SRA temporarily halts molasses imports under MO No. 1
The Sugar Regulatory Administration (SRA) of the Philippines has issued a temporary moratorium on importing molasses through Molasses Order (MO) No. 1. The policy, effective until December 31 with the possibility of extension or lifting based on stock balance and policy outcomes, aims to give the government time to review existing rules and find a balance that benefits both local producers and molasses users.
Why the move: price crashes, stock levels, and policy gaps
As of August 31, 2024, molasses imports reached 853,285 metric tons (MT) for the current crop year, 28% higher than the three-year average. Yet despite the robust domestic sugar sector, the SRA reported a sharp drop in the domestic molasses price, from about ₱18,000 per MT last year to ₱12,000 per MT—roughly a 30% decline. At the same time, domestic production rose 21% year on year to 1.18 million MT, pushing the millsite stock balance to 303,961 MT. The disparity between growing production and rising imports, alongside stock and price signals, prompted the temporary ban to reassess policy directions and ensure local molasses are consumed first.
Impact on ethanol, biofuels, and the local economy
Most of the country’s molasses is used as feedstock for ethanol production. Under Republic Act No. 9367, or the Biofuels Act, all motor fuels are required to contain locally sourced biofuels. The SRA notes the need to verify that molasses used by ethanol producers is indeed local and to align imports with a policy that supports local farmers while meeting biofuel mandates. The moratorium is framed as a temporary, conditional measure to prevent a “non-definite stopgap” situation where imports would undermine domestic molasses utilization and pricing. In the interim, import clearance for new molasses releases is halted, with exceptions: pending applications filed before September 30 remain exempt, as do molasses already in transit or under a purchase order. Imports arriving after November 30 would fall under MO No. 1 and would not be exempt.
Stock, prices, and policy direction
The central objective of MO No. 1 is to stabilize the market by reviewing and potentially redesigning the policy framework governing molasses imports. The SRA intends to develop a performance-based policy that better balances the interests of local sugarcane farmers, molasses producers, and ethanol manufacturers. By pausing new imports, the agency hopes to address the current mismatch between supply, demand, and price signals while evaluating how much import reliance is actually necessary to maintain biofuel production and national energy security.
Next steps: what to expect
Over the ban period, the SRA will examine withdrawal patterns, confirm the local origin of molasses used by ethanol producers, and determine whether a local molasses shortage justifies imports as a temporary measure. The agency may extend or lift MO No. 1 based on stock balances and the effectiveness of any new policy framework. Importers face tighter controls, as violations could trigger revocation or non-renewal of registration with the SRA.
What stakeholders should prepare for
Farmers, sugar mill operators, ethanol producers, and molasses traders should monitor SRA announcements closely. The government’s focus on ensuring that locally produced molasses is prioritized for local use may affect long-term contracts, price expectations, and supply planning. The current action underscores a broader push to synchronize molasses policy with the Biofuels Act and to implement a robust, transparent system that supports the sustainability of the sugar and biofuels sectors.
Policy details and exemptions
Under MO No. 1, the SRA will no longer accept new applications for clearances to release imported molasses. However, exemptions apply to applications filed before Sept. 30 and to molasses already in transit or covered by a purchase order. Imports arriving after Nov. 30 will be subject to MO No. 1 rules. Any violation may lead to sanctions, including revocation or non-renewal of importers’ registration with the agency.
