The Philippines is expected to face shortfall in the supply of sugar in the coming market year (MY) despite the government's decision to suspend the export of the sweetener to the United States and other markets globally.
Latest report from the US Department of Agriculture (USDA) showed that due to expected slower recovery of the sector, the Philippines' raw sugar production for market year 2021 to 2022 is seen at 2.1 million metric tons (MT), lower than the 2.14 million MT produced in the same period last year.
The latest forecast is below the projected domestic consumption, which the USDA pegged at 2.2 million MT of raw sugar.
Sugar crop year in the Philippines starts in September and ends in August. An MY, on the other hand, refers to the 12-month period at the onset of the main harvest when the crop is marketed.
As early as August of this year, the Sugar Regulatory Administration (SRA) already knew that the Philippines is poised to have lower output for the current crop year. Because of this, it decided to allocate 100 percent of the production to the domestic market as specified in Sugar Order (SO) No.1 issued on August 31, 2021.
"Because of the SRA allocation, exports under the raw sugar tariff rate quota are expected to drop to zero," the USDA report said.
Based on SO 1, the Philippines' raw sugar production for the crop year 2021 to 2022 is estimated to be 2.09 million MT, which is lower than the estimate of 2.10 million MT the country was hoping to produce for crop year 2020 to 2021.
“Based on the PAGASA rainfall forecast, above normal rainfall condition is expected for the months of October 2021 to January 2022 over Batangas and Negros Island. While a slightly above normal rainfall on December 2021 to January 2022,” the SO 1 reads.
“The country's sugar supply situation is better served with an all ‘B’ domestic sugar allocation for this crop year,” it added.
The Philippines’ 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.
Before the issuance of SO 1, the United Sugar Producers Federation (UNIFED) already urged SRA to scrap the A sugar or the US sugar quota for the coming crop year, especially if the supply is just enough for the country’s consumption.
“There is no point to allocate A sugar when we will also import the differential to satisfy the local needs,” said UNIFED President Manuel Lamata.