PHILIPPINES: Sugar planters support change to quotas

Published: 06/24/2013, 8:07:06 AM

The National Federation of Sugarcane Planters headed by Enrique Rojas passed a resolution Friday endorsing the conversion of "A" sugar (US quota) to "D" sugar, for export to the world market during its joint board of directors and general membership meeting at the NFSP Main Office in Bacolod City, according to the Philippines' Visayan Daily Star newspaper.

The Sugar Regulatory Administration projects that, at the end of the current crop year, the estimated stock balance of "A" sugar will be 116,000 metric tons, a press release from NFSP said.

"If nothing is done to address this ‘A' overhang, it might affect domestic sugar prices at the start of Crop Year 2013/14 which officially opens on Sept. 1, 2013," Rojas said.

"By converting ‘A' to ‘D' and shipping the ‘D' out to the world market, we reduce the physical sugar stocks and we also decrease its possibility of leaking into the domestic market," he added.

"We did not over-allocate for ‘A' sugar," SRA Administrator Gina Martin meanwhile, told the NFSP members during the meeting.

The Philippines has an annual quota of about 138,000 tonnes sugar which it can ship to the US market. US sugar prices traditionally enjoy a premium over world market prices. However, the US experienced a better-than-expected sugar production this crop year, coupled with the unrestricted entry of Mexican sugar into the US market by virtue of the North American Free Trade Agreement.

Martin explained that, "Because of this oversupply in the US market, US sugar prices are low. In fact, early this year, the US Department of Agriculture already advised us that we need not ship more sugar to the US in addition to the 53,000 tonnes which have already shipped. The US will consider such partial shipment of our 138,000 tonnes quota as full compliance already," she said as the primary reason why there is an excess of "A" sugar.

"A" sugar prices are below P700 (US$16) per 50-kilo bag while "D" sugar prices are a little over PHP700 per bag. On the other hand, "B" sugar (domestic market) fetches around PHP1,300 per bag.

Rojas added that not all of the 116,000 tonnes "A" sugar will be converted to "D" but perhaps only 80,000 to 90,000 tonnes.

Martin expressed optimism that "B" stock balance at the end of the crop year will be within reasonable levels, considering that there has been a notable increase in domestic consumption.

Low stock balance at the end of the crop year augurs well for domestic sugar prices at the start of the coming crop year.

Aside from Martin, other guests were also invited to provide industry updates to NFSP members.

Sugar Board Member Cocoy Barrera gave the latest sugar production highlights while former Department of Energy undersecretary Jay Layug, senior policy adviser of the Sugar Master Plan Foundation, talked about the policy advocacy directions as well as the energy opportunities for the sugar industry.

Retired general Joel Goltiao, head of the Sugar Anti-Smuggling Organization, apprised the body on the status of the efforts against sugar smuggling, particularly SASO's achievements and action plan.

Providing very practical inputs on more effective, cost-efficient farming practices was Hugo Cubero, the Costa Rican consultant of the Philippine Sugar Research Institute (Philsurin).

World Vision, the foundation that received a US$15 million grant from the US Department of Labor to combat child labor in the sugar industry in the Philippines, also shared the thrusts of its programs and explored possible collaboration with NFSP in the implementation of socio-economic projects.

The World Vision staff at the NFSP meeting was headed by project director Daphne Culanag.

Representatives from the local supplier of Kubota farm tractors also presented their product to the body, small farm tractors for cultivation between sugarcane rows and are used extensively in other sugar-producing countries.

NFSP is facilitating the financing with Philsucor to help its members purchase the farm tractors, in line with the sugar industry's mechanization thrust to reduce production cost.