Philippines’s Favorable Opportunity Seeking Sugar Exports to US

According to Sugar Regulatory Administration (SRA), the Philippines, which has been a consistent and reliable sugar exporter, is one of the select countries to allocate 7 percent of the next crop year’s projected 2.19 million metric tons (MMT) output for export to the United States in order to minimize high carry-over stocks, as pandemic lockdowns dampen local demand, and help stabilize prices.

In his report to Agriculture Secretary William Dar, SRA Administrator Hermenegildo Serafica said the agency is studying the possibility of exporting surplus sugar to the US to take advantage of Washington’s preferential rate.“We forecast that we will have excess sugar this crop year 2020-2011, which will need to be exported, and we expect to produce 2,190,190 million metric tons (MMT) of sugar for crop year 2020-2011, higher than the previous year’s output of 2,145,693 MMT” said Serafica.

A sugar crop year in the Philippines starts in September and ends in August of the following year. Earlier, local sugar producers urged the SRA to scrap sugar exports to the world market to ensure that the country will have enough sugar during the current coronavirus disease 2019 (Covid-19) pandemic.

Serafica, however, said maintaining a high stock inventory would only result to depressed local prices, especially now that sugar consumption and withdrawals from warehouses have slowed down. He pointed out that demand for sugar was greatly reduced as manufacturers of sugar-containing products have limited their operations. Also, most restaurants have limited or stopped operations.

“Export of domestic sugar will ease and help stabilize prices — at levels that are reasonably profitable to producers and fair to consumers,” the SRA chief added. For several years, the Philippines has not allocated sugar for non-US markets, while the US remains as the top destination of local sugar because of better prices compared to the world market.

President Pablo L. Lobregat, The Philippine Sugar Millers Association (PSMA) has outlined the country would enter the next crop year with a carry-over stock of about 678,460 metric tons (raw sugar equivalent). Unless this volume is brought down in crop year 2020-21, it shall be a perennial carry-over for the succeeding crop years.

Lobregat noted that the pandemic-induced restrictions on mass gatherings limit weddings, birthdays, and fiestas, wherein “huge quantities of sweetened products and beverages” are consumed. The PSMA chief added that demand from restaurants remained lackluster as customers are limited by social distancing and quarantine pass requirements. He pointed out, has resulted in “severe reduction in economic activities, particularly sales of sugar-based products.”

Meanwhile, the Confederation of Sugar Producers (Confed), among the biggest groups of sugar industry stakeholders in the country, is pushing for a 6-percent allocation for “A” and 94 percent for “B” or domestic sugar to balance the country’s sugar supply.

Taking into account the estimated projection, Confed Chairman for Negros/Panay Chapter Nicolas Ledesma Jr. said that “a 6-percent ‘A’ allocation will amount to 131,000 MT. Add to that the 14,000 metric tons beginning stock balance we have for ‘A’ sugar, we will have enough allocation to the US market of about 136,500 MT, which 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.” With all programs in place we find it unnecessary to do ‘D’ or world sugar allocation,” Ledesma said,

Adding Confed is also pushing that no sugar importation will happen in the coming year because “prevailing economic conditions will likely lead to a reduction of sugar consumption. The country has given an annual allocation of sugar export to the US market at a premium under a TRQ. TRQs allow countries to export specified quantities of a product, like sugar, to the US at a relatively low tariff.