The Sugar Regulatory Administration (SRA) is regulating the entry of imported molasses into the country after the temporary ban it imposed on shipments from abroad is lifted.
SRA Administrator Pablo Luis Azcona said regulating molasses shipments ensures that it would only serve as ‘a stopgap measure’ for beefing up local supply to meet domestic requirements.
‘We have to make sure that the local produce is withdrawn from the sugar mills before we allow importation,’ Azcona told the BusinessMirror on the sidelines of the Senate hearing on the proposed budget of the Department of Agriculture on Wednesday.
The agency had recently issued Molasses Order (MO) 1 which imposed a temporary ban on molasses imports following the surge in shipments from abroad and the spike in local production.
The SRA chief said the unabated entry of molasses shipments created storage problems during milling season.
Prior to MO 1, any trader can bring in imported molasses as the government did not require permits or allocations prior to shipment.
Azcona said the SRA Board is working on Molasses Order (MO) 2, which would outline the rules for importing molasses.
Under the draft order, allocations granted to importers will be based on their purchases of locally produced molasses. This was patterned after Sugar Order (SO) 2 which was issued during crop year 2024-2025.
Under SO 2 or the voluntary purchase program, sugar allocations for eligible entities are based on the raw sugar volume they purchased from local farmers at a premium price.
In return, eligible participants would be prioritized in the government’s future import programs at a ratio of 2 (locally produced raw sugar purchased): 1 (imported sugar).
‘We need to find an objective and performance-based system for giving molasses import allocations. So, there has to be proof of local purchase,’ Azcona said.
‘Once they have proof of local purchase, we will come up with a calibrated formula that has an equivalent import allocation.’
He added that the MO 2 would be released prior to the lifting of the temporary ban on imported molasses, which remains in effect until December 31.
‘We want it to be fair to everyone. So, if you support the local molasses industry, you are allowed to import. We also want a fair and accountable way to do it,’ Azcona said.
Meanwhile, the SRA chief allayed concerns that regulating molasses shipments could put pressure on quotations for animal feeds and pump prices.
‘They can rest assured that won’t happen. We will do our best to prevent shortages because we don’t want that, too.’
He also said that under MO 1, the agency can extend or cut short the temporary ban imposed on molasses shipments.
‘We’re monitoring prices weekly. If we see the need to lift the moratorium, we can stop it anytime to arrest a price increase. But we don’t see that happening yet.’
The SRA recently issued MO 1 after planters, sugar mills, and other stakeholders sounded the alarm over the stock balance of local molasses and the decrease in its millsite prices by 30 percent year-on-year.
Molasses imports for crop year 2024-2025 jumped to 853,285 metric tons (MT) as of end-August, 28 percent higher than the average annual shipments in the three previous crop years.
Local production of the sugar byproduct also rose by 21 percent to 1.18 million metric tons (MMT) in the reference period from 975,934 MT last year. This resulted in a domestic millsite stock balance of 303,961 MT.
‘There is thus a need to impose a moratorium on the importation of molasses, and to revisit and review the policies and practices on the same, if only to ensure a mutually beneficial relationship between the local production and the importation of molasses.’