Outlook sours for sugar industry beset by high output, low demand

The local sugar industry is dealing with an unusual surplus amid favorable weather conditions coupled with demand cutbacks. Local consumption is down, however, and poses a problem that, in the long run, may bite the industry hard.

Based on the Sugar Regulatory Administration’s (SRA) supply and demand report, sugar output is now at 2.4 million metric tons (MT), an increase of 4 percent from the previous crop year. Demand, both from the local and foreign markets, is down by 5 percent to 1.71 MT.

The current output is a turnaround from the projection made by the US Department of Agriculture, which forecast that local output may fall to its lowest level in 10 years.

The SRA said output may reach 2.1 million MT this crop year, or 300,000 MT lower from the current figure.

SRA board member Roland Beltran said unforeseen events—especially the spread of the new coronavirus disease—were not factored in the forecasts, adding that “climate alone may prove or disprove predictions.”

While higher sugar production is often a welcome development, the Confederation of Sugar Producers Association Inc. spokesperson Raymond Montinola said this could hamper operations if the pandemic would continue to persist.

“Industries that use sugar have cut back their orders because of the pandemic since they have yet to exhaust their current supply. Almost all businesses are operating on a limited scale, and most of our production are committed for industrial use,” he said.

He added the increased demand for ethyl alcohol does not have a significant impact on demand, given that the raw material for manufacturing disinfectants is not sugar but its byproduct, molasses.

Current prices have already reflected the industry’s plight as sugar prices at the mill gate already declined by 8 percent. The average rate for a ton of molasses, in turn, has increased by 13 percent.

Another pressing concern is the lack of sugarcane cutters for the nearing milling season.

According to Montinola, most sugarcane workers are migrants from other provinces, but with various quarantine measures imposed across the country, the industry is seeing a possible shortage of workers.

“We don’t have enough people here that are willing to be sugarcane workers, but at the same time, we cannot risk the spread of COVID-19. It would be a very big problem for the industry if we have to suspend our operations because one of our stakeholders have been infected,” he said. INQ