Government mulls scrapping US sugar quota

MANILA, Philippines — The Philippines is looking at the possibility of scrapping sugar allocation to the US amid the challenges being faced by local producers for this crop year.

The Sugar Regulatory Administration (SRA) said the Board would study the possibility of diverting “A” sugar amid an expected relatively flat output.

The move was also raised by Sen. Juan Miguel Zubiri, but SRA administrator Hermenegildo Serafica warned of the repercussions of proceeding with such decision.

“He (Zubiri) does not understand why we are shipping out when we are also importing. His stand is that instead of shipping out, why not sell it directly to beverage companies for that allocation instead of importing,” Serafica told The STAR  Tuesday.

“If we scrap that, regaining access will not be that easy. Once we give that up, US will reallocate this to other exporting countries. What happens if we lose that, it might be indefinite (to have it back),” he said.

Bases on the latest sugar order, 95 percent of the sugar production will be for the domestic market, while the remaining five percent will be for the US market.

The SRA classifies sugar into “A” for sugar for export to the US, “B” for domestic consumption, “C” for reserves, “D” for export to countries other than the US and “E” for local food processors.

“We have the same quota given by the US. The problem is our domestic supply is going down and the mill gate price of A sugar is lower than B sugar,” SRA board member for planters side Emilio Yulo told The STAR.

The Philippines is one of the select countries given an annual allocation of sugar export to the US market at a premium.

“But we will have to study this. The board will look into this and we assured the senator that this wiould be taken up,” Serafica said.

“There are lots of things that we have to consider, it’s not only about figures, balances by end of the crop year, but also how profitable it will be for the farmers and the consumers,” he said.

Serafica explained that converting all “A” to “B” would mean excess raw sugar supply.

For the new crop year which started last month and will end in August next year, the Philippines expects to produce 2.096 million MT of sugar.

This is a measly 1.1 percent increase from this year’s 2.072 million MT production.

The lower production will likely prompt more sugar imports this crop year as the country needs to maintain at least 2.2 million MT in supply to meet local demand.