Sugar industry to identify potential 2011 crop year problems

SUGAR SECTOR stakeholders will meet early next month to discuss production prospects for crop year 2010-2011, with an eye to preparing for potential problems like the shortage that struck this year, Agriculture officials said yesterday.

In a phone interview, Sugar Regulatory Administration (SRA) chief Bernardo C. Trebol said that stakeholders -- including sugar-cane farmers, sugar millers and traders -- will meet with Agriculture officials led by Secretary Proceso J. Alcala tentatively on Aug. 5.

It will be recalled that a prolonged dry spell, which officially stretched from December to May, prompted the government to cut its sugar production outlook this year, in turn forcing the country to import the commodity for the first time since 2006.

Beyond next year, however, Mr. Trebol said the meeting will seek to make production projections until 2015, as well as discuss how the country can become competitive in the export market.

Mr. Trebol said sugar production in the crop year starting September may be flat or just slightly more than the estimated 1.97 million metric tons in the current year. "I don’t think we will increase production," he said. "Probably, we will hit a maximum of 2 million MT."

In a separate phone interview, Mr. Alcala confirmed that he has scheduled a meeting with sugar stakeholders. "We will tackle sugar production for the next year to see to it that we won’t be having problems in sugar supply," Mr. Alcala said, adding that industry leaders will also be asked how the country can compete in the