Producers to get P415 per bag for sugar conversion

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Thursday, June 12, 2014

ALL sugar producers will get a P415 per 50-kilo bag differential following the conversion of the world market sugar (D) to domestic sugar (B), said planters federations and the sugar millers association Wednesday.

The statement was issued by Enrique Rojas, president of the National Federation of Sugarcane Planters (NFSP); Manuel Lamata, president of the United Sugar Producers’ Federation of the Philippines (Unifed); DaniloAbelita, president of Panay Federation of Sugarcane Farmers (Panayfed); and Francisco Varua, president of the Philippine Sugar Millers Association (PSMA).

They said the amount was reached after two transparent biddings.


The bidding committee, composed of all stakeholder representatives, rejected the first bid as too low, thereby necessitating a second bidding, they added.

There has been a recent clamor to import sugar because of the slight spike in domestic sugar prices brought about by the increase in domestic demand.

The Sugar Alliance of the Philippines (SAP), composed of the four major planters federations and PSMA, opposed the proposed importation, saying there are sufficient sugar stocks in the country.

SAP urged the Sugar Regulatory Administration (SRA) to convert the unshipped “D” sugar to “B” sugar to address the tightening supplies.

SRA conducted an inventory of all “D” sugar produced since the start of the crop year and issued a sugar order declaring that 90,000 metric tons (MT) of “D” sugar are eligible for conversion.

SRA also came up with a coefficient of 0.4346 in determining the volume eligible for conversion out of the producers’ total “D” sugar production.

“D” sugar is sold at a substantially lower price than “B” sugar. Since most of the “D” sugar are already in the hands of the traders, SAP insisted that traders should give producers a substantial price differential per bag when the “D” is converted to “B.”

To get the highest possible price differential for the producers, SAP agreed to hold a consolidated bidding for all unshipped “D” sugar. The bidding was conducted yesterday with P415 per bag as the winning bid.

For example, a planter has produced 1,000 bags of “D” sugar since the start of the crop year. To determine the number of bags which are eligible for conversion to “B” sugar, he should multiply 1,000 bags with the SRA conversion coefficient of 0.4346 which will result to 434.6 bags.

The 434.6 bags eligible for conversion should then be multiplied by the differential of P415 per bag which equals to P180,359 total differential for all the eligible “D” sugar convertible to B.

Moreover, the traders committed to pay an additional P20 per bag on top of the P415 per bag price differential. The P20 will be distributed as follows:

Sugar Anti-Smuggling Organization, 10 percent; Social Amelioration, 28 percent; Philsurin, 14 percent; Sugar Master Plan Foundation, 19 percent; and, Sugar Marketing Development Fund, 28 percent.

Published in the Sun.Star Bacolod newspaper on June 12, 2014.

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