Export of raw sugar to the United States hampered by supply problems

Exporting raw sugar to the United States is not a priority at this time as the country continues to suffer from a limited sugar supply, the Philippine Sugar Millers Association (PSMA) said.

PSMA Chairman Pablo Lobregat told BusinessMirror that exporting raw sugar to the US market is not an industry priority “at the moment” given the issues hampering domestic production.

“At the moment it’s not a priority, but you shouldn’t say give up either. [‘A’ sugar forever]. [If the US] takes it off, [we] can’t blame them but [we] don’t tell them we’re giving up [our quota allocation]said Lobregat in a recent interview.

The Philippines has long benefited from the United States’ tariff rate quota (TRQ) system for its sugar imports. Under the TRQ system, the Philippines receives an allocation of raw sugar that is allowed to enter US soil at a lower tariff rate.

However, since the previous crop year 2021-2022, the Philippines has allocated all of its raw sugar production for domestic consumption. The current Sugar Regulatory Administration (SRA) board earlier announced that it has recommended a full “B” raw sugar allocation for the current 2022-23 crop year.

Despite not allocating a single volume of raw sugar for export to the US market, the Philippines continued to receive quota in fiscal year 2022 and even in the upcoming fiscal year 2023, which begins on October 1, from the United States.

The SRA board has the power to classify the country’s sugar production according to its destination market: A for the American market, B for the domestic market and D for the world market. A “C” sugar would refer to reserved sugar which could be reclassified by the SRA board as A, B or D.

The last time the Philippines exported raw sugar to the United States was during the 2020-2021 crop year, with a total volume of 112,008 metric tons commercial weight (MTCW) over its total quota of 138 154 MTCW.

However, Lobregat explained that the Philippines should not permanently lose the US market, as it serves as a dependent alternative market for local raw sugar, especially when local prices are lower than US prices.

“The problem right now is that ‘B’ sugar prices are higher than ‘A’ sugar prices. What happens if there comes a time when the price of sugar “B” is 2,500 P and the price of sugar “A” is 4,000 P? Then we should export,” he said.

“People forget that A sugar prices are generally higher than B sugar prices. We must not lose this market,” he added.

Lobregat added that Philippine officials can always explain to their American counterparts that the country is experiencing problems, mainly weather-related, that prevent it from shipping raw sugar to the American market.

“But we shouldn’t tell them that we’re giving up our right to quota allocations,” he said.

SRA Administrator David John Thaddeus P. Alba explained earlier that the tight supply was behind the SRA Board’s decision to allocate all raw sugar production to the market indoors amid lackluster production forecast for the current crop year.

“We have an estimated demand of 2.2 million metric tons to 2.3 million metric tons. We don’t think our production would meet the demand,” he said.

“Why are we going to export when we cannot supply the domestic market? We see no opposition to the [proposed] SO 1,” he added.

Rachel J. Bradford