Strong Peso Hurts Food Exports Essay Example for Free

Strong Peso Hurts Food Exports EssayPhilippines economy nowadays portraits a good start for, as we are lifting our country from the previous economic situation. Not including the whole world economy, we are experiencing a smaller amount of problems in our economy than the recent. The rate of alter between our Pesos against the Dollar is going stronger from now and as some bank company said that it could reach as highschool as 37.50 in the succeeding(prenominal) year. This is worthy for our country that it could raise the pctage to lessen the financial crisis and issues of our economy here in the Philippines. However, this could also mean that some other Filipinos, who are change a lot in our economic growth, will be at an edge of helping themselves to this firmer peso.Strong peso plus the high breadstuff toll, makes local food producers and exporters come to haste to restore the D-Sugar allocation of 2 percent. This will be considered as douse for the on-going raise of th e peso coupled with high sugar price, which cost around 40 to 44 per kilo without duties and taxes. The D-Sugar allocation is the use of food producers and exporters for local consumption and export of their products. However, the D-Sugar allocation of 2 percent is too small to make a depression on the profits of sugar producers, but its closure will cause a huge percent on the production costs of food exporters.One of the factors that affect the Philippine economic growth is price control. Price control defines as governmental pain in the neck on the prices changed for goods and services in a market. It is usually intended to maintain the affordability of staple foods and goods and to prevent price gouging during shortage, or alternately, to insure an income for providers of certain goods. These are ii primary forms of price control, a price ceiling, the maximum price that gouge be changed and a price floor, the minimum price that can be changed. The Philippines is one of main product that comm still buys in markets, groceries stores, etc. The government wants to change its minimum price, which rejected by the administrator of Sugar regulative Authority.ReactionThe Philippine Food Processors and Exporters Organization Inc. is a great factor in the Philippine economic society. About its appeal of restoring of D-Sugar, which is not yet responded by the Sugar Regulatory Administration (SRA), will be the hedge for the food exporters to the firmer peso that their expectations of the peso- one dollar bill exchange rates will reach 37.50 against the dollar. Exporters, in general, in this content could lose around $100 million from this year as they are dependent of the dollar as the international trading property. The landed cost of import sugar is now about 40 to 44 per kilo before duties and value-added tax. Local sugar, on the other hand, sells these sugars for about 54 to 70 per kilo. As the dollar continues to appreciate, food exporters carry the burden of absorbing the increasing ratio of loss to margins, and that leaves domestic manufacturers at the losing end.It is very unfair for the food exporters, sugar exporters, without any hedge to cancel the D-Sugar restoration and is now coupling with the strong peso exchange rate with the dollar. Sugar producers will be at risk to have another(prenominal) pricing system to regain the loss form their margins and profits. Sugar Regulatory Administration (SRA) issued Sugar Order 4, series of 2009-2010, converting C-Sugar, or the countrys allow for sugar to B-Sugar for the use of the domestic market. They now abolish the D-Sugar to provide an improvement in the C-Sugar in the domestic supply. It is an aid for the domestic sugar producers as they aureate that they are being supported by the government.However, eliminating D-Sugar plus the increasing value of Peso, is a disease for the food exporters as they may lose not only their margins and profits, but their competition on other countri es. Philippine economic growth rate may decrease in such a gap as the sugar which is the main exports for the food exporters which has a greater percentage in contributing to our economic growth. There will be a massive unemployment in some food companies as this problem may tend to be fatal in the next years without any hedge or ascendent to the abolishment of the D-Sugar. Lots of domestic food producers may shutdown for this reason and a serious displacement as cheaper imports flood the local market.As the currency of peso goes stronger against the dollar, it affects a lot of factors in the Philippine economy. There are lot of appeals concerning sugar because of its continuous increase of price. Local market hurts from the appreciation of peso and comes with a solution of an appeal to aid their problems. But is SRA insisted, they explain why they cant just take a control over the price of sugar. Moreover, there should be a manipulation in sugar or unstable value of supply and pri ce over the sugar. There is a big(a) increase of percentage in the stocks of sugar so there is no current manipulation.Resoucrce http//literasura.blogspot.com/2011/07/reaction-paper.html