El Niño seen cutting sugar output to 24-year low

January 25, 2024
Business Mirror | https://businessmirror.com.ph/2024/01/25/el-nino-seen-cutting-sugar-outp...

The Philippines’s raw sugar production in the current crop year could drop to 1.75 million metric tons (MMT), the lowest in 24 years, due to El Niño.

Sugar Regulatory Administration (SRA) Chief and CEO Pablo Luis S. Azcona said emerging estimates from the industry indicate that raw sugar production may miss the initial projection of 1.85 MMT.

Azcona said initial assessment made by the SRA and industry stakeholders point to El Niño as the main culprit behind the projected drop in raw sugar output.

However, he said the SRA is verifying the latest raw sugar production estimate.

The projected 1.75 MMT raw sugar output in crop year 2023-2024 would even be lower than the 1.799 MMT produced in crop year 2022-2023.

Historical SRA figures show that the latest production estimate could be the lowest in 24 years or since crop year 1999-2000, when output fell to 1.619 MMT also due to El Niño.

“In the first sugar order, we mentioned that there is a possibility of a 10 percent to 15 percent drop in production depending on the severity of the forecasted El Niño. We are doing a review and noted a drop in the estimate. Based on preliminary estimates [of SRA] and of millers [production], it dropped to about 1.75 MMT,” Azcona told reporters recently.

The latest emerging production estimate of 1.75 MMT is about 5.4 percent lower than the SRA’s earlier projection of 1.85 MMT, well within its anticipated decline of 10 to 15 percent due to the dry spell.

Azcona said the final estimated production figures would be released by the SRA soon.

The SRA is checking on the remaining standing sugarcanes in individual milling districts to come up with the updated production estimate.

Nonetheless, Azcona said local raw sugar output has already hit 1 MMT as of January 15.

He said the hotter and drier weather caused the crop to mature faster, but this resulted in smaller canes with higher sugar content. However, Azcona said sugarcanes lose the tonnage weight in the process, which results in overall lower raw sugar output.

“What’s alarming also is a lot of our farmers and our progressive farmers are complaining of a lower yield this year due to the weather patterns. If you look at the sugarcanes in Negros, they weigh lighter,” he said, noting that around 60 percent of the country’s sugarcanes have already been harvested.

Azcona said he expects the harvest to be completed in the next three to four months.

Philippine Sugar Millers Association President Pablo Lobregat estimated that total raw sugar output in the current crop year would be close to 1.75 MMT.

“It could be higher by 100,000 MT so it would be around 1.8 MMT. So it is something like last year around 1.799 MMT. It would not be far from last year’s output,” Lobregat told the BusinessMirror.

“El Niño is still ongoing, we are still in the middle of it. But a 10 percent drop [from 1.85 MMT earlier projection by the SRA] would be huge already.”

Procurement program

The Sugar Council, which is composed of major industry federations nationwide, threw its support behind the national government’s plan to purchase P5 billion worth of raw sugar from sugarcane planters.

The state’s plan is part of its efforts to lift the farmgate prices of sugarcane that have been declining in recent weeks.

“We appreciate the action taken by President Ferdinand R. Marcos Jr. and Agriculture Secretary Francisco P. Tiu Laurel Jr. in allocating funds for the direct purchase of sugar from local producers,” the group said in a recent statement.

“We hope that with this timely government intervention, prices can improve in the remaining months of the crop year.”

The Sugar Council said there is a need to raise the prevailing prices of raw sugar, which currently averages P2,400 per 50-kilogram bag, to allow planters to “recover” costs and sustain production in the next crop year.

The group also cautioned against “hoarding” of sugar quedans in anticipation of the higher prices that the government would offer.

“In discussions with industry stakeholders, it was stressed that this direct buying should only apply to newly-milled sugar covered by an SRA Sugar Order, and not to past weeks’ production,” the Sugar Council said.

“This is consistent with the government’s intent to ensure fair treatment for all, especially the small sugar farmers who cannot afford to hold on to their quedans to wait for better prices. The program cannot allow the better-financed producers to benefit more than those with fewer resources.”