Philippines mulls early export of sugar to prevent glut

MANILA, Philippines – The government is now studying the possibility of undertaking an early export program for sugar to prevent a possible oversupply which could depress prices.

The Sugar Regulatory Administration (SRA) made the statement after sugarcane farmers urged the government in a recent meeting to “hasten” sugar exports to “relieve pressure in the domestic market.”

“We have referred the matter (early export) to the Sugar Board for study and consultation with the different stakeholders in the sugar industry,” said SRA administrator Regina Bautista-Martin in a statement issued October 10.

The attached agency of the Department of Agriculture (DA) noted that there is a growing volume of available sugar. Weak demand, the SRA said, is one of the major factors behind this.

To date, the SRA said that the country’s inventory consists of 40,952.80 metric tons (MT) “A” sugar or those for the US quota and 55,853.24 MT of “D” sugar or those for other markets. These, said the SRA, are ready for export.

Manila ships sugar to the US under a prefential trade scheme dubbed as the tariff rate quota (TRQ) system. Shipments under the TRQ scheme are usually undertaken in December or January.

But in recent years, the government has been resorting an early export program to prevent a glut in domestic supply. In August, the SRA declared that it will not frontload shipments to the US as there is no excess sugar that needs to be shipped out earlier than the usual schedule.

The existing inventory, the SRA noted, is being augmented by the increase in sugar produced by more mills. As of September 30, the agency said 9 mills have started operations, significantly higher than the 3 mills which started operation in the previous year.

“In the first 4 weeks of milling in crop year 2012-2013, the Philippines has produced 73,528.03 MT indicating an increase of 395% when compared to the 14,824.39 MT produced in October 2011,” the SRA said.

The attached agency of the DA explained that sugar mills in the province of Negros started their operations earlier than usual.

In the previous crop year which ended on August 31, 2012, the Philippines exported more than 200,000 MT to the US and about 326,000 MT to other foreign markets. – Rappler.com