NFSP: Prioritize Domestic Market in Sugar Allocation

Enrique D. Rojas, president of the National Federation of Sugarcane Planters (NFSP), calls on the Sugar Regulatory Administration to prioritize the domestic market in the allocation of domestic sugar production for Crop Year 2020-21, which starts on September 1.

“We should allocate our local sugar production for CY 2020-21 to our domestic market. If SRA can provide specific figures on production, consumption and importation for the past several years, and if the estimated production for CY 2020-21 exceeds our projected domestic consumption, then we are amenable to allocating the barest minimum to honor our long-standing trade commitment to the US market,” Rojas emphasized.

In his letter sent to SRA yesterday, Rojas stated NFSP’s sentiments barely two weeks before the new milling season opens on September 1, while SRA is contemplating the allocation of sugar production for the next milling season.

Traditionally, SRA allocates or classifies domestic sugar into “A” for the US market, “B” for the domestic market and, if there is a production surplus, “C” for strategic reserve and “D” for export to the world market.
For Crop Year 2019-20, SRA allocated 95% of sugar production for the domestic market and 5% for the US market. The allocation remained unchanged for the entire crop year.

“Our sugar production has been declining in the past years, mainly because of land reform, which parcelized productive sugar farms into smaller, unviable plots. Compounding the problem is the lack of farm labor, which increases the cost of production, affects the timing of the harvest and, consequently, the amount of sugar that can be extracted from the canes,” Rojas pointed out.

Mechanization can address the lack of farm labor, but most sugar farmers do not have the economies of scale to justify mechanization. And even if their farms are large enough for mechanization, they can hardly afford to buy tractors and, more so, the more expensive sugarcane loaders and harvesters.

Moreover, the threat of sugar import liberalization prevents farmers from investing more in their operations to improve their productivity. Very recently, the National Economic Development Authority released the results of a study which proposes for the gradual liberalization of sugar importation, a move which has been pushed by the country’s economic managers for more than a year now, he said.

“The US market has been traditionally a favorable market for Philippine sugar. We must endeavor to fulfill our trade commitment to the US, so that we can retain our access to the US sugar market. If US sugar prices improve, then Philippine sugar can still enter that market. The US market offers Philippine sugar a better alternative than the dump prices in the world market,” Rojas explained.

“With national sugar production estimated at slightly over 2 million metric tons for Crop Year 2020-21, it might not be too much of a sacrifice to allocate three percent (3%) of sugar production to serve the US quota, preserve harmonious trade relations with the US, and thus maintain access to the US market,” he added.

“Late in the milling season when we can already clearly determine that there is a production shortage, then we can decide, in consultation with the producers, the exact volume of sugar that we need to import. We should also ensure that the importation will arrive after the mills have ceased operations, so that the imported sugar will not adversely affect our sugar prices,” Rojas stressed.*