Sugar output breaches target, but low prices a concern

Sugar output breaches target, but low prices a concern - price of sugar


THE sugarcane sector performed better than expected this crop year as production exceeded the target despite the lingering effects of El Niño, the Sugar Regulatory Administration said.

As of May 28, sugar production totaled 2.33 million metric tons (MT), from 2.21 million MT a year earlier, the industry regulator said in a report. The output has surpassed the 2.25 million MT target this crop year.

The SRA had expected the milling season to take longer this crop year due to delays in planting of sugarcane after the El Niño episode which hit in late 2015 and lasted until mid-2016. The crop year starts in September and ends in August.

However, the sector is facing a major hurdle as prices continue to drop due to unabated importation of high-fructose corn syrup (HFCS) from China.

Mill-site prices of sugar fell to P1,255 per 50 kilogram bag, down 29.1 percent from P1,770 in the previous crop year, according to the SRA.

The drop in prices was largely traced to the higher sugar inventory as a result of imported HFCS.
Many industrial users, including Coca-Cola Femsa Philippines and Pepsi Co., are shifting to cheaper alternatives like HFCS, which has zero duty compared with similar imports from the United States.

Sugarcane producers estimated that HFCS imports have displaced 13 percent of locally-produced refined sugar.

From 2011 to 2016, beverage makers and food processors imported almost 800,000 metric tons of HFCS, displacing the demand for 23 million 50 kg bags of local sugar and depriving the sugar industry of P35.2 billion in potential income.

In crop-year 2016 to 2017, imported HFCS has driven down sugar prices from more than P1,800 per 50 kg bag to less than P1,400 as of the first quarter of 2017—translating to potential revenue losses of about P20 billion for the current crop year.

To ease the pressure from stock inventory and stabilize the situation, SRA has ordered the advance swapping of sugar quedans to allow early shipment of sugar to the US.

SRA Administrator Ana Rosario Paner allowed holders of “B” sugar quedan or domestic sugar to advance swap
for “A” sugar quedan or US sugar quota to maintain a balance between production and domestic requirement of the sweetener in the local market.

“This will also ensure stabilized price levels reasonably profitable to producers and fair to consumers,” Paner said in an earlier interview.

Paner has called on the Department of Trade and Industry (DTI) to ensure that the retail price of sugar reflects the decline in mill-site prices.

“I urge the DTI to check whether the retail price of raw and refined sugar has gone down, as the mill-site price of sugar is declining. The SRA hopes that consumers would enjoy the drop in the price of sugar,” she said.