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Food Evolution Raw sugar Jan 13, 2019 @ 15:12

Blaming TRAIN on increased sugar imports is a ‘not-so-sweet-speculation’

The Department of Finance (DOF) said that saying Tax Reform for Acceleration and Inclusion (TRAIN) resulted to a surge in sugar imports is a not-so-sweet-speculation.

The agency was reacting to a news report quoting University of the Philippines economist Rene Ofreneo.

“Like a toddler who scrapes off the sweet cream and throws away the cookies, Mr. Ofreneo takes the wrong issue with TRAIN, discards basic logical economic reasoning and, worst, sweeps under the rug the structural issues facing the sugar industry and their socio-economic implications,” DOF said.

DOF noted that imports have been falling on a year-on-year basis since the second quarter of 2017. In the past 12 quarters, sugar imports peaked to nearly 400,000 metric tons (MT) in the second quarter of 2016 before drastically falling to 110.5 MT in the second quarter of 2018, at which time food manufacturers were already clamoring Sugar Regulatory Administration (SRA) to approve more imports.

“Note that in the first semester of 2018 domestic prices surged to as high as P2,790 per 50-kilogram bag (kg), more than double that of the landed price of their imported counterpart, at P1,300 per kg. It should have occurred to Mr. Ofreneo that a spike in imports would be something that was expected to occur anytime given the tightness in domestic supply, with or without TRAIN,” DOF said.

“And supply is tight because domestic sugar cane production dropped by 16.7 percent during the crop year 2018 at the same time that imports were declining,” it added.

DOF also said that Ofreneo should have taken into account that the new excise tax on sugar-sweetened beverages is two-tiered: 6 pesos per liter for drinks using sugar and 12 pesos for those laden with imported high fructose corn syrup (HFCS).

This gave additional protection to domestic sugar producers, it said.



 

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