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Philippines Sugar Semi-Annual Report 2008
Sugar production in the Philippines is forecast to drop to 2.2 million tonnes in ther calendar year 2008/2009 according to the USDA Foreign Agricultural Service. Because of declining consumption and weak demand the Philippines government will formally request the AFTA Council to move sugar to the highly sensitive list, in order to allow for a temporary halt in tariff reductions.
Exective Summary
Final SRA sugar production estimates for last crop year reached 2.5 MMT despite earlier reports of unfavorable weather. Sugar production is projected to fall to 2.2 MMT in CY 2008/09. Domestic sugar consumption also declined to 1.9 MMT last year and will likely remain at the same level this year as a result of weak demand from the food manufacturing sector and consumers. The Philippines government will formally request the AFTA Council to move sugar to the highly sensitive list, in order to allow for a temporary halt in tariff reductions.
Production
According to the Philippine Sugar Regulatory Administration (SRA), Philippine raw sugar production reached 2.455 million metric tons (MMT) in FY2007/08, significantly higher than the original SRA estimate of 2.275 MMT, or about 10 percent higher that the previous crop year. According to the Bureau of Agricultural Statistics (BAS), total area devoted to sugarcane production in CY 2007/08 was 392,647 hectares.
However, raw sugar production is projected decline slightly in CY 2008/09 to about 2.20 MMT in CY 2008/09 from a high of 2.455 MMT in the previous year, mostly due to reduced fertilizer use brought about by increasing fertilizer prices and despite some projected expansion in new sugarcane areas to supply feedstock for the new ethanol plants that are expected to begin their operations starting in 2009. In January 2007, the Philippines passed the Bio-fuels Act, which mandates the use of 5-10 blend of ethanol with all gasoline sold domestically starting in 2009.
While there is no formal trade in sugarcane due to the unique “quedan” system in the Philippines, according to industry sources, a metric ton of sugarcane can roughly valued at about P1,310 (as of November 7, 2008, based on P980/50-kg bag of raw sugar. In CY 2007/08, the average mill site price per 50-kg bag of “A” raw sugar was P601 for the U.S. market; P1,109 for "B" raw sugar for the domestic market; P1,054 for “C” sugar;P540 for “D” sugar; the average composite price was P1,057.
Wholesale and retail prices of raw and refined sugar in Metro Manila for CY2007/08 follows:
As of November 5, 2008, prevailing wholesale price of raw sugar was P1,150, while refined sugar was at P1,550 per bag; prevailing retail price of raw sugar was P30/kg, while refined sugar price was P36/kg (US $1= Philippine Pesos 48.49).
Consumption
Domestic sugar consumption has been traditionally measured by monitoring sugar withdrawals from the mills. Domestic sugar withdrawals were previously projected to reach 1.95 MMT in CY 2007/08, however, final estimates show a drop in withdrawals to about 1.90 MMT. Consumption this year is projected to remain at similar levels in part due to the projected slowdown in demand for sugar by local food manufacturers and the growing availability of imported low-priced sugar-containing food and beverage items in the market.
Trade
No imports are forecast for CY 2008/09 due to projected adequate sugar production projected for the current crop year.
Under the U.S. Tariff Rate Quota program, raw sugar exports for 2008/09, is set at 142,160 MT, while exports to the world market are projected to reach 82,541 MTRV.
POLICY
ASEAN: In October 2008, the Philippine President directed the Department of Trade and Industry to notify the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) Council that the Philippine government will seek the transfer of raw and refined sugar from the sensitive to the highly sensitive list of the AFTA common effective preferential tariff (CEPT) scheme. The President’s directive aims to retain sugar tariffs at 38 percent for imports from within the ASEAN region for the next three to five years at the least. The Philippine sugar industry, supported by the Department of Agriculture’s Sugar Regulatory Administration, is seeking a freeze on existing tariff rates.
MAV: In October 2007, the Philippine DA announced that it would be undertaking a review of the Minimum Access Volume (MAV) regulations, proposed changes included limiting imports of sugar under MAV to raw sugar and to be exclusively undertaken by sugar producers. The MAV review has not yet been completed.
Further Reading
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November 2008
