Domestic preference for molasses expected to boost sugar industry

SUGAR PRODUCERS said the requirement that molasses users prioritize domestically produced supplies over imports will boost farmer profits and improve competition among importers.

“We are very elated with this development. We have been asking for this from many administrations. They always favored the big alcohol distillers. It is about time they give the profits to the farmers,” Manuel R. Lamata, president of the United Sugar Producers Federation of the Philippines, told BusinessWorld via Viber, referring to an order by the Sugar Regulatory Administration (SRA).

The SRA’s Molasses Order (MO) No. 2, which took effect on Jan. 8, requires traders and importers to purchase domestically produced molasses before importing.

The industry group described the policy as a long-overdue step to strengthen demand for domestic molasses, which has suffered from weak prices amid excess supply.

The SRA reported that the average millgate price of domestically produced molasses was P7,110.46 per metric ton in December, down 56.31% from a year earlier.

Mr. Lamata said the new rules could give farmers greater bargaining power while forcing importers to compete for import privileges.

“This order will surely bring prices up because they have to compete with each other for the right to import. Hopefully, the government will permanently implement this,” Mr. Lamata said.

The Philippine Sugar Millers Association (PSMA) has expressed support for the policy, which “strengthens domestic value chains and safeguards downstream industries,” according to PSMA President Terence S. Uygongco.

MO 2 allows importers and traders to import one kilo of molasses for every three kilos they buy from Philippine producers.

Mr. Lamata said the scheme is “more than fair,” noting that importers have been bringing in volumes far exceeding domestic production.

“They have been importing more molasses than we can produce. Let them buy local first; when all that is exhausted, then they can import,” he said.

Domestic molasses purchased by prospective importers must be withdrawn from sugar mills or storage tanks within a month of approval. Compliance will be monitored through weekly reports and on-site verification by the SRA.

The SRA said that the moratorium on molasses imports will be in effect until March and may be extended depending on domestic inventory levels. — Vonn Andrei E. Villamiel