THE PHILIPPINES, which is importing sugar this year after eight years of being an exporter, may improve its sugar production in 2011.
But until then, the country will have to import the sweetener for the second year in a row.
Production in the 2010-2011 crop year may total 2.3 million tons compared with 2.18 million tons in the current crop year ending August 2010, according to data from the Sugar Regulatory Administration (SRA).
?The new crop looks good because of favorable prices, available fertilizer, and a generally encouraging environment, what with the currently high prices. There is incentive for the farmers to take care of their sugarcane. If there?s no extended El Niño, we would likely produce 2.3 million tons of sugar,? SRA Administrator Rafael Coscolluela explained.
El Niño is a weather phenomenon that causes drought. The weather bureau has reported that 20 provinces are already experiencing below-normal rainfall. One is Batangas, a minor sugar production area.
The province of Negros, which produces 60 percent of the country?s sugar, has only started to experience dryness in the southern part of the province.
Coscolluela said that cloud seeding operations have been set to ensure normal sugarcane growth in southern Negros.
Some 300,000 to 360,000 tons of sugar stocks may be carried over to 2011.
However, the output hike may not be enough to serve higher local demand and exports to the United States while maintaining a two-month buffer stock at the end of the milling period.
Coscolluela said that demand has reached 2.3 million tons this year from the previous 1.95 million tons. This is because high world market prices discouraged the smuggling of sugar into the country, Coscolluela told the Inquirer.
Add to that the US sugar quota of 137,000 tons and there is already demand of 2.437 million tons to be filled.
The ending inventory by September 2011 will then be around 163,000 to 223,000 tons, which is below the ideal buffer stock of around 300,000 tons.
A two-month buffer stock keeps sugar supplies stable as milling starts around September and October, according to the Philippine Sugar Millers Association.
?There is of course this question: Do we keep the stocks for domestic use or do we continue exporting to the United States?? he said.
He said that traditionally, the Philippines honors its commitment to the United States because it?s a generally favored market.
Coscolluela said that sugar prices are expected to remain high for about two years, after which there could be enough surplus to bring down prices.
When this happens, it would be to the Filipino farmers? advantage if the Philippines still had its US quota to serve.
?You wouldn?t want to miss on your quota just because of a temporary situation this year because the United States may decide to give that to other countries,? he said. ?If that happens, then you would forego long-term opportunities that are generally good for our sugar industry.?
Sugar prices doubled last year and are up another 12 percent this year to P54 a kilo this year because of weather disruptions to crops in Brazil and India, the world?s biggest producers.
Raw sugar prices are at a 29-year high on concerns that global demand is outstripping output. In the Philippines, prices are at a 23-year high.
The Philippines is returning to the sugar-import market for the first time since 2001. This is expected to strain global supplies as the erstwhile net exporter joins Indonesia, Pakistan, India, and Egypt in seeking imports.
The government is currently preparing guidelines that will allow private companies to import about 150,000 tons of sugar through the National Food Authority.
The overall plan is to import raw sugar with the NFA as the importer on record so that the sweetener can be delivered to the Philippines free of duty.
The NFA will avail itself of a subsidy from the Department of Finance?s tax expenditure fund so that the 38 percent import tariff will not be passed on to the consumer. The cost of subsidizing the duty is about P2.1 billion, according to Coscolluela.
