• GILBERT P. BAYORAN
Alarmed by the drop of the prices of sugar to below the cost of production, pegged at P2,400 per 50 kilo bag, Negros Occidental 5th district Representative Emilio Bernardino Yulo called for an investigation to the factors behind the price instability.
Yulo wants to hold accountable those who are tasked with protecting the sugar farmers, and those who are taking advantage of the situation for “unimaginable profit.”
“We cannot afford to let this issue continue. It is imperative that we take immediate and decisive action to stabilize sugar prices and safeguard the livelihoods of our small sugarcane farmers,” he stressed.
Sugar producers have been clamoring for government intervention to arrest the sharp decline in the prices of locally produced sugar.
While sugar farmers were greatly relieved when millgate prices averaged at P2,850 per 50 kilogram bag at the start of the milling season, Yulo, a former SRA board member, however noted that prices have declined to around P2,750.00 in October, plunged further to an average of P2,600 in early November – a P250 drop in just two months. Two weeks ago, it further dropped to an average of P2,500 per bag. To make matters worse, last Thursday it went down further to 2,470.00, or a drop of almost P400.00, the solon said.
Citing Economics 101, which states that when the supply is low and the demand is high, prices will naturally go up. Yulo said “strangely, the law of supply and demand does not seem to apply to the sugar industry right now.”
Elementary as it is, we all know that the law of supply and demand moves inversely proportional with price, but presently such is not the case. Despite relatively low supply and an expected surge in demand for sugar this Christmas season, prices continue to drop, the solon noted.
Stressing that the required raw sugar buffer stock is about 200,000 metric tons, which translates to a 60-day buffer stock. Yulo, however, said that the supply side has dropped to approximately 150,000 metric tons, or just a meager 45-day supply as of November 15.
This defies any logical explanation and contradicts the fundamental principle of supply and demand, the solon pointed out.
Despite the low supply and the steady demand for sugar, the industry faces low and declining sugar millgate prices. This is an aberration, which Yulo described as a product of artificial manipulation, something that requires immediate attention.
Moreover, while the millgate price of sugar has dropped significantly, supermarket prices have remained consistently the same, creating a huge disparity that burdens both small farmers and our consumers, he added.
Noting also that the weather punished sugar farmers, who endured the longest dry season and a La Niña this crop year, yet survived the crisis, Yulo said that the continuous drop of sugar prices worsens their situation.
The Sugar Regulatory Administration (SRA), created under Executive Order No. 18, has among its key mandates, as stated in Section 2 paragraph b, “ensure stabilized prices at a level reasonably profitable to producers and fair to consumers,” according to Yulo.
When tested against its mandate, it is obviously clear that SRA has fallen short, he added.
Azcona, who was present during the delivery of Yulo’s privilege speech at the House of Representatives on December 9, said he will attend any congressional inquiry, if it will help the sugar farmers.
According to Azcona, the Sugar Regulatory Administration board is coming up with programs this month to curb the downward spiral in millgate sugar prices.
SRA is considering regulating the supply of sugar, which could help address the sharp decline of millgate prices.
When prices fall below production cost, it is not just the sugar farmers who suffer but also their dependents, as well as the farm laborers, and the local economies that rely on their success, Yulo said, noting also that 90 percent sugar farmers are now small marginalized planters or agrarian reform beneficiaries who farm one to two hectares of land.*
