Marcos faces the bitter economics of sugar imports from the Philippines

President Ferdinand Marcos Jr., who carried on the function of concurrent agriculture chief to highlight the importance of boosting the sector, is now confronted with the politics and economics of the sugar trade.

Competing soda makers have published a rare statement confirming a lack of premium refined sugar. Seasoned and career farm officials leave over an import dispute. Farmers have rebuffed import proposals and bemoan the dismal state of the industry. Lawmakers are firm on pursuing congressional research into the sugar import boondoggle. The evolution of the sugar import saga keeps getting bitter.

Sugar Imports from the Philippines

Low agricultural productivity and improved domestic demand have resulted in lower sugar exports. Sugar prices were also elevated due to Philippine protectionist policies with little progress in farming methods.

According to ``An Assessment of Reform Guidance for the Philippine Sugar Industry,” a National Economic and Development Authority (NEDA) working paper released in 2021, Philippine sugar prices were double the world price and export prices. Thai in 2019.

PRICE OF SUGAR. The Philippine domestic price of raw sugar vs. Thailand and world export prices, 2001-2019. According to a Philippine Competition Commission (PCC) record released in 2020, there were only 27 sugar mills nationwide as of March 2020. In most areas, only one or two factories are in operation to conform to all their planters.

According to the Sugar Regulatory Administration (SRA), local sugar production will just obtain 1.8 million metric tons in 2022, below the annual demand of 2.03 million metric tons seen over the past three years.

Although the sugar industry has declined since its peak, it remains a vital part of the economy.

NEDA has calculated that sugar farms continue to employ half a million workers. The industry also conceals an absolute area of ​​410,000 people – larger than the total area 25 years ago – and contributes 86 billion pesos to the economy.

Total sugarcane production reached $815 million in 2020, creating it the fifth largest crop, after rice, bananas, corn, and coconuts. But in terms of share in the agricultural gross domestic product, it dropped to 1.9% in 2018 from a peak of 3.6% in 1999.

Why the sugar industry is in crisis

NEDA cited the following as some of the main problems facing the sugar industry:

Fragmented land ownership

Absence of improved cane varieties

Poor soil quality

Inefficient irrigation

Labour needs

Deficient agricultural mechanisation

Inadequate financial capital

Economists also attribute the drop to the isolation of the industry from the international market.

A mandatory sharing agreement between sugar mills and cane growers is also in place, varying from 60% to 40%, to 70% to 30%, the allocation of growers and mills, respectively.

NEDA’s simulations also imply that full liberalisation of the sugar trade would predictably harm planters and millers, whose earnings would drop by 57%, while consumers would gain in welfare by up to 65%.

A decline in prices of up to 11% would be felt, but employment in the sugar industry would drop by up to 16%, while domestic production would fall by 6.8%.

The closure of the domestic market to competition from foreign suppliers is a critical factor in the vulnerability of the domestic industry to competitive losses, PCC stated.

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