By Madelaine B. Miraflor The administration's tax reform program is causing so many changes in so many different industries. For instance, soft drink manufacturers are now scrambling to dispose their excess high fructose corn syrup (HFCS) stocks amid higher tax on sugar-sweetened beverages (SSB). As a result, the Sugar Regulatory Administration (SRA) needed to allocate more of the local sugar production to domestic use. The Sugar Order (SO) No. 3 of SRA showed that it has allowed some companies to export their unused HFCS, which beverage firms use as a cheaper alternative to sugar. "The country's industrial sector which imports and utilizes about 90 percent of HFCS now reconciles the use of HFCS and/or local sugar in the manufacture of their products, from their own business and economic standpoint," SRA said in the order. "SRA has received several requests to export their advance booked imported fructose currently held by the BOC ," it added. The order came just a few weeks after Tax Reform for Acceleration and Inclusion (TRAIN) — which imposed taxes on SSBs and other products — became effective. Once without taxes, SSBs have been slapped a tax rate of R6 per liter while drinks with HFCS are taxed P12 per liter. Beverages that normally has high amount of HFCS are soft drinks and energy drinks. SRA Chief Hermenegildo Serafica said on Friday that a lot of beverage companies are now shifting their formula back to 100 percent sugar, from the mix of 60 percent sugar and 40 percent HFCS. "We expect an increase in demand due to the TRAIN wherein excise tax for HFCS is higher than Sugar. Thus, some HFCS users especially the sweetened beverages will be shifting their formula to sugar," Serafica said in a text message. Serafica was referring to companies like Pepsi Cola Products Philippines, Inc., Coca-Cola Femsa Philippines, Inc. and RC Cola Philippines. Based on an existing data, the unused HFCS stocks of Pepsi still stood around 15,000 metric tons (MT), while Coke still has 5,000 MT— all ready to be disposed and sold abroad. SRA said that it will make sure that these stocks will be shipped out of the country and "do not find their way to the local market destination." For his part, SRA board member Roland Beltran said in a separate inquiry that companies' decision to export their HFCS stocks is one of the reasons why SRA had to cut the allocation of sugar exports to United States and world market and instead use it for local consumption. "Yes, one of the reasons. But the main reason is that our projected production for this crop year (CY) 2017 to 2018 is slightly lower compared to last year. Our conservative production estimates for this crop year is at 2.27 million MT. This is due to heavy rains experienced in Visayas and Mindanao," Beltran said in a text message. To be exact, SRA reduced the allocation of sugar to US ("A") from 10 percent to 6 percent, while the allocation of world market sugar (“D”), or those for export to other countries, was also cut to 1 percent from 10 percent. Under the tariff-rate quota (TRQ) — which allows countries to ship sugar to US at a relatively lower tariff — the Philippines exports about 136,000 metric tons (MT) of sugar to the US every year. SO 1-A also increased the country's sugar allocation to domestic market ("B") to 93 percent from the 80 percent. This, as the domestic demand is expected to be around 2.17 million metric tons (MMT). “The domestic market remains as the priority market for locally-produced sugar, and it is of national interest that a comfortable buffer, or carry-over volume, of "B" sugar during the end of season and for the start of the next crop year for stable supply and prices,” SRA said. Meanwhile, SRA now sees local raw sugar production for Crop Year (CY) 2017 to 2018 — which starts in September and ends August — to be less than 2.38 MMT on the weight of unfavorable weather conditions. A crop year starts September and ends August.