Sugar output projected to go up 5% to 2.42-M tons

LAHUG, Cebu City – The Sugar Regulatory Administration (SRA) is projecting sugar production for cropyear 2006-2007 to reach 2.42 million metric tons, five percent more than the 2.137 million tons produced in the previous crop.

This, as the US Department of Agriculture announced a 158,000-metric ton raw sugar quota for the Philippines, 20,000 more than its regular quota of 137,000 tons. This year, the US allowed the Philippines to ship 260,000 metric tons, 80,000 more than its regular quota due to the devastation wrought by a series of natural calamities that hit the US sugar crop.

During the 53rd Philippine Sugar Technologists Association (Philsutech) convention here, SRA Administrator James Ledesma said he expects next year’s Philippine allocation under the US tariff rate quota system (under which the Philippines has the third biggest allocation of premium priced sugar exports to the US next only to the Dominican Republic and Brazil) to reach between 157,000 and 204,500 metric tons.

Sugar contract 14, the basis for the US sugar price, is at 21.35 cents per pound as of Tuesday, compared to the world market price (contract no. 11) of 14.91 cents per pound. The premium price for export to the US under the sugar quota however is diminished by various costs shouldered by exporters.

Ledesma said this year’s sugar crop which starts Sept. 1, is expected to yield million metric tons.

Barring any destructive weather that might affect production, the projection is based on yield expectations of sugar planters.

In his speech, the SRA chief noted that sugar production in the country has been steadily increasing since cropyear 1999-2000, reaching its highest volume in CY 2003-2004 at 2.34 million metric tons. There was a slight drop though in 2004-2005 due to the surplus production of the preceding cropyear that pushed prices down and prompting some sugar farmers to shift other crops.

He pointed out that a more stable price structure is emerging as multiple products such as sugar, ethanol, and electric power are being produced from sugarcane. "The opportunities are there for the taking," he said.

Ledesma said the sugar industry is in the process of transformation, and recent world trends have changed the primary use of sugarcane.

With the price of gasoline rising, he said the sugar industry is faced with immense opportunities. "But to be able to take advantage of these opportunities, we need to transform institutionally and structurally to achieve these dreams," he said.