THE Sugar Regulatory Administration (SRA) on Tuesday said it is allowing the advance swapping of domestic sugar quotas into US sugar quotas in a bid to stabilize sugar supply in the country.
In Sugar Order No.4, SRA Administrator Anna Rosario Paner has allowed holders of “B” sugar quedan or domestic sugar to advance-swap them for “A” sugar quedan or US sugar quota, to maintain the balance between production and domestic requirement of the sweetener in the local market.
“This will also ensure stabilized price levels [that are]reasonably profitable to producers and fair to consumers,” Paner said.
The SRA earlier slashed the sugar allocation to the US to 6 percent from the previous 8 percent of total production amid uncertainties over an additional supply agreement with Washington. Prior to that, the sugar agency had allocated 92 percent for domestic use and 8 percent for the US market.
Sugar production for crop year 2016-2017 is forecast to reach 2.25 million metric tons, higher than the 2.236 million MT produced in the previous crop year, and is expected to cover the domestic requirement of 2.15 million MT.
Paner said that the advance swapping of domestic sugar to US sugar quota will be open to all sugar producers, millers, traders and holders of outstanding quedan permits.
“All outstanding “B” sugar quedan-permits issued in crop year 2016-2017 are hereby allowed (eligible), on a voluntary basis, for advance swapping into “A” or US quota sugar for quota years 2016-2017,” she said.
Applications for advance swapping shall be accepted until April 30 this year, the official added.
“B” quedan-permits advance-swapped to “A” will be allowed replenishment starting September 1, 2017 until August 31, 2018, she said. Only those who have actually exported to the US using advanced-swapped sugar will be allowed to replenish their stocks for domestic use.
HFCS imports hurting sugar industry
SRA earlier blamed the higher sugar inventory to the unabated entry of high fructose corn syrup (HFCS) in the country as industrial customers shift to cheaper alternatives.
“There is a surplus in corn output in China, which resulted to a much lower price of HFCS. Also, high fructose corn syrup from China is zero duty as compared to its counterparts in the United States,” she said, adding that HFCS imports have already taken up about 13 percent of the demand for locally produced refined sugar.
Local sugarcane producers said that from 2011 to 2016, beverage makers and food processors imported almost 800,000 metric tons of HFCS into the country, displacing the demand for 23 million 50-kilo bags of locally produced sugar and depriving the country, particularly the sugar industry, of P35.2 billion in potential income.
For the crop year 2016 to 2017, HFCS importation has driven down sugar prices from a high of more than P1,800/bag to less than P1,400 per bag, translating to potential revenue losses of about P20 billion for the current crop year.
To prevent further damage to the local sugar industry, Paner said that only importers or consignees of imported HFCS duly-registered with the SRA at the time of the application for clearance for release will be allowed to import sugar starting next month.