Sugar industry sees tough times ahead

The country’s largest organization of sugar farmers sees tough times ahead for the industry due to rising cost of inputs and depressed sugar prices. Nonetheless, the group views the situation as a challenge for the industry to increase productivity and push for alternative markets for sugar.

In an interview, Confederation of Sugar Producers Associations (Confed) national president Federico Locsin III said that despite the high carryover inventory of more than 600,000 metric tons of sugar into the new cropyear which began last Sept. 1, the industry is optimistic that the sugar industry is well-positioned for better times ahead.

The 2007-2008 sugar cropyear which ended last Aug. 31 posted a record production of 2.455 million metric tons. The feat was accomplished at a time when the cost of fertilizers started at P900 per bag, rising over the duration of the cropyear to as high as P1,900 per bag.

With the price of fertilizers, particularly urea which is petroleum-based, now hovering at P1,800 per bag, the Sugar Regulatory Administration (SRA) has estimated that production for the new cropyear 2008-2009 beginning last Sept. 1 will drop to 2.257 million metric tons.

This expected production has been allocated thus: 68 percent for the domestic market (B sugar), 15 percent as reserve sugar (C sugar), 10 percent for the US market (A sugar), and seven percent for the world market (D).

When the cropyear 2007-2008 ended last Aug. 31, the SRA estimated that a total of 634,271 metric tons of sugar remained and would be carried over into the new cropyear.

Locsin said that while the estimate for the new cropyear’s production is low, the carry-over from the previous cropyear was high, which means the industry can meet demand. By the end of cropyear 2008-2009, it is expected that the carryover stocks into CY 2009-2010 will be back to a more comfortable level of 300,000 to 400,000 tons. “By next year, we expect the situation to normalize,” he said.

Aside from the high cost of inputs, Locsin said too much rain during the last cropyear dampened new planting activities, resulting in a lower production estimate for the new crop.

As for moves to extend the implementation of the comprehensive agrarian reform program, the Confed president urged government to channel its resources into strengthening existing beneficiaries and making them succeed in terms of increased support services activities.

“We are not totally against CARP but let us make the program successful first,” he said.

The current regime of low prices and high cost of inputs, according to Locsin, also poses a challenge for sugar farmers to accelerate efforts towards increasing their productivity and pushing for alternative uses for sugar, including for fuel.

For his part, former Confed national president Jose Zubiri said sugar smuggling, while minimized, still continues to threaten the industry. “We must remain vigilant,” he stressed.   — Mary Ann Reyes