Low sugar production forecast due to La Niña

With the La Niña phenomenon in the country expected to last until February next year, an official from the Sugar Regulatory Administration (SRA) said the agency was expecting lower sugar output for 2018.

“Presently and a week before, heavy rains have struck Visayas and Mindanao where most of our sugar production takes place. Too much water is not good for sugarcane,” SRA board member Roland Beltran said.

Negros Occidental, known as the sugar bowl of the Philippines, was hit by tropical storm “Urduja” although not as badly as in nearby areas in Eastern Visayas, where five out of six provinces were declared under a state of calamity.

The country’s sugar crop year starts September and ends in May, while harvest period begins in October to December and ends in May.

Data issued by SRA showed a pre-estimate of 59,044 metric tons (MT) of raw sugar production for crop year 2017-2018, while refined sugar production is expected to reach 18,078 MT.

This pales in comparison with last comparative year’s output of 2.5 million MT and 959,976 MT for raw sugar and refined sugar, respectively, although these forecasts were only applicable for the early part of 2018.

“Production may be a bit lower than last year but sugar supply will still be enough,” said Beltran.

In terms of policies, Beltran said the enactment of the new tax reform bill that imposed a higher tax on sugar-sweetened beverages would most likely hit consumers more than the local farmers.

“Planters will continue because it’s their way of life … maybe there will be an effect on the consumption aspect though it remains to be seen,” he said. “However, it will be compensated if industries will forego the use of HFCS (high fructose corn syrup) and increase their utilization of sugar.”

Under the new Tax Reform Acceleration and Inclusion (Train) bill, beverages using HFCS will be taxed at P12 a liter, while drinks using sugar will be taxed at P6 a liter. This will be imposed on energy drinks, powdered juice drinks and carbonated drinks.

Pepsi Cola Products Philippines Inc., one of the biggest beverage companies in the country, has disclosed its plan to reformulate its drinks by using 100 percent sugar versus its previous formulation of using 60 percent sugar and 40 percent HFCS to avoid paying higher taxes.

Once companies follow suit, SRA is expecting the local sugar industry to fill up HFCS’ market share.

As of last month, there are 27 milling sugar centrals while a total of 12 sugar refineries are operating. This puts the sector’s total milling capacity at 204,300 MT canes a day with an average milling capacity of 7,567 MT a day.