Following the settlement of the trade dispute between Mexico and the United States, the chief of the Sugar Regulatory Administration (SRA) said the Philippines is unlikely to see an increase in its sugar quota from Washington in the next crop year.
SRA Admistrator Anna Rosario V. Paner told the BusinessMirror that any increases in the country’s allocation—currently pegged at 142,160 metric ton raw value (MTRV), or 136,201 MT commercial weight—depends solely on how well Mexico could supply the sugar requirements of the US.
“[It] seems [the Philippines will get the] same volume unless something happens to Mexico,” Paner said when asked about the expected quota from Washington.
Should Manila get the same allocation from Washington, Paner said the Philippines could “definitely” fill the volume due to higher production in the current crop year, which would end on August 31.
Also, she added Manila may not get additional allocation from Washington in the current crop year after the US did not announce a need for sugar import volume reallocation in the current fiscal year.
“The chances do not look good, but anything is possible,” Paner said. On June 30 the US Department of Agriculture (USDA) announced the fiscal year (FY) 2018 tariff-rate quotas (TRQ) for raw cane and refined sugars.
The USDA established the FY 2018 TRQ for raw cane sugar at 1.117 MMT raw value, the minimum to which the US is committed under the World Trade Organization Uruguay Round Agreement on Agriculture. This was also the same volume set by the USDA in the current fiscal year ending September 30.
However, the Office of the US Trade Representative has yet to determine the allocation of traditional sugar suppliers like the Philippines.
“Raw cane sugar under this TRQ must be accompanied by a certificate of quota eligibility and may enter the US until September 30, 2018,” the USDA said.
The Philippines exports sugar to the US under the TRQ scheme. The TRQ allows countries to export specified quantities of a product to the US at a relatively low tariff.
The US and Mexico have successfully struck a deal on June 6, settling years-long dispute over the trade of sugar between the two countries. Under the agreement, Mexico will increase the price of its raw sugar being sold at local mills by 0.05 cents per pound for raw sugar, and 2 cents per pound for refined sugar.
Also, the import cap on Mexico’s refined sugar was cut drastically to 30 percent from 53 percent, while increasing its raw sugar volume to 70 percent. The agreement lowered the level of purity at which Mexican sugar can be sold as “refined sugar” in the US.
Mexico accepted the modifications in their previous trade agreement on the condition that it will be granted a right of first refusal to supply 100 percent of any “additional need” for sugar as determined by the USDA after April 1 of each year.
This means Mexico would always have the first right to fill any “demand for sugar in excess of the demand the USDA had predicted for the crop year”, according to the US Department of Commerce.
The SRA has been monitoring the tension between the US and Mexico over its trade agreement, as the additional quota allocation could depend on the result of their trade talks.
Latest SRA data showed that, as of June 18, the country has already shipped 106,464.99 MT of sugar to the US, filling more than three fourths of the 136,201 MT allocated by Washington.
Preliminary data from the SRA, a government-owned and -controlled corporation attached to the Department of Agriculture, showed that sugar production in crop year 2016-2017 has reached 2.437 million metric tons (MMT).
The figure is 8.89 percent higher than the 2.238 MMT produced in the previous crop year. It is also 8.31 percent higher than the SRA’s projection of 2.25 MMT. For the current crop year, the SRA allocated 74 percent of the local sugar output for domestic demand, while 20 percent would be exported to other foreign markets aside from the US. The remaining 6 percent would be shipped to the US.
The SRA pegged the domestic demand for sugar for the current crop year at 2.15 MMT.