The possibility of the government opening up the local market to more imported sugar remains to be one of the major factors why the country’s local sugar production is seen not improving this year or in the next years to come.
This, according to international data, has remained to be “the cause of concern” among local sugar producers.
In the latest Global Agricultural Information Network (GAIN) report, the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) here in Manila (Post) revised its outlook on the Philippines raw sugar production for the current crop year from 2.2 million metric tons (MT) to 2.1 million MT.
“Low productivity remains an issue amid the continued discussion of trade liberalization,” Post said.
The Philippines’ sugar crop year starts in September and ends in August of the following year.
According to Post, factors limiting the growth of the Philippines’ sugar production include the slow decline in sugarcane area and low farm productivity, particularly in areas outside Negros Island that pull down the national average.
Climate, too, will remain a major factor as drought or too much rain have an adverse effect on production, while there is the possibility of crop diversification as some farmers may decide to shift to more profitable options.
Furthermore, Post said the government’s consideration of liberalizing the sugar industry is also a cause of concern among farmers and millers.
“Stakeholders believe that the proposed trade liberalization would place significant challenges on the sugar industry, which is not yet equipped to face open competition,” Post said.
To recall, in October last year, the National Economic Development Authority (NEDA) conducted an assessment of reform directions for the sugar industry.
The study concluded with policy recommendations to increase productivity, lower costs, and improve institutional support mechanisms. This, while noting that any trade liberalization should be implemented gradually and only partially to ensure that it will benefit all consumers and will not unduly penalize sugar industry stakeholders.
Meanwhile, for the current crop year, Post expects the country’s sugar consumption to rebound by 200,000 MT from the previous year, with households and institutions driving the recovery as COVID-19 restrictions are loosened.
Consumption and imports, on the other hand, are revised down from their previous forecasts by 300,000 MT and 175,000 MT, respectively, due to weaker demand following Philippine government efforts to combat the pandemic.
Sugar imports under the next calendar year are also likely to reach 150,000 MT after dropping to 25,000 MT the prior year, as the economy reopens and beverage manufacturers expand production.