PH needs to beef up sugar imports to control prices

The Philippine government had seen the need to beef up sugar imports in order to prevent a possible hike in retail prices as the prevailing dry spell limits the supply for this particular commodity.

SRA Administrator Ma. Regina Bautista- Martin said the agency is cooking up new guidelines for the proposed move in order to ease the impact of the projected drop in sugar production in the supply chain.

Martin said that because of El Niño and a reduction in area planted with sugarcane, sugar production is projected to be lower than previously estimated at the start of the crop year.

Production for this commodity is expected to reach 2.15 to 2.19 million metric tons ( MT) for 2015 to 2016 crop year, much lower compared to the 2.32 million MT recorded last crop year. A sugar crop year in the Philippines starts September and ends August.

Martin said the additional sugar imports will sustain the country’s buffer stock this year, while local exporters will still try to live up to the country’s commitment to export sugar to Washington under the tariff quota scheme.

For this crop year, Manila has a regular US sugar quota of 135,508 MT.

Tariff- rate quotas allow countries to export specified quantities of a product to the US at a relatively low tariff, but subject all imports of the product above a pre- determined threshold to a higher tariff.

“While SRA have programs lined up to address El Niño and encourage farmers to continue planting, we needed to immediately address the matter of exporting to the US quota and have a controlled import program to cover the drop in the initial crop estimates.

Thus we came up with a US sugar quota and export replacement program,” Martin said.

“Under the program, SRA will allow the export of “B” sugar or domestic sugar to “A” sugar or US quota, while importation of sugar as replacement for the volume exported to Washington with a small addition of about 33,000 MT to cover the drop in the initial production estimate,” the SRA chief further said. To date, local traders can import 1.25 MT of sugar for every 1 MT exported to the US.

She said that the additional volume will be able to improve domestic supply at the same time cater to the local demand. Average retail price of sugar was pegged at 56 per kilogram in February, 2016, up from the 55/ kg prevailing price last year up to January, 2016.

As of now, local traders have already exported a total of 49,500 MT of sugar to Washington with another 28,000 MT set to leave port within this week.