Log In Subscribe

World Trending Business Markets Tech Politics Economy Features Opinion Life & Arts Podcast

ECONOMY

Philippine sugar 'crisis' tests

Marcos' pro-farms push
Coca-Cola cuts production, bakers hike prices amid shortage

Philippine President Ferdinand Marcos Jr. has been critical of sugar imports that hurt local farmers,
but recently conceded that shortages are pushing him to ship in more sugar from overseas. ©
EPA/Jiji

CLIFF VENZON, Nikkei staff writer

August 26, 2022 14:22 JST

MANILA -- A Philippine sugar shortage has forced a soda maker to

cut production and bakeries to hike prices, giving President
Ferdinand Marcos Jr. his first major test as he endeavors to
revitalize the agriculture sector.

Marcos, who is concurrently the agriculture secretary, has been

critical of imports that hurt local farmers. He recently conceded,
however, that shortages are pushing him to ship in more sugar from
overseas.

Soft drink makers, bakeries and small eateries say the sugar
shortage and soaring prices are hurting their businesses and putting
livelihoods at risk.

Coca-Cola Beverages Philippines has suspended operations at four

of its 19 plants; 30% to 40% of its production lines are not running,
and the company is struggling to source bottler-grade refined sugar.
The disruption has affected 900 workers.

"We are assessing the situation on the ground -- our operations, any
developments to ease the sugar crisis -- on a daily basis," Juan
Lorenzo Tanada, the company's director for corporate and
regulatory affairs, told Nikkei Asia on Monday.

The Philippine Baking Industry Group, an association of big bakers,

plans to notify the trade department regarding price increases for
some bread products next week as its members adjust to higher
flour and sugar prices, group head Johnlu Koa said on Tuesday.
"We are hopeful that [the department] will agree to it," Koa said, as
the industry tries to make rising production costs "a little less
damaging to our working capital."

Marcos has met with stakeholders to assess the situation. After

initially rejecting a proposal to import 300,000 tonnes of sugar -- a
move lauded by local producers -- the president said the country
would need to source sweeteners from overseas.

"We will import. We will be forced to do so," Marcos told reporters

last week. "Unfortunately, it's the same situation for all the
agricultural commodities in the Philippines.

"As much as possible, we don't want to import. But the problem is

our production is not enough. And sometimes, the prices are very
high."

Philippine President Ferdinand Marcos Jr. speaks in Quezon City, Philippines, on Aug. 8. © Reuters

As of Aug. 12, prevailing retail prices for refined sugar in Metro

Manila public wet markets had doubled to 100 pesos ($1.80) per
kilogram from last September, according to the Sugar Regulatory
Administration.

A proposed importation of 300,000 tonnes of sugar early this

month sparked controversy when Press Secretary Trixie Angeles
said the import document was signed without the approval of
Marcos.

The Senate on Tuesday opened a probe into the fiasco; new sugar
officials were sworn in on Monday. At least three senior agriculture
officials have quit after Angeles warned "heads" would "roll" if
"malice or negligence" is found in the investigation.

The voided import order projected a 16% drop in raw sugar

production to 1.8 million tonnes in the 2021-2022 crop year, which
ends this month. The lower output was blamed partly on Typhoon
Rai, which devastated crops in December.

Soda makers need 450,000 tonnes for full production for the rest of
the year, Coca-Cola said, raising questions as to whether the
planned import volume will be enough.

In a statement on Tuesday, acting sugar administrator David Alba

said the government would import 150,000 tonnes of refined sugar,
saying other soft drink producers still have sugar supplies. Sugar
officials also urged Marcos to allocate all supplies from the
upcoming crop year for domestic use and ditch a U.S. export quota
allocation, Alba said.

"The Sugar Board just took office, and we ask our industry partners
to indulge us with some time so we can address this issue based on
established facts," said Alba, a former general manager of a major
sugar group in the central Philippines.

The sugar shortage comes with rising commodity prices already

squeezing Filipino consumers. Philippine inflation climbed to 6.4%
in July, the highest since 2018. Inflation for sugar, confectionary
and desserts grew faster at 17.6%, the statics agency reported.

Major supermarkets have agreed to lower sugar retail prices,

Angeles said on Friday. The government has also raided sugar
warehouses suspected of hoarding supplies, suggesting that the
shortage might be "artificial," she said.

Socioeconomic Planning Secretary Arsenio Balisacan said taming

commodity prices is crucial as the Marcos administration aims to
halve the poverty rate to 9% during his six-year term ending in
2028.

"We need to have a balancing act," Balisacan told reporters last

week. "We have to ensure that the tools we employ to protect the
farmers do not harm the rest of the economy, especially [given] that
we are trying to get poverty reduced."

Last week, the Philippine central bank raised key interest rates by
50 basis points to 3.75% amid inflationary pressures, partly due to
"sharp increase in the price of sugar."

As policymakers weigh the appropriate import policy, smaller

enterprises are bearing the brunt of high sugar prices.

Grace Navarro, who runs a small bakery in Manila, said she has
increased prices of sugary breads by 1 peso to 6 pesos. She has also
shrunk the weight of her pandesal, a popular breakfast roll, to 20
grams from 25 to 30 grams to keep prices at 2 pesos apiece.

"Sales have dropped since the pandemic -- super," Navarro said. "If
we don't increase prices, how can we recover?"

Michael Saberit, who sells fried bananas coated in brown sugar

from a roadside kiosk, says it's not easy to raise prices. "I tried
increasing prices, but it shocked customers so I lowered them
again," Saberit said. "It's better to earn less than lose customers."

Get our Asia daily briefing newsletters

newsletter@nikkeiasia.com

Register

READ NEXT

Politics

Marcos movie
generates crowds
and controversy in
the Philippines

Economy
Philippines girds for bigger inflation hit
as economy slows in Q2

Politics
Marcos sets out big economic goal of
slashing Philippine poverty

Politics
Duterte's controversial legacy: Making
Philippine strongmen 'cool'

Politics
Marcos to take Philippine farming
portfolio in inflation battle

Feeding Asia
Asia's new food frontier: The rise of
edible tech

Feeding Asia
Asia's agricultural revolution: planting a
high-tech future

Feeding Asia
India's poorest scald as cooking oil
prices soar

SPONSORED CONTENT About Sponsored Content

Discovering endless Flying penthouses from Check the latest in the Japan-Southeast Asia
possibilities for a fulfilling Dassault / Learn more Japanese business, trends, Market Forum Event Report
life and career/Waseda about Dassault Aviation culture and technology-
Business School Channel Japan

GET INSIGHTS ON ASIA IN YOUR INBOX DISCOVER THE ALL NEW NIKKEI ASIA APP

Register for our newsletters

About Us Contact Us Sitemap Help Terms Of Use Copyright

Privacy & Cookie Policy Advertising

By continuing to browse this website, you accept cookies which are used for several reasons such
asInc.
Nikkei personalizing content/ads
No reproduction and
without analyzing how this website is used. Please review our Cookie
permission. Accept & Continue Close
Policy to learn how you can update your cookie settings.