RP expects increase in US sugar export quota

The Philippines stands a strong chance of getting an additional sugar quota to the United States  next year, according to Sugar Regulatory Administration (SRA) head Rafael Coscolluela said yesterday.

In an interview at the sidelines of yesterday’s signing of the joint administrative order setting the guidelines for biofuel production, Coscolluela said “we’re in for hard times in the next two years and it’s time for belt tightening for the sugar sector.”

He said the Philippine sugar industry must “become more efficient to lower production cost.”

Sugar production for crop year 2008 to 2009 is expected to drop to 2.220 million metric tons instead of the earlier projected output of 2.45 million.

Coscolluela said sugar producers have been complaining of higher cost of production. The price of domestic or “B” sugar, Coscolluela said, has been lower than projected at only P900 per bag instead of the earlier projection of over P1,000 per bag.

He said the lower price is due to a number of factors that include oversupply which is depressing prices and the global economic recession.

Fortunately, Coscolluela said, the price of export or “A” sugar has risen to P850 a bag.

According to Coscolluela, the higher price for export sugar is due to a very substantial drop in shipping cost which has led to increased buying from abroad.

To take advantage of the current higher price for export sugar, the SRA is now allocating more of its excess or “D” sugar for export.

Of the normally allocated seven percent of D sugar, Coscolluela explained, 4.5 percent will not be reallocated for export, while 2.5 percent would be set aside for local food processors. Sugar classified as “C” is reserve sugar.

Thus, even while the scenario for the next two years may not be so bright, Coscolluela said, the sugar sector is still happy as it expects an increase in the Philippines’ sugar quota to the US. The increase is expected to be as high as 60,000 to 65,000 MT.

Coscolluela said all suppliers of sugar to the US can expect an increase if the latter raises its export requirement.

The SRA had planned to export 15 percent to 20 percent of its production for crop years 2007 to 2009 due to a huge supply overhang, which is the highest in 20 years.–Marianne V. Go, Philippine Star