Philippines sugar sector faces bitter realities

The Philippines, a long-time supplier of raw sugar to the United States, is currently in a bind due to the sugar supply situation not only in the country but also in other parts of the world. As the pandemic and climate change have upended sugar production in the Philippines and other major sugar-producing countries, local producers this early are urging the government to suspend sugar shipments to the US market for crop year 2021-2022. According to local producers, output in the upcoming crop year is expected to decline, which warrants the temporary suspension of shipments to the US under the tariff rate quota system.

The US became a market for Philippine sugar as early as 1796, according to the Sugar Regulatory Administration (SRA). From 1880 to 1889, the country’s sugar exports to the US averaged 200,000 metric tons annually. The development of the Philippine sugar industry was fast-tracked during the American occupation, when the country was allowed to export sugar to the US under preferential terms.

However, the decline in the sugar sector’s productivity in recent years is prompting the government, millers and producers to reassess the country’s capacity to fill up Washington’s sugar quota. The Philippines has always managed to supply Washington’s sugar requirement in previous years as the allocation of the country hinges on its historical shipments. However, sugar producers and millers warned that if the problems threatening the sector are not immediately addressed, the country would be hard pressed to fill up the quota in the next three to five years.

For one, output has remained stagnant in recent years, making it imperative to expand areas planted with sugarcane. The threat of La Niña has also made it more difficult for sugar producers to increase output as an increase in rainfall could reduce the sugar content of canes grown in affected areas. Unfortunately, La Niña is becoming more frequent, and there is a possibility that major sugar-producing provinces would again experience more rainfall this year, according to the state weather bureau.

From 421,358 hectares of farms planted with sugarcane in CY 2016-2017, when the country’s output breached 2.5 million metric tons, the size of sugar plantations shrank to 409,714 hectares in CY 2018-2019, according to SRA data. This prompted sugar millers and producers to ask the national government to put in place a national program that will allow them to improve output despite the rapid decline in combined land area planted with sugarcane.

Land consolidation, which has been done via the block-farming program, should be an integral part of this national scheme, given the importance of economies of scale in sugar cultivation. Government must also work with sugar millers and producers to develop other areas where sugarcane may be cultivated.

Sugar is one of the country’s major export commodities and is an essential raw material for the manufacture of certain food items, some of which are also exported. Improving the sector’s productivity requires bold and decisive steps, which must be taken soon, given the threat of climate change to local food production.