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Coca-Cola to drop case vs Sugar Order No. 3, to raise consumption of local sugar by 10%

Author: DA-AFID | 30 March 2017

In a closed-door meeting among stakeholders in the sugar industry, officials of the Sugar Regulatory Administration (SRA) and officials of beverage companies this morning, Coca-Cola FEMSA Philippines, Inc. has agreed unqualifiedly accept the validity of Sugar Order No. 3 which regulated the importation of high-fructose corn syrup (HFCS) or corn sugar and to drop the court case questioning it.

Agriculture Secretary Emmanuel Piñol said that during the meeting, Coca-Cola and other beverage makers Pepsi-Cola, among others, also agreed to increase by at least 10 percentage points their current usage of local sugar and start reconverting their processing systems to accommodate more local sugar.

Secretary Piñol said the beverage firm will write SRA, through Administrator Anna Rosario Paner, for a clarification of Sugar Order No. 3 to verify that the SRA directive did not cover the importation of HFCS by beverage companies before this SRA order took effect on March 10, 2017. This will allow Coca-cola to finally secure the release of some 300 container vans of imported HFCS now stored in customs zones.

Sugar Order No. 3 may classy HFCS as a “Class C” or reserve sugar, “B” sugar (domestic) or “D” sugar (world market) which meant corn sugar could only be used by beverage and food manufacturing companies after SRA classifies the same as “B”.  It also imposes a fee of P30.00 per metric ton of HFCS.

“All (those present during the meeting) agreed that Sugar Order No. 3 was valid,” Secretary Piñol said.

The Sugar Board, which governs the SRA, issued Sugar Order No. 3 in response to complaints from local sugar producers that the higher consumption by beverage companies of HFCS, all of which are currently imported mostly from China with zero tariff, had caused a huge drop in domestic sugar prices by as much as P400 per 50-kilo bag to its current going price of P1,300-P1,350 per bag.

The beverage companies informed Secretary Piñol that they switched to using HFCS to offset the huge price difference of P200 per 50-kilo bag between HFCS and domestic sugar.

The DA Secretary noted that because of profit considerations, Coca-Cola, for instance, now uses 90% HFCS and 10% sugar for its production. With Coca-Cola’s commitment to increase its consumption of domestic sugar, this will raise domestic sugar’s share in its purchases to at least 20%, with HFCS at 80%, Piñol noted.

In yesterday’s meeting (March 30), Coca-Cola, Pepsi-Cola and the other beverage companies also committed to buy this year the sugar they plan to buy in 2018 from domestic sugar producers to help stabilize domestic sugar prices, he said.

In addition, Coca-Cola and the other beverage firms committed to use more domestic sugar if they will be allowed access to the “D” class sugar, which is sugar reserved for the world market, Secretary Piñol said.

But this access to Class “D” sugar, which is priced at par or even lower than the prevailing global sugar price that currently stands at P900-P950 per 50-kilo bag, would still have to be studied by the SRA, the DA chief said. ### (DA-OSEC)


Agriculture Secretary Emmanuel F. Piñol

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