The Philippines may import more sugar to avert a possible increase in retail prices, the Sugar Regulatory Administration (SRA) said on Wednesday, citing supply issues arising from a prevailing dry spell.
In an interview, SRA Administrator Ma. Regina Bautista-Martin said the agency would be coming up with new guidelines to ensure a stable supply ahead of a projected drop in production this crop year due to the El Niño.
“Because of El Niño and a reduction in area planted with sugarcane, sugar production is projected to be lower than initially estimated at the start of the crop year,” Martin said.
Sugar output is expected to reach 2.15 to 2.19 million metric tons in the 2015-2016 crop year, compared with the 2.32 million MT a year earlier.
The crop year starts in September and ends in August.
Additional sugar imports will help maintain a healthy buffer stock, as local exporters and traders attempt to fulfill Manila’s commitment to Washington’s tariff quota scheme, the SRA chief noted.
The Philippines is one of the select countries with an annual allocation of sugar export to the US market at a premium. This crop year, Manila has a quota of 135,508 MT.
“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,” she said.
At present, traders may import 1.25 MT of for every 1 MT exported to the US.
“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,” Martin said.
The average retail price of sugar was pegged at P56 per kilogram for February 2016, up from the P55/kg in the year earlier to January 2016.
Martin said local traders have exported 49,500 MT to Washington with another 28,000 MT set to leave port this week.
“Two vessels have already left for the US, and under the program the exporter can now import the replacement or portion thereof, which may arrive in the coming weeks,” she added.