Government mulls voluntary purchase of raw sugar

To hike Farmgate prices

MANILA, Philippines — The Sugar Regulatory Administration (SRA) is mulling a new round of voluntary purchase program that would siphon off a certain level of raw sugar from the market to arrest falling prices of the commodity.

SRA administrator and CEO Pablo Luis Azcona said the agency’s board is now studying the possibility of opening a voluntary purchase program that would encourage traders to buy raw sugar higher than prevailing market prices in exchange for the right to future import programs.

“We are studying what we did last year and finding ways to improve it and make it a lot fairer to participate. (We want) anybody can participate as long as they possess a domestic trading license,” Azcona said.

Under a voluntary purchase program, raw sugar would be bought at a premium and would be classified as “C” sugar or reserved sugar, meaning the stocks would be temporarily held off from market circulation, effectively reducing available supply for sale.

The SRA first implemented such a program in the previous crop year 2023-2024 wherein it was able to hold off over 260,000 MT of raw sugar from market sale for a maximum of three months.

During the first voluntary purchase program, eligible traders reportedly bought sugar at a price between P2,700 and P2,800 per 50-kilogram bag, compared to the prevailing market price back then of around P2,500 per bag.

Farmgate prices of raw sugar also immediately returned to above P2,700 per 50-kilogram bag level following the implementation of the program in the previous crop year.

The SRA chief explained that multiple sugarcane planters federations have written to the agency to ask the government to intervene and address the falling farmgate prices of raw sugar.

“(Agriculture) Secretary (Francisco Tiu Laurel Jr.) is also very concerned about the current sugar pricing since there is no oversupply but prices are declining,” Azcona said.

The SRA head said the country’s combined raw and refined sugar stocks are about 450,000 MT, which was around the same level as the 406,000 MT recorded two years ago.

However, Azcona said farmgate prices of raw sugar are polar opposites compared to two years ago, when prices were above P3,000 per 50-kilogram bag.

Today, farmgate prices have fallen to as low as P2,400 per bag of raw sugar, Azcona said.

Azcona pointed out that the current prevailing raw sugar farmgate prices are even lower than last year’s average price of about P2,600 per bag when the country had so much supply at more than 750,000 MT.

“The current pricing is at breakeven or even lower than the cost-to-produce of small-scale farmers,” he said.

The SRA earlier said it supports and is open to any possible probe by the House of the Representatives on the declining farmgate prices of raw sugar that has been detrimental to small-scale sugarcane planters.