The implementation new guidelines regulating the entry of imported high fructose corn syrup (HFCS) should be deferred by the Sugar Regulatory Administration (SRA) pending consultations with soft-drink makers, according to Agriculture Secretary Emmanuel F. Piñol.
Piñol said the SRA did not consult stakeholders, such as soft-drink makers, before it issued Sugar Order (SO) 3, which put in place additional requirements that must be met by importers of HFCS.
“There’s a problem with SO 3 of the SRA because it regulates the importation of HFCS, which Coca-Cola uses in producing its soft drinks. Now, Coca-Cola and Pepsi Cola appealed to me, saying they were not properly consulted,” he said.
“I have recommended to President Duterte to authorize me to hold in abeyance SO 3 pending proper consultations with stakeholders,” Piñol added.
The SRA is a government-owned and -controlled corporation (GOCC) attached to the Department of Agriculture (DA). Its administrator is appointed by the President, while the DA chief serves as ex-oficio chairman of the SRA Board.
Citing the top honcho of Coca-Cola Femsa Philippines Inc. (CFPI), Piñol said using other types of sugar would entail the overhaul of the company’s machines and equipment, as these were designed to use HFCS.
Piñol said he met with CFPI, a Mexico-based company, and the Mexican ambassador on March 13 to discuss SO 3 and HFCS imports.
In February the SRA issued SO 3 after farmers and millers complained that they were losing some P10 billion a year due to the unregulated entry of HFCS imports being used by local beverage and food producers.
SO 3 specified the guidelines for the issuance of clearance for the release of imported HFCS and chemically pure fructose.
“HFCS is a type of sugar and/or that its importation affects the balance of supply of sugar in the country,” SRA Administrator Anna Rosario V. Paner said in SO 3.
“The unregulated importation of HFCS displaces the use of locally produced sugar and, thereby, negatively affects the balance of production, threatens the livelihood of industry workers and impedes the growth of the sugar industry,” Paner added.
Piñol said he was not present during the meeting when the SRA board made a decision to regulate the entry of HFCS in the country. However, he said his ex-oficio chairman alternate, Agriculture Undersecretary Segfredo R. Serrano, attended the SRA board meeting on February 17.
“Serrano agreed with the position of the SRA, but I think the flaw there is that the other stakeholders, such as Coca-Cola and Pepsi, were not consulted. These companies are actually big businesses in the Philippines, so it’s important to hear their side on the impact [of SO 3],” he said.
“I’m not disregarding the recommendation of my undersecretary [Serrano], but when Coke and Pepsi Cola presented their side, I think their concerns were legitimate. [Beverage firms] should be given enough time to make adjustments in the [production] process,” Piñol added.
Piñol also said CFPI had complained to him that the company’s soft-drinks inventory would be good for only five days.
“Their importation of HFCS will [soon] arrive at the ports, but they cannot release it unless SO 3 is held in abeyance,” he said.
The DA chief also warned that regulating the entry of HFCS could become a “sore point” in the trade relations between Beijing and Manila as the bulk of HFCS imports come from China.
Earlier, Paner said the volume of HFCS imported last year, pegged at 285,000 metric tons (MT), which is equivalent to some 5.7 million 50-kilogram bag, was the highest since 2013. Paner said this displaced nearly 30 percent of the market share for locally produced refined sugar.
“There has been a lot of excess corn in China, so the price of HFCS went down and then China exports to us at zero duty,” Paner said. “That’s why the price of sugar is dropping, because there’s so much supply due to the importation of HFCS”.
Piñol said he would convene the SRA board on March 23 to discuss HFCS importation and the possible suspension of SO 3.
CFPI had tried to ask the Regional Trial Court in Quezon City to issue a temporary restraining order against SO 3. In a ruling issued on March 10, the court denied CFPI’s petition.
The company argued that some of the provisions of SO 3 undermine their right to import HFCS, while giving the SRA arbitral power “to interfere and place unnecessary restrictions in importing HFCS”.