by Cyber Gem Biasbas, Rose Fritchelle Custodia, Quinzhy Jimenez, and Evangeline Ortiz
“‘Pag nagtaas ako [ng presyo], magugulat na lang din sila. Ako na lang din naga-adjust para sa kanila. Alam din naman nila na mataas talaga kaso, wala, eh. Gan’on talaga.”
Part of the challenges of being a business owner is knowing when to make hard choices in order to maintain a livelihood. This is the everyday life for a small canteen owner like Edcel Velasco.
Edcel is the head of their household and owner of ‘Amiza’ in Los Banos. He sells a variety of student friendly meals such as silog, pancit, as well as snacks like kakanin. In the ten years that he lived in the area as a frequent buyer and user of basic commodities, he recently noticed a significant change in pricing, particularly of sugar.
For him, refined sugar has always been more expensive, which is why he prefers buying brown sugar. According to his estimate, half a kilo of brown sugar only costs around 28 to 30 pesos before the COVID-19 pandemic. Now, with the surge of inflation and the ongoing sugar crisis, prices have been concerning for him and people alike.
Price History of Sugar
There are three types of sugar that are sold in retail, namely: raw, washed, and refined sugar. Each of these products have different market prices, with raw sugar being the cheapest as it goes through little processing. Raw sugar also has the most amount of molasses, and other sugar products have it removed through heavier processing. This produces washed sugar, and has a higher pricing than raw sugar. Refined sugar, on the other hand, is the most costly out of the three. It undergoes heavier processing in refineries to reduce most of its molasses content, giving it its generic-white look.
Over the years, these prices have either fluctuated or remained the same due to changes in supply and demand, the amount of sugar stored in warehouses (sugar balances), and imports and exports. Prices may also be affected by the onslaught of disasters, especially typhoons that pass through provinces with sugarcane farms.
“Dati mas mahal yung puti ngayon baliktad, mas mahal na pula. Yung kilo [ng pulang asukal] halos 100 plus dati 60 lang yun. Yung mas mababa puti, nasa 90 lang pero mataas pa rin.” For some people like Edcel who are used to buying the cheaper kind of sugar, the price of sugar is unusually higher than recalling what it was years ago.
The Sugar Regulatory Administration (SRA) is the government agency that keeps track of sugar records through their Sugar Supply and Demand Report and Weekly Comparative Report. SRA’s data from 2018 to the present reveals the sugar price history:
Sugar prices remained relatively stable months before and during the COVID-19 Pandemic. The country produces up to 25 million tonnes of sugarcane per calendar year (a calendar year begins on August 1 and ends on September 30 of the next year) which is enough to keep up with market demands. However, prices began to increase and fluctuate starting May 2021 due to three major factors: (1) the low number of sugar balances in the country, (2) the onslaught of Typhoon Odette, and (3) the ongoing Ukraine-Russia conflict.
May 2021: Low Sugar Balances
The price of refined sugar increased from 50 PHP to 54.5PHP starting from May to December 2021. In these months, the primary cause was the low sugar balances in the country. Sugar balance is the total amount of sugar in different mill sites or warehouses. This is the total amount where factories or retailers buy sugar for public consumption.
Prior to the sugar crisis this year, the decreasing trend in sugar balances in 2021 (orange) is significantly different from the levels of sugar balances in the previous year (blue). Factors to consider in this change are sugar import and export trends, production factors, climate, as well as economic conditions. While the reasons for this are still uncertain, nevertheless, the low supply of sugar during these months of 2021 led to a gradual increase of prices.
In economics, the law of supply and demand says that the price of a commodity will increase if its supply is low. The demands might remain the same because commodities are products that are often used in households, businesses, and factories. Given that sugar is one of the most basic commodities, SRA chief Serafica indicated that sugar demand remains to be high.
Baking businesses like the one owned by Los Banos resident Myles Rosario have also been affected by changes in sugar prices. During the pandemic, she started her baking business by making customized cakes and cupcakes in her online page. Household and business consumption of sugar is combined inside their home as she also bakes cakes for her home.
Aside from baking, their household sugar consumption is used mainly for cooking snacks and viands. Myles said that before the spike of sugar prices, they always bought sugar once or twice a month to stock supplies for their home and for their business. Presently, they only buy once a month or whenever the need arises.
Similarly, a well-known local business around UPLB is Cadapan Canteen, known for their student friendly meals and Filipino desserts. They had to adjust their pricing in order to keep the same amount of their serving.
“Hindi namin binago recipe pero nagdagdag kame ng price since mataas na raw materials. Before 50 php lang ulam namin na may sauce na ginagamitan ng sugar. Nag-add lang kame 5 php para affordable pa rin yung increase namin sa ulam na ginagamitan ng sugar.”
Eric Cadapan, a life-long resident of Los Baños, shared that they do not serve desserts in their menu anymore because of the continuous price increase of sugar. They have stopped making halo-halo and various kakanin.
“Before gumagawa kame ng desserts sa canteen. Eh tumaas na [yung presyo ng asukal], tumaas costing, di na namin mabebenta sa mga student halos so nagplano kame na tigilan na lang yung dessert”.
