STATUS OF THE PRICE OF SUGAR

IN THE PHILIPPINES

Presented To: ENGR. MONALINA M. BARRIOS

Prepared by: GROUP 2

Members:

ANGEL LYN MESINA

MONICA JAVIER

JONA MARIANO

HANNA JANE BALLARTA

SHEKINAH GLORY LIBERATO

MARIANNE ARBOLEDA

ELLEN FELIZARDO

DHARLENE MAE BALOMA

GICELLE KYLA DELGADO

JOVELYN LAZARO

JACKIELYN MARUAL

JOANA MARIE FRAGO

 TABLE OF CONTENTS

EXECUTIVE SUMMARY ……………………………………………........ 1

INTRODUCTION…………………………………………………………. 2

DISCUSSION………………………………………………………………... 3

DEFINITION OF TERMS…………………………………………………. 6

CONCLUSION..……………………………………………………………. 8

RECOMMENDATIONS……………………………………………………. 9

REFERENCES……………………………………………………………… 11
 INTRODUCTION

The Philippines is one of the world's largest sugar producers, and the sugar industry plays
a significant role in the country's economy, providing employment to millions of people.

In this report, we will provide an overview of the current status of the price of sugar in
the Philippines, including recent trends, market factors driving price changes, and potential
impacts on key stakeholders. We will analyze the challenges faced by the sugar industry in the
Philippines and how they have affected sugar prices.

Additionally, we will explore the government's interventions and policies aimed at

stabilizing sugar prices and their effectiveness. We will also provide insights into the future
outlook for sugar prices in the Philippines and offer recommendations for businesses and
investors looking to navigate this dynamic market.

Our goal is to provide you with valuable insights that can help inform your decision-
making and position your organization for success in the ever-changing landscape of the sugar
industry in the Philippines. So, without further ado, let's delve into the current state of the sugar
market in the Philippines.

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 EXECUTIVE SUMMARY

VISION

“By 2040, the Philippines shall have a globally competitive sugarcane industry that
supports the food, power, and other related industries through an institutionally competent Sugar
Regulatory Administration (SRA) and committed stakeholders, for a secured future for
Filipinos.”

MISSION

“Sugar Regulatory Administration (SRA) is a Government Owned and Controlled

Corporation which formulates responsive development and regulatory policies, and provides
Research, Development and Engineering (RD & E) services to ensure sufficient supply of
sugarcane for a diversified, sustainable and competitive industry that improves productivity and
profitability of sugarcane farmers and processing industries, and provides decent income for
workers towards enhancing the quality of life of Filipinos.”

CORPORATE GOALS AND OBJECTIVES

1. Pro-active and effective policies and regulations to ensure viability, food safety, environmental
sustainability and global competitiveness of the sugarcane industry;
2. Product diversification, development and promotion;
3. Responsive technical assistance and extension services to sugarcane industry stakeholders;
4. Environment-friendly and innovative Research and Development (R&D) technologies for the
sugarcane industry stakeholders
5. Sustained development of expertise and human resources in the field of sugarcane industry
development and related areas;
6. Empowered Sugar Regulatory Administration (SRA) supportive of its Vision, Mission and
Goals.

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 DISCUSSION

In the Philippines, the main types of sugar commonly used and produced are:
• Raw
• Washed
• Refined

During the 2021/2022 crop year, refined sugar in the Philippines was being sold at 89.5
Philippine pesos, a significant increase from the prevailing retail price in the previous crop year
which was about 54.5 Philippine pesos per kilo. The retail price of washed and raw sugar also
significantly increased in this period.

The Philippines is currently facing a massive shortage in sugar supply, with large soda
companies even reporting disrupted operations due to the ongoing shortage. Retail prices of
sugar in supermarkets in Metro Manila reached as high as 126 Philippine pesos per kilo or 2.24
U.S. dollars, nearly thrice as much as the previous year's retail price.

