Philippines likely to import sugar this year – USDA

MANILA, Philippines - The United States Department of Agriculture (USDA) expects the Philippines to import sugar this year to augment domestic supplies as it attempts to fulfill the US sugar export quota amid tightness in supply caused by the prevailing dry spell.

In a report dated Oct. 8, the USDA Foreign Agricultural Services said while the Sugar Regulatory Administration is hoping to fill the US tariff rate quota volume of 142,160 metric tons raw value, the tightness in domestic supply would remain as a result of the El Niño phenomenon.

“The SRA is expected to announce a possible importation of sugar this year to augment domestic supplies,” the report said.

For the current crop year that began in September and ends in August 2016, the SRA expects raw sugar production to reach 2.27 million MT, slightly lower than the 2.32 million produced in the previous crop year because of the dry spell that is expected to last until the second quarter of next year.

Out of  the 2.27 million MT, domestic demand is placed at 2.25 million MT,  which is roughly equal to production.

Because of this, the SRA has allocated 100 percent of the projected production volume for the domestic market although the agency remains determined to fulfill the US export quota without resorting to importation.

The brunt of the dry spell was already felt at the tail end of the 2014-2015 sugar milling season when hot and dry weather conditions stunted the growth of canes in in major sugar producing regions of Negros and Iloilo. In Mindanao, some farmers shifted from sugarcane farming to cultivation of banana and rubber.

The combined effect of reduced cane production and strong domestic demand for sugar placed great strain on local supply, prompting the SRA to stop in June all remaining exports to the US and the world market.

Despite incurring a shortfall, the US raised the Philippines’ sugar export allocation for the current crop year in consideration of the country’s good track record as an exporter.

Last month, SRA administrator Ma. Regina Martin said the Philippines had a substantial carry-over volume from the previous crop year of around 400,000 MT of raw and refined sugar combined.

The Philippines has not imported sugar in the past five years and has remained what Martin described as a modest sugar exporter.

The Philippine sugar milling season would be in full swing in November and December, during which the SRA would review the industry’s export program.

Martin said the government wants to protect the US market as it remains to be the most profitable market for Philippine sugar.

World market prices have fallen to as low as $0.10 to $0.12 per pound whereas the US buys sugar at around $0.20 to $0.22 per pound.