The Confederation of Sugar Producers (CONFED) is supporting the Sugar Regulatory Administration’s (SRA) plans to increase the allocation of sugar intended for the United States market to balance the sugar supply in the country.
Supply is projected to hit 2.190 million metric tons (MT) for crop year 2020-2021 against last year’s production of 2.145 million MT.
Last year, sugar consumption of the Philippines was at 2.4 to 2.6 million MT.
In a position paper, CONFED said 6 percent of sugar output should be allocated for A sugar or sugar for export to the US, which is approximately the quota set by Washington for next year.
The bulk, or 94 percent, should be allocated for B sugar or sugar for local consumption, CONFED said.
The group also does not see any need to replenish the A sugar and that the US market requirement for the current crop year must be completed by September 30.
Sugar crop year in the Philippines starts in September and ends in August of the following year.
“A 6 percent A allocation will amount to 131,000 MT. Add to that the 14,000 MT beginning stock balance we have for A sugar, (and) we will have enough allocation to the US market of about 136,500 MT… (This) should balance out our supply considering that projected excess for the next crop is also about 48,000 MT for both raw and refined sugar,” said Nicolas Ledesma Jr., CONFED chairman for Negros and Panay.
Ledesma said with all programs currently in place, they find it unnecessary to allocate exports to other countries apart from the US
Ledesma expects no sugar importation in the coming year since prevailing economic conditions will likely lead to a reduction of sugar consumption.
SRA administrator Hermenegildo Serafica in a report last week to the Department of Agriculture said the agency is studying the possibility of exporting surplus sugar to the US to take advantage of Washington’s preferential rate.
Serafica said a high inventory in the market would result to depressed prices especially now that sugar consumption and withdrawals from warehouses have slowed down due to low demand from industrial and institutional consumers like beverage companies and restaurants.
“Export of domestic sugar will ease and help stabilize prices at levels that are reasonably profitable to producers and fair to consumers,” Serafica said.
He said the Philippines has not allocated sugar for non-US markets for several years now while the US remains as the top destination of local sugar because of better prices compared to the world market.
Last month, the Office of the US Trade Representative retained the Philippines’ sugar export quota under the tariff-rate quota (TRQ) on imported raw cane sugar for fiscal year 2021 at 142,160 MT raw value that is equivalent to 136,201 MT commercial weight.
The country’s quota was the third largest following Brazil’s 152,691 MT and Dominican Republic’s 185, 335 MT.
TRQ allow countries to export specified quantities of a product to the US at a relatively low tariff, but subject all imports of the product above a pre-determined threshold to a higher tariff.
The Philippines is among select countries given annual allocation of sugar export to the US market at a premium.
Meanwhile, Serafica told a virtual Congressional hearing over the
weekend SRA is pushing for faster and more efficient implementation of Sugarcane Industry Development Act (SIDA) programs.
Under SIDA, the government is mandated to include annually starting 2016, an initial aggregate amount of P2 billion to help the modernization of the sugar industry.
However, allocations has been slashed by the Department of Budget and Management (DBM) due to under-utilization.
The funds were slashed to P700 million in 2018, P500 million in 2019 and to as low as P67 million this year.
Among the mitigations SRA mentioned in the hearing that are crucial is the closer coordination with partner implementing agencies; multi-year memorandum of agreement with the Department of Public Works and Highways for infrastructure projects under the General Appropriations Act; as well as a multi-year treatment of research projects due to the long gestation period of sugarcane research.
Representatives asked the DBM to act and implement on the mandate for the sugar industry to receive appropriations from the Sugar Sweetened Beverage Tax.