Sugar price drop alarms producers

BACOLOD CITY, Philippines -- Sugar industry leaders expressed alarm as sugar prices fell below P1,000 a 50-kilogram (Lkg) bag, calling the situation "very bad."

"We are now feeling the pinch of the global economic crunch, we are faced with a horror movie that will last until the end of this crop year," said Manuel Lamata, president of the United Sugar Producers Federation of the Philippines Inc.

Prices dropped way below the planters' production cost of P1,150 per bag on Thursday, Lamata said.

He said sugar production costs rose amid soaring prices of fertilizer and fuel last year.

"Government should instruct its banks to begin quedan financing to enable the planters to hold on to their quedans so they don't have to sell their sugar at very low prices," Lamata said.

A quedan is a document certifying the amount of sugar a planter has to his credit at a sugar mill. The instrument may be sold to merchants who, armed with the quedan, may claim the corresponding amount of sugar from the mill.

Lamata's call for quedan financing also got the support of Confederation of Sugar Producers Association (Confed) Negros-Panay chapter president Reynaldo Bantug.

Bantug said the prices might have dropped amid the environment of economic uncertainty.

But he hoped the situation would improve with the shipping out of the country's "D" or world market sugar.

Prices this week ranged from P950 to P990 per bag of “B” or domestic sugar, Bantug said.

"The situation is very bad. Even the more efficient planters are barely breaking even. A lot of people are crying. A lot are losing," he said.

He also projected a drop in consumption and demand for sugar due to the global economic crunch.

"We definitely need to tighten our belts now," Bantug said.

“The situation is bad for all sugar industry planters, but most especially the small planters who have to sell their sugar quedans every Friday to sustain their operations," said Enrique Rojas, president of the National Federation of Sugarcane Producers.

The Sugar Regulatory Administration and the Philippine Sugar Alliance should appeal to President Gloria Macapagal-Arroyo to immediately stop sugar smuggling and hasten the shipping out of the A (US) and D (world market) sugar to decongest local sugar stocks, Rojas added.

Rojas has blamed sugar smuggling for the current oversupply of sugar that has been blamed for dampening the price of domestic produce.

But Rafael Coscolluela, SRA administrator, said market forces and the present uncertainty have caused the drop in sugar prices.

Coscolluela noted that raw and refined sugar inventories have been competing with the new crop.

However, he said the sugar stocks are moving well and that this would be a good sign.

"I think we are seeing the bottom now," he said.
source:business.inquire