February 18, 2016
Louise Maureen Simon (Philippine Star) | http://goo.gl/EyjdrD
MANILA, Philippines – The Philippines is likely to import more sugar to tighten controls on retail price increases due to tightness in supply as a result of El Niño phenomenon.
The Sugar Regulatory Administration (SRA) said additional sugar imports would help maintain a healthy buffer stock as local exporters and traders attempt to fulfill the country’s commitment to export sugar to Washington under the tariff quota scheme.
“We would also come up with new guidelines for the proposed replacement program to ensure stability of sugar supply in anticipation of a projected drop in production this crop year due to the effects of El Niño,” SRA administrator Ma. Regina Martin said.
Sugar production is projected to reach 2.15 to 2.19 million metric tons for crop year 2015-2016, lower than the 2.32 million MT during the last crop year.
Sugar crop year in the Philippines starts in September and ends by August.
“Because of El Niño and a reduction in area planted with sugarcane, sugar production is projected to be lower than the initial estimate at the start of the crop year,” Martin said.
The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) reported that the El Niño phenomenon is expected to reach its peak in the first quarter of the year with effects to be felt by 85 percent of the Philippines until the latter part of April.
The SRA earlier said the industry would face bigger challenges this year due to dwindling farm areas and the continued dry spell.
The Philippines is one of the select countries given an annual allocation of sugar export to the US at a premium. It has a regular US sugar quota of 135,508 MT for crop year 2015-2016.
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.
Martin said there is a need to immediately address the matter of exporting to the US quota and have a controlled import program to cover the drop in the initial crop estimates despite SRA having programs lined up to address El Niño and encourage farmers to continue planting.
“Thus, we came up with a US sugar quota and export replacement program. At present, traders can import 1.25 MT of sugar for every 1 MT exported to the US,” Martin added.
Under the program, the 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.
Martin noted that the additional volume would be enough to bolster domestic supply and satisfy the local demand which would help sugar prices.