August 28, 2020
Jasper Y. Arcalas (Business Mirror) | https://bit.ly/2EM7DbY
THE Philippine Sugar Millers Association (PSMA) has proposed to the Sugar Regulatory Administration (SRA) to allocate 7 percent of the next crop year’s projected 2.19 million metric tons (MMT) output for export to the United States in order to minimize high carry-over stocks, as pandemic lockdowns dampen local demand.
In a position paper submitted to SRA Administrator Hermenegildo R. Serafica, PSMA President Pablo L. Lobregat outlined why the group is pushing for a higher “A” quota allocation in the next crop year 2020-2021, when local production is projected to reach a four-year high.
The SRA allocated 5 percent of the sugar production in the current crop year 2019-2020 for export to the US.
SRA earlier disclosed it expects sugar output in the next crop year, which starts on September 1, to increase by 2 percent from the current crop year’s 2.145 MMT volume.
Lobregat explained that they recommended a 7-percent US quota sugar allocation to “reduce the high carry-over stocks of both raw and refined sugar” for the incoming crop year.
Based on the estimates of PSMA, the country would enter the next crop year with a carry-over stock of about 678,460 metric tons (raw sugar equivalent).
“Unless this volume is brought down in crop year 2020-21, it shall be a perennial carry-over for the succeeding crop years,” Lobregat said in his letter dated August 24.
“Hence, with a slightly higher ‘A’ allocation of 7 percent, the carry-over is shown to go down to 541,986 metric tons by August 31, 2021, notwithstanding a higher estimated production of 2.19 million metric tons and a same volume of sugar demand projected for crop year 2020-21 with the current crop year,” he added.
Based on PSMA’s computations, the country would have a 13,884 carry-over “A” sugar in the incoming crop year. A 7-percent A sugar allocation would mean about 153,300 MT of locally produced sweetener next crop year would be exported to the US, making total volume available for shipment at 167,184 MT.
This means if the Philippines would ship the almost 137,000 MT raw sugar to the US under its quota, then Manila would still have a remaining “A” balance of 30,184 MT, according to PSMA’s letter.
“An ‘A’ allocation of 7 percent puts the Philippines in a better position for an additional quota in April next year by preparing the volume as early as now,” Lobregat said.
“The 30,184 metric ton’s ‘A’ ending balance by August 31,2021, provides the country with a ready volume when an additional quota will be announced,” he added.
Furthermore, Lobregat explained that a higher “A” allocation will help the industry move sugar supplies “to an available market—the crucial US market—instead of remaining in warehouses” amid a tepid domestic demand.
Lobregat noted that the pandemic-induced restrictions on mass gatherings limit weddings, birthdays, and fiestas, wherein “huge quantities of sweetened products and beverages” are consumed.
The PSMA chief added that demand from restaurants remained lackluster as customers are limited by social distancing and quarantine pass requirements.
This, Lobregat pointed out, has resulted in “severe reduction in economic activities, particularly sales of sugar-based products.”