In a letter dated Oct. 1, 2001 to Montemayor, Philippine Food Processors and Exporters Organization Inc. (Philfoodex) president Jesus T. Tanchanco said helping food exporters, through better priced sugar will enable the sector to help in economic recovery in the face of a global recession that would adversely affect the country’s export products.
Tanchanco said a major factor that burdens the food processing industry is the cost of sugar, which at present is P1,200 to P1,300 per 50-kilo bag wholesale which translates to P24 to P26 per kilo retail. By contrast, sugar sells for P10 per kilo in Indonesia, P13 in Thailand, P12 in Laos and P14 in Malaysia.
Considering that sugar comprises 30 to 70 percent of the cost of processed food products (juices, biscuits, candies, etc), the cost difference works to the disadvantage of food processors, who are outpriced in the market, Tanchanco said.
He noted that the local sugar industry is heavily protected (from 50 to 65 percent under the minimum access volume and another 15 percent increase in the very near future, or a total of 80 percent) despite the Philippines being a net importer of sugar.
Tanchanco appealed for DA’s assistance to help local food processors continue operating their plants and survive the growing competition in the food market.
He said Philfoodex is asking for the following from the DA:
• Allow food processors to buy their sugar requirements from the NFA at a price of P100 per bag lower than their selling price to retailers.
• Restore the domestic sugar allocation of locally-produced sugar to food processors. This involves setting aside one percent of local production to be sold at special pre-arranged price to Philfoodex at levels similar to ASEAN competitors.
• Annual allocation of 50,000 tons of special rate MAV for importation by Philfoodex for production use of food processors. This will serve only as a buffer stock to be brought in depending on the local supply situation.
He said the food processing industry is committed to support the Arroyo administration’s program to attain a more sustainable agricultural development and create jobs for the millions of Filipinos in the urban areas through food processing and export.