Local sugar producers said they prefer that the bulk of the Philippines’ sugar production for the next crop year would stay here in the country amid the COVID-19 pandemic, but the Department of Agriculture’s (DA) plan is the complete opposite.
In a statement, Sugar Regulatory Administration (SRA), an agency attached to the DA, said it is actually considering to export surplus sugar for crop year 2020 to 2021, preferably to the United States, to help stabilize prices and supply.
This, as the agency expects a slightly higher sugar production of 2.19 million metric tons (MT) for the next crop year, compared to the P2.15 million MT produced in the previous crop year.
A sugar crop year in the Philippines starts in September and ends in August of the following year.
Every start of the crop year, SRA, the government agency tasked to regulate the sugar industry, decides how much of the country’s expected sugar production will be allocated for the domestic market and how much will be exported.
To be specific, sugar production is divided into different classifications, including ‘B’ for domestic sugar, ‘A’ for sugar exports to the US, ‘D’ for sugar exports to the world market or other countries, and ‘C’ for reserves.
Last week, the Asociacion de Agricultores de La Carlota y Pontevedra, Inc. (AALCPI) recommended SRA to maintain the status quo of sugar classification for the coming milling season to ensure that the country will have enough supply of the sweetener during the COVID-19 pandemic.
However, in his report to Agriculture Secretary William Dar, SRA Administrator Hermenegildo Serafica said the agency is now studying the possibility of exporting surplus sugar to the US to particularly take advantage of Washington’s preferential rate.
He also said that maintaining high stock inventory would only result in depressed prices, especially now that sugar consumption and withdrawals from warehouses have slowed down.
To recall, the Philippines is one of the select countries given an annual allocation of sugar export to the US market at a premium under a tariff-rate quota.
Tariff-rate quotas allow countries to export specified quantities of a product, like sugar, to the United States at a relatively low tariff.
“We forecast that we will have excess sugar this crop year 2020-2021, which will need to be exported,” Serafica told Dar.
He also said that the demand for sugar was greatly reduced due to limited operations of food manufacturers, such as beverage companies as well as industrial and institutional consumers like restaurants, mostly of which are not fully operational.
“Export of domestic sugar will ease and help stabilize prices – at levels that are reasonably profitable to producers and fair to consumers," Serafica said.
Right now, 68 percent of the country's domestic sugar goes to industrial users like beverage manufacturing companies while 22 percent of the supply is bought by institutional customers like pastry shops and bakeries. Only 13 percent of the supply goes to households.
The Philippines has not allocated sugar for non-US markets for several years now due to low annual output, while the US remains as the top destination of local sugar because of better prices compared to the world market.
In the previous crop year, the Philippines had a US quota of 136,827 MT. The volume may increase depending on Washington’s requirement during a particular season.