December 2022: Typhoon Odette
According to the Department of Agriculture’s report on January 2022, Super Typhoon Odette caused almost PHP 13.3 billion worth of damages to the agricultural sector. Several regions in the country were severely affected, including Negros Island.
Negros Island is the country’s top producer of sugar. Sugarcanes that were planted around October 2021 – the start of planting season – would have only been three to four months old when the supertyphoon struck the island of Negros. The crops were still in their tillering phase, the second phase of its four-stage growth, and were still very susceptible to damage. Although older sugarcanes were not as vulnerable, they were still prone to some damages, disease, lack of nutrition, and so on.
As a result, SRA data show that sugarcane harvest plummeted starting May to July 2022, but recovered at the end of August 2022. Low harvest means low sugar production and sugar balances. As explained earlier, low sugar balances would mean higher prices.
February 2022: Russian-Ukraine Conflict
Russia is one of the world’s biggest oil exporters. When Russia invaded Ukraine early 2022, multiple countries attempted to punish Russia by preventing trades with them. As a result, oil supply struggled to meet demands, especially from countries recovering from the pandemic like the Philippines. The high oil prices affected the sugar industry because of the increase in gasoline prices which also affects electricity prices.
Data from the Department of Energy (DOE) show that when gasoline prices increased, sugar prices had the same trend. When gas prices are higher, the cost of production also rises.
In the sugar industry, this means that every machinery that requires fuel would need to spend more money for gas. For example, some farms might use a gas-powered sugarcane harvesting machine. The harvest would be transferred to the milling facilities through trucks. Electricity would then be used to extract the juices of the sugarcane and refine them. The refining process consumes a lot of time and power. Refined sugar may have peaked at 105 pesos per kilogram due to the thorough refining process that it undergoes.
The Compounded Effects on Businesses and Consumers
Local businesses and consumers that use sugar have no choice but to adapt to both sugar prices and increasing gas prices. Like in the case of Edcel. Every two days, a kilo of brown sugar is consumed to maintain his small business. Despite the distance from his home, Edcel buys his sugar directly from the Pamilihang Bayan in Calamba, where the sugar delivered is cheaper and has no value-added price compared to other markets. Despite this effort, the almost 50-peso price difference post-pandemic has affected his selling practices. It was a dilemma between increasing his products’ price or reducing the amount of viand per serving. Considering the students’ account, he chose the latter and stuck to the student-friendly price range to maintain its affordability, rather than lose a part of his customers.
It also goes the same with Marlon Cea who runs Margil’s store. They had to buy in bulk, because they operate a mini wet market and previously, a canteen. For business owners like them, traveling to Pamilihang Bayan in Calamba seems worthwhile in exchange for a cheaper price.
Their efforts show how the increasing inflation rate affects both small businesses and their consumers. The increasing inflation rate is a reflection of the decreasing buying power of everyone. As a result, small business owners like Edcel, Eric, Myles, and Marlon have to go the extra mile to reduce the burden of increasing sugar prices on their customers.
However, even with all the effort to change routines and cut sugar consumption at home some businesses like Myle’s Flour de Maria cannot cut sugar consumption in running their business. “Hangga’t maaari ay nagtitipid ng konsumo [ng asukal sa bahay] pero kung walang magagawa na bawasan yung konsumo o takal gaya sa pagbe-bake, nagtataas na lang kami ng presyo dahil sa inflation.”
She also pointed out that the continuous spike of sugar prices affects not only her business but also her customers. “Hindi lang kami ang apektado, pati ang mga bumibili ng cakes kasi tataas din ang presyo nito dahil nagmamahal ang ingredients.” she added.
As the prices of ingredients to make desserts increase, she also has to increase her selling price to be able to afford other goods that they need. It creates a domino effect burdening every business, every household, and every consumer.
Unfortunately, this truly happens. When commodity prices increase, everyone involved in the trade is affected. Producers, businesses, and end-consumers are all chained in a cause-effect loop. Therefore, the Government must invest further in securing the welfare of our agriculture. A well-supported sector would drive prices down and ensure our food security.
BusinessMirror. (May 2022) PHL faces raw sugar shortage as demand surges. https://businessmirror.com.ph/2022/06/22/phl-faces-raw-sugar-shortage-as-demand-surges/
Department of Energy. (November 2022) Monthly Gas Prices. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Biofuels%20Annual_Manila_Philippines_RP2022-0043.pdf
Inquirer.net. (December 2022) SRA says PH sugar supply stabilizes. https://newsinfo.inquirer.net/1704323/sra-says-ph-sugar-supply-stabilizes
Philippine Statistics Authority. (December 2022) Summary Inflation Report Consumer Price Index for the Bottom 30% Income Households (2012=100): November 2022. https://psa.gov.ph/price-indices/bottom-30/title/Summary-Inflation-Report-Consumer-Price-Index-for-the-Bottom-30%25-Income-Households-%282012%3D100%29%3A-November-2022
Sugar Regulatory Administration. (December 2022) Sugar Supply and Demand Situation. https://www.sra.gov.ph/industry-update/sugar-supply-and-situation/