SRA told to scrap sugar allocation to world market

August 18, 2020
Madelaine B. Miraflor (Manila Bulletin) |

Sugar producers prefer that all their sugar output for the next crop season stays here in the Philippines to make sure that the country will have enough supply during the pandemic, but this is a decision that is not up to them but to the Sugar Regulatory Administration (SRA).

In a statement, the Asociacion de Agricultores de La Carlota y Pontevedra, Inc. (AALCPI) is recommending SRA to maintain the status quo of sugar classification for the coming milling season.

If not this, since the country has trade commitments with the United States, the Philippines can just allocate 95 percent of the sugar production to the domestic market and 5 percent to the world’s largest economy, AALCPI President Roberto Cuenca said.

The sugar crop year in the Philippines starts on September 1 and ends on August 31 the following year, while production of the sweetener is divided into three classifications, namely ‘B’ for domestic sugar, ‘A’ for sugar exports to the US, and ‘D’ for sugar exports to the world market or other countries.

Every start of the crop year, SRA, the government agency tasked to regulate the sugar industry, gets to decide how much of the country’s expected sugar production will go to these classifications in order to prevent abnormal price adjustments.

Cuenca said that although AALCPI prefers that 100 percent of the country’s sugar output stays here for the next crop year because of the “present situation”, there might still be a need to maintain the balance. Hence, the recommendation to keep the 5 percent for the US.

“The said percentage classification takes into consideration the present situation and the balance between ensuring sufficient domestic supply while maintaining the status quo of a readily available export market to the United States,” Cuenca said.

However, he stressed that the A sugar quota should be “without replenishment rights”, referring to the sugar order in the last crop year wherein SRA approved the importation of sugar as replacement for the US quota to address the gap in domestic supply.

“SRA should be on top of the situation” and make sure they have enough and accurate data “to determine if that classification is viable as we forge into the milling season”, Cuenca further said.

For his part, SRA Administrator Hermenegildo R. Serafica said in a text message that sugar allocation will be deliberated by the Sugar Board after thorough consideration of the crop estimate, which will consider supply and demand projections based on analysis of historical and projected figures.

The SRA board, he said, will also consider the position papers of sugarcane industry producers upon drafting the allocation for the next crop year. 

Right now, 68 percent of the country’s domestic sugar goes to industrial users like beverage manufacturing companies Cola FEMSA Philippines and Pepsi Cola Products Philippines, Inc., while 22 percent of the supply is bought by institutional customers like pastry shops and bakeries. Only 13 percent of the supply goes to households.  

Cuenca said that the demand for sugar usually peaks by December in time for the holidays while the second peak is towards summer.

“But given the present situation, if this continues, SRA must revisit the classification and respond to it accordingly,” Cuenca said, referring to the COVID-19 pandemic.

As of July 12, the country’s total sugar supply already stood at 2.1 million metric tons (MT), which is slightly higher than the 2.074 million MT output in the previous crop year.