Philippine raw sugar output would post flat growth in marketing year (MY) 2018-2019, as demand for the sweetener would remain unchanged following the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
According to a Global Agricultural Information Network (Gain) report, the country’s sugar production would settle at 2.3 million metric tons (MMT) in MY 2018-2019, which would begin on December 1. Sugar consumption would still be at 2.25 MMT, the report noted, as sugar-sweetened beverages become more expensive.
“Demand for sugar is expected to remain flat in MY 2018-19 as prices of sugar-sweetened beverages increase due to new taxes,” the report read.
The report estimated that total sugar consumption in the current marketing year will rise by 2.27 percent to 2.25 MMT, as industrial users veer away from imported high-fructose corn syrup (HFCS). HFCS was slapped a higher tax under the TRAIN law.
“Post estimates sugar demand slightly higher than the Sugar Regulatory Administration’s [projection] at 2.2 MMT in MY 2016-17 with consumption rising marginally to 2.25 MMT in MY 2017-18, as more industrial users begin to use local sugar due to lower excise taxes on sugars-sweetened beverages vs. noncaloric and HFCS-sweetened beverages and the amended Sugar Order 3, which places additional regulations on the importation of HFCS,” the report read.
For MY 2017-2018, the Gain report projected that total raw sugar output would decline by 8 percent to 2.3 MMT, from a record-high of 2.5 MMT posted in MY 2016-2017.
“The drop in sugar production is mostly attributed to unfavorable weather conditions, particularly during the vegetative or growth stage in many sugarcane-producing provinces, which should affect sugar content and weight of cane,” it explained.
The report said about 80 percent of total sugar produced in the Philippines is consumed locally, while the remaining volume is exported.
“Roughly 50 percent of domestic consumption is accounted for by industrial users, 32 percent by households and the remaining 18 percent by institutions [e.g., restaurants, bakeshops and hospitals],” it read.
The Gain report said the country’s raw sugar exports in MY 2017-2018 and MY 2018-2019 “are expected to level out to 220,000 metric tons [MT] after a bumper crop in MY 2016-2017.” Manila exported a total of 300,000 MT of raw sugar in MY 2016-2017 “due to record production levels.”
“The largest Philippine sugar export market is the United States, as prices under the US tariff rate quota system are normally higher than world market prices,” the report read.
Manila would still import refined sugar at around 100,000 MT in MY 2017-2018 and MY 2018-2019 “due to strong demand from food and beverage producers.” The country imported about 50,000 MT of refined sugar in MY 2016-2017, according to the Gain report.
The report was prepared by the Foreign Agricultural Service of the US Department of Agriculture in Manila.