would significantly help in bringing down the cost of sugar which is one of the major ingredients in beverage production.
Yao pointed out that beverage manufacturers cannot just raise their prices because the cost of their ingredients has gone up. He disclosed, "if you increase your prices, you kill your brand."
Yao assured that the importation of sugar at this time would only be a temporary measure.
Yao also argued that the 50,000 metric tons imported by the Philippine International Trading Corp. (PITC) is not enough to make a significant impact on local sugar prices.
The 50,000 metric tons is equivalent to only one million bags of sugar.
Yao disclosed that Asiawide alone needs 100,000 bags per month of 50-kilogram bag of sugar for its production of Zest-O and RC Cola.
Favila, in a similar effort to lower the intermediation cost of sugar, had also asked sugar millers to sell directly to small sugar dealers to help lower the cost to the consuming public.
According to Favila, small sugar dealers complain that they currently are not allowed to bid for sugar since the minimum bags sold are around 10,000 bags.
Small sugar dealers want to be able to bid for a minimum of 100 bags or even lower at 50 bags.
At the current cost of around P1,800 to P1,900 per bag, Favila relayed, a minimum of 100, or even lower of 50 bags, is all that small dealers can reportedly purchase.
By allowing small dealers to bid directly from the sugar millers, Favila said, the cost of sugar to consumers could be kept stable as the price would not increase due to a number of middlemen who would tack on additional cost to the product.
The domestic price of sugar has been increasing since December last year.
The Department of Agriculture (DA) had informed the Department of Trade and Industry (DTI) that there is some hoarding or hedging of sugar.
Favila has already warned that government would allow the importation of sugar to assure supply rather than result to price control.