Sugar Industry Development Act. Republic Act 10659, otherwise known as the
Sugarcane Industry Development Act (SIDA) was passed in 2015. The main objective of this
law is to promote the competitiveness of the sugarcane industry through mandated programs and
appropriations. Sugarcane Industry Development Act (SIDA), has five components:

1. Establish productivity improvement programs;

2. Provide the needed infrastructure support;

3. Enhance research and development of other products derived from sugar, sugarcane, and their
by-products;

4. Provide human resource development and extension services; and

5. Provide financial assistance to small farmers.

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 Sugar is widely used in the Philippines for various purposes. Here are some common uses
of sugar in the country:

•Food and Beverage Industry

•Cooking and Baking
•Desserts and sweets
•Preserving and Canning
•Traditional Medicine

A. WHOLESALE PRICE of SUGAR per 50-Kilo Bag (2022-2023)

PRICE

Wholesale Prices. The low sugar output for Market Year (MY) 2023 has led to soaring
wholesale prices for both raw and refined sugar in Metro Manila. Refined sugar prices have
spiked to PhP3,550 per LKG (1 LKG = 50 Kilo of bag of sugar) in May 19, 2023. The Philippine
media has reported that the government is looking to import more sugar to stabilize prices,
although Sugar Regulatory Administration (SRA) has not yet issued a new Sugar Order.

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B. RETAIL PRICE of SUGAR per Kilo (2022-2023)
PRICE

Retail Prices. High wholesale prices translate to elevated retail prices, which have risen
to PhP95.00 per kilo in May 19, 2023. The Philippine Department of Agriculture (DA) sets
suggested retail price of refined sugar at PhP50 per kilo, which groceries and supermarket have
not followed as reflected in the numbers above. The wholesale and retail prices of sugar in Metro
Manila can be accessed above.
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CONCLUSION

The sugar industry of the Philippines is only weakly affected by competition from
producers outside the country. Import penetration into the domestic market has been historically
low; domestic prices tend to be much higher than world prices (often double or more); and
changes in world price translate only weakly to changes in domestic price. The absence of
foreign competition is due to the application of non-tariff barriers by the Sugar Regulatory
Administration (SRA) which effectively serve as the industry Quick Response (QR).

Institutions have evolved to countervail the abuse of market power of millers. Planters'
associations formed to serve as a unified bargaining agent on behalf of planters; for one, they are
able to station inspectors to check the veracity of the sugar content measurements made by the
mill, attenuating the problem of asymmetric information. Similarly, the sugar sharing agreement
enforced by the Sugar Regulatory Administration (SRA) protects planters from the abuse of
market power by the millers; however, it has its own drawbacks as a source of inefficiency in the
sugar industry.

Planters have a moderate view of the exercise of market power and the abuse of a
dominant position in sugar processing and trading of quedans. While planters would tend to
agree that processors and traders do coordinate among each other to reduce buying price and
gain other advantages, planters are only moderately dissatisfied about the state of competition,
fairness of pricing, and the other payments and services of the mills. Apparently, the
countervailing institutions are functioning to moderate the anti-competitive tendencies inherent
in sugar marketing and processing.

There is limited evidence that sugar is mobile enough across mill districts to eliminate
arbitrage opportunities. Even as key informant interviews suggest that prices are competitively
set across mill districts, further analysis of Philippine Statistics Authority (PSA) data on
provincial prices show only weak evidence that geographic price discrepancies have been
arbitraged away. This deserves further study and suggests that the movement of sugar across
space is constrained. We rule out regulation as a barrier, given that the inter-island permit is used
to regulate only the movement of imported sugar and not of domestic sugar. This leaves high
freight cost and geographic segmentation in sugar trading as the possible explanations for
persistent price discrepancies across mill districts.
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RECOMMENDATIONS
The following recommendations are oriented towards the competition policy of the
Philippines as provided under the Philippine Competition Act (PCA). The Philippine
Competition Act (PCA) prohibits setting up barriers to entry or acts that prevent competitors
from growing within the market except those resulting from superior product or process,
business acumen, or legal rights or laws (Section 15(b)). Notwithstanding this exception, it
remains the function of the Philippine Competition Commission (PCC) (Section 12(r)) to
advocate pro-competitive policies of government, including advising the Executive Branch. on
the competitive implications of government actions, policies, and programs. Without minimizing
the legitimate social objectives pursued by existing laws (such as Executive Order 18), namely
price stability and preserving the economic viability of the sugar industry, the following
recommendations are framed consistent with this function of the Philippine Competition
Commission (PCC):

Liberalize the importation of raw and refined sugar at ASEAN Trade in Goods
Agreement (ATIGA) and Most Favored Nation (MFN) tariff rates. The closure of the
domestic market to competition from foreign suppliers is a key factor behind the vulnerability of
the domestic industry to competition failures. As with the fertilizer industry and other sectors, the
presence of large domestic processors due to economies of scale need not vitiate competition if
foreign suppliers can compete freely with domestic processors and send prices down to world
market levels plus freight cost and tariffs (equal to 5 percent for imports from Association of
Southeast Asian Nations (ASEAN), and 65 percent for imports from outside the Association of
Southeast Asian Nations (ASEAN).)

Reexamine the sharing system and consider the shift to sugarcane procurement. The
sharing scheme places a rigid market arrangement between planters and mills. A more
straightforward way to create market flexibility and open up competition is to shift to sugarcane
procurement; in the case of mill district dusters (such as found in Negros Island), this will lead to
competitive price bidding for sugarcane. Moreover, the shift out of the sharing system will
remove a key source of inefficiency in the sugar industry. Boosting efficiency and
competitiveness of the domestic sugar industry is even more critical if and when the preceding
recommendation on liberalizing imports is adopted.
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A shift to a cane purchase system should be accompanied by a prohibition on

forward integration of mills to trading. Under a cane purchase system, mills will come into
possession of all the sugar stocks: currently they are also owners of all the warehouses for sugar.
These advantages may confer on them a market leadership position and open opportunities for
coordinating stock-release and price-setting. The prohibition on the purchase of additional stocks
will open up opportunities for other players to enter the marketing chain of the sugar industry,

Continue and strengthen the quedan as a warehouse receipt system and not a means
to segment markets. The quedan explicitly divides the market, poses entry barriers to market
segments and would constitute a direct violation of competition law were it not for the exception
provided in Section 15(b). Note though that the liberalization of sugar importation will nullify
the industry segmentation enforced by the sugar classifications. Users of sugar will be able to
freely purchase cheap world market sugar, eventually enforcing a single prevailing price in the
domestic market. However, the quedan itself, as a warehouse receipt system, need not be
abolished.

Maintain market transparency and enforce free domestic transport of sugar. The
transparent discovery and dissemination of mill site prices, thanks to industry associations and
the Sugar Regulatory Administration (SRA), should be maintained after sugar industry reform.
Liberalized importation will vastly reduce the incentive to smuggle imported sugar, obviating the
need for placing undue restrictions on the inter-island shipping of sugar.
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REFERENCES

https://ispweb.pcaarrd.dost.gov.ph/isp-commodities/sugarcane/

https://www.philstar.com/headlines/2023/05/01/2262896/sugar-retail-price-supermarkets-hits-
p136kilo

https://www.sra.gov.ph/about-us/corporate-objectives/

https://www.sra.gov.ph/about-us/

ACCC, 2019. Effectiveness Survey Report on Findings Final Report. Ref 3899. ACCC.
 11

DEFINITION OF TERMS

Abolish
Formally put an end to (a system, practice or institution).

Anti-competitive
Is a practice that includes activities like price fixing and boycotts.

Arbitrage
The simultaneous buying and selling of securities, currency or commodities in different markets
or in derivative forms in order to take advantage of differing prices for the same asset.

Asymmetric
Having two sides or halves that are not the same.

Attenuate
Reduce the force, effect or value.

Business Acumen
Is someone's ability to understand and handle business situation.

Constrained
Appearing force or overly controlled.

Countervail
Offset the effect of (something) by countering it with something of equal force.

Delve
To try hard to find out more information about something.

Discrepancy
A lack of compatibility or similarity between two or more facts

Diversification
Is a strategy that mixes a whole variety of investments within a portfolio in an attempt to reduce
portfolio risk.

Duster
A kind of sprayer machine that is used for spraying chemicals at larger areas of farmland.

Freight
Transport (goods) in bulk by truck, train, ship or aircraft.
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Infrastructure
The basic physical systems of a business, region, or nation and often involves the production of
public goods or production processes.

Massive
Very large in size, or amount.

Nullify
Make legally null and void, invalided.

Quedan
A warehouse and storage receipt given to the hacienderos.

Raw Sugar
Also known as turbinado sugar, is light brown in color and comes in crystalized form.

Refined Sugar
It is made by extracting and processing the sugar naturally found in foods like corn, sugar beets,
and sugar cane.

Shortage
A situation in which there is not enough.

Smuggle
Move (goods) illegally into or out of a country.

Tariff
A tax or duty to be paid on a particular class of imports or exports

Vastly
To a very great or vast degree or extent.

Vitiate
To destroy or impair the legal validity of.

Washed Sugar
Is a form of sugar with a larger reduction of molasses removed from its coating and a much
lighter form of raw sugar.
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