Additional sugar imports loom as domestic supply tightens

MANILA, Philippines – Local sugar traders are now allowed to import an additional 100,000 metric tons (MT) of sugar following the tightness in supply due to the recent dry spell, the Sugar Regulatory Administration (SRA) said.

In an order, the SRA said the decision was reached after certain industrial consumers of sugar expressed desire to shift to other alternative sweeteners or bring in sugar containing finished products unless competitive priced sugar are made readily available to them.

“Despite the importation of sugar as part of the earlier replacement program and sufficient supply in the domestic market brought about by a carry-over volume from the previous crop year, as well as the drop in sugar withdrawals, domestic sugar prices have been high for the most part of the current cropping season,” SRA said.

As of last week, sugar output has reached 2.21 million MT, exceeding the 2.1 million MT production estimate for crop year 2015-2016.

A sugar crop year in the Philippines starts September and ends by August.

“We have already exceeded the target but production remained lower than the 2.32 million MT in the previous crop year,” SRA policy and planning manager Rosemarie Gumera said.

SRA expects the sugar sector to bounce back in the next crop year citing the favorable weather conditions and availability of water for irrigation.

“This  crop year will be a better cropping season and we expect sugar output to takeoff. In fact, many sugarcane farmers have now started planting crops, which will be available for the first batch of harvesting by September or October,” Gumera added.

It can be recalled that Manila has allowed importation of sugar as part of the replacement program as drought hit major sugarcane producing provinces.

Under the program, SRA will allow the export of domestic sugar to “A” sugar or US quota, while importation of sugar as replacement for the volume exported to Washington with a small addition of about 33,000 MT to cover the drop in the initial production estimate.

Only participants of the program are allowed to replace the sugar exported with imports. Traders can import 1.25 MT for every one MT exported to the US.

The Philippines is one of the select countries given an annual allocation of sugar export to the US market at a premium. For this crop year, Manila has a regular US sugar quota of 135,508 MT and another 19,000 MT as additional quota allocation.

The tariff-rate quotas allow the Philippines to export specified quantities of a product to the US at a relatively low tariff but subject all imports of the product above a pre-determined threshold to a higher tariff.