Gov’t urged to allocate 5% of sugar output to US market

A sugar group is requesting the Sugar Regulatory Administration (SRA) to allocate a portion of local sugar production to the United States, noting the importance of a readily available export market amid an expected glut brought by lower demand.

The Asociacion de Agricultores de La Carlota y Pontevedra Inc. (AALCPI) said it was recommending to the SRA through its Sugar Order No. 1 to classify 95 percent of the country’s sugar produce as “B,” or for domestic consumption, and the remaining 5 percent for “A,” or for exports dedicated to the US market.

Sugar Order 1 serves as the basis of the agency in setting its policies for the rest of the crop year, which begins in September.“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 US,” AALCPI president Roberto Cuenca said.

He added that while the group wanted to have the country’s entire sugar output be used by locals, “we cannot be assured of the demand in these times and so we have to maintain the balance.”

SRA documents showed that the current inventory for sugar as of July stood at 2.4 million metric tons while demand had gone down to 1.92 million MT.This leaves the industry with an oversupply of 480,000 MT as industrial users shy away from ordering more sugar.

Before the coronavirus pandemic, about 60 percent of the country’s sugar supply went to manufacturing companies, while the remaining inventory was dedicated to household use and exports.

Cuenca also urged SRA that the “A” sugar quota be “without replenishment rights.” This referred to the sugar order issued in the last crop year wherein the agency approved the importation of sugar as a replacement for local output used to meet the US quota.

SRA Administrator Hermenegildo Serafica, for his part, said that given the changing behavior of sugar users, they were not entertaining the possibility of importation.

According to Raymond Montinola, of the Confederation of Sugar Producers Association Inc., a healthy year-end inventory for raw and refined sugar was at 200,000 MT and 250,000 MT, respectively. He stressed that these volumes would be enough to cover the lean season, noting that anything in excess could pose problems to stakeholders.

However, projections made by the US Department of Agriculture Foreign Agricultural Service was more optimistic.

It said that the country’s sugar production was expected to increase to 2.35 million MT to keep up with the expected rise in consumption as the global economy recovered from the pandemic.

It added that exports of sugar to the United States might even increase to 140,000 MT as sugar prices improve. INQ