THE news last week (Nov 27) raises anew the dire price situation of Philippine sugar. Not that the issue is recent but two new factors came into view that the industry’s regulatory body has officially identified and must investigate – manipulation of prices by sugar traders and continued legal importation of sugar which was held in abeyance. Suddenly, high fructose corn syrup is no longer the sole villain causing the precipitous drop in mill gate prices. Of course smuggling is always there. This is well-known within the industry and the government.
The news claims prices had sunk to P1,190 per P50-kilo bag, way below production cost. Sugar prices, of course, always take a roller coaster path, some low periods are longer than others, but somehow the industry has survived and even prospered. However the situation today diverts from those of previous decades when economic protectionism was the shield for survival. What is clear however, is that the industry has already started to shrink since the adoption of CARP, the forced partition of sugar lands.
Some years back I attended a conference in Stockholm, Sweden as part of my duties as consultant of the International Cooperative Alliance project for international cooperative trade development for Asia and the Pacific. A speaker told of a story of people complaining about the high price of potato and they cited the fact that in Bangladesh the price was a tenth of the price in London. The mayor told the man to go to Bangladesh and buy his potato there.
The point is that between the producer and the retailer, as I mentioned before, there are costs without which products cannot reach the consumers. Even a farmer bringing his bag of kamote to market has costs. But how much do the traders rake in profits and how do they operate to prevent manipulation of supply and the marking of prices along the pipe line is another matter differing under varied circumstances.
The Sugar Regulatory Administration, responding to complaints of low prices at the mill gate, will investigate. I wonder what they will find that they already do not know about considering that the SRA board is composed of people long in the sugar business not only in production but in trading as well.
Historiography in sugar industry has scant data and discussion on this subject and yet imprints of the hand of the sugar trader had always been there. It can be rightly said that the growth of the industry would not have come about if not for traders. They opened the European market through the British financing and trading companies and stayed on until the end of the Spanish regime. By then (1898) the Negros sugar industry had brought of Negros so much wealth that was the envy of other provinces.
But even then the traders, the “sugar factor” had a bad image for making more money than the producers. But although they were the “bad guys” they were catered to, as they are today, even by those who denounce them in various unsavory terminologies. As one trader told me years ago “they can call me by whatever name they like as long as they deliver their sugar quedans to me.”
This history of sugar trading is an interesting one that can fill a good-size book. In fact, ownership of many large sugar estates in Negros and how they changed hands after the sugar crisis from 1901 to 1920 can be traced to the activities of sugar traders.
Indeed because of the wealth they amassed, many leading sugar planters also became traders or use their associations to engage in trading, one way of assisting their members. They participate and even influence daily price bidding.
The accusation that the traders are “making a killing” while prices had frozen is a surprise, not because the SRA and the planters don’t know who the traders are but rather that the traders are thus beyond their control or influence as to insure that sugar supplies are not manipulated to create an artificial market price.
All sugar traders are registered with the SRA and sugar movements are monitored by it. No sugar goes out of the mill without SRA approval and every grain produced by the mill is recorded. What is there to investigate? Is this just an Indonesian shadow play?
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