SRA allots most of sugar production to domestic market

March 31, 2021
Jasper Y. Arcalas (Business Mirror) |

The Philippines has decided to allocate its remaining raw sugar output in crop year 2020-2021 for domestic consumption to ensure ample stockpile and avert a possible increase in prices as the country faces lower than expected production.

The Sugar Regulatory Administration (SRA) issued Sugar Order (SO) 1-A that authorized the scrapping of the 7 percent “A” allocation or sugar to be exported to the US as mandated by earlier SO 1.

Based on SO 1-A, all remaining sugar production covering “production of week ending April 4” until the end of the crop year 2020-2021, which is on August 31, shall be allocated as “B” or for the domestic sugar market.

The SRA board explained that the reallocation was driven by the lower sugar content of canes milled in the current crop year due to “severe” La Niña affecting the majority of sugarcane fields.

The SRA board explained that the decline in sugar recovery milling rate, which has dropped to an average of 1.71 50-kilogram bag per ton cane (LKg/TC) is “substantially lower” than the 1.87 LKg/TC estimated before the start of the crop year.

“The drop in LKg/TC eclipses the increase in sugarcane tonnage this crop year, which is higher by 8 percent [as of March 7, 2021] from tonnage for the same week-ending last crop year,” the document released on Tuesday read.

“As a consequence of the drop in LKg/TC, SRA in its Final Crop Estimate for calendar year [CY] 2020-2021 revised sugar production for the crop year to 2.101 million metric tons, from 2.19 million metric tons,” it added.

The SRA said it has “informed stakeholders about the drop in estimated production for the crop year, who in turn have given their recommendation/s on how to address the situation.”

Philippine Sugar Millers Association Executive Director Cocoy Barrera told the BusinessMirror that their group supported the reallocation to “boost domestic supply” and “ensure stability of prices.”

Barrera said the country may still be shipping a total of about 100,000 MT to 102,000 MT of sugar to the US from the production that has been “quedanned” prior to SO 1-A. This could also include the volume of carry-over A sugar from the previous crop year.

Due to this, there are no concerns if the scrapping of “A” allocation would put the Philippines’s quota to the US at risk, Barrera said.

“That’s enough for three vessels, which will make us substantially compliant [with our quota to the US],” he said.

Barrera said the country has already shipped 34,000 MT of sugar to the US while there is already a nomination for a vessel for the second shipment which would contain about the same volume as the first one.

“We do not foresee immediate changes in our quota to the US. With the change in administration of the US government, the sugar program will remain,” he said.

SRA Administrator Hermenegildo Serafica told the BusinessMirror that all production this week shall be quedanned already as “B” sugar.

As for the remaining volume to be exported to the US, the SRA is still in the process of quedanning the production last week, Serafica added.

“There are still A sugar stocks and we are still in the process of quedanning the production of last week. We will know after this week how much ‘A’ sugar we have left,” he said via SMS.

SRA board member Emilio Yulo, who represents the planters’ sector, said he doubts that the country would be able to hit its revised production estimate for the current crop year.

Citing SRA data and trend, Yulo said total sugar output this crop year would settle at 2 million MT at best, which is slightly lower than the 2.028 million MT recorded volume in the previous crop year.

As of week ending March 14, the country’s sugar output declined slightly to 1.394 million MT from the 1.397 million MT recorded volume in the same week of last year, based on latest SRA data.

SRA data showed that sugarcane milled as of the reference period grew by 7.57 percent to 16.67 million tons from last year’s 15.504 million tons. However, sugar recovery rate is down by 6.56 percent to 1.71 LKg/TC from 1.83 LKg/TC last year, data also showed.