Planters are appealing to the Sugar Regulatory Administration (SRA) to increase local sugar supply by prioritizing the domestic market over the United States, as El Niño could cut sugarcane output in the current crop year.
Confederation of Sugar Producers Association (Confed) Spokesman Raymond Montinla called on SRA to reclassify a portion of “A” sugar, or those to be exported to the US, to “B” sugar for the domestic market.
For crop year 2018-2019, the SRA allocated 5 percent of output for the US sugar quota while the remaining 95 percent is for the domestic market.
“Confed has been pushing for the transfer of the ‘A’ allocation to ‘B’ on the grounds that output might be lower than expected,” Montinola said in an interview with reporters last week. “We have been proposing this way before the crop year started. We feared that output may be lower because we came from a La Niña season.”
He also said production may be lower than the SRA’s projection of 2.079 million metric tons (MMT) as El Niño could dry up sugarcanes faster.
SRA Board Member Emilio Yulo concurred with Montinola that El Niño could affect total sugar production in the current crop year, which would end on August 31.
The SRA earlier revised its production forecast to 2.079 MMT, from 2.225 MMT after bad weather conditions affected some sugarcane-producing provinces. The latest forecast is slightly lower than the previous crop year’s 2.08 MMT.
“The ‘A’ sugar allocation is beneficial if production is huge. But on a year of deficit, it is not good,” Montinola said.
Under Executive Order 18, dated May 28, 1986, the SRA has been vested with the power to “establish and maintain a balanced relationship between sugar production and the requirements of sugar and to maintain such marketing conditions, as will ensure stabilized prices at levels reasonably profitable to the producers and fair to consumers.”
Shortfall
In a separate interview, Yulo said the proposal of Confed requires “serious study” by the SRA board.
“We need to determine if it is worth continuing the ‘A’ program, particularly since it will be hard to justify to our planters why we continue to export sugar to the US, but we also have the importation program,” he said.
Yulo said the Philippines may not be able to fill up the sugar quota allocated by Washington.
“Our revised projected output is 2.079 MMT and the 5 percent [for the US] is a little over 100,000 metric tons. Our quota is 136,000 MT so we will end up short,” he said. “The shortfall is equivalent to one boatload.”
While shipments may fall short of the sugar quota, Philippine Sugar Millers Association (PSMA) Executive President Jesus Barrera said raw sugar exports to the US would still be “substantial.”
“We will be short, but we have an overhang from last year of about 15,000 metric tons, so we will still be able to ship a substantial volume but not the entire quota,” Barrera told the BusinessMirror. “It could be less than 15,000 MT to 20,000 MT.”
Barrera said production in the current crop year is on track to hit the SRA’s latest forecast as data shows higher sugarcane delivery and higher sugar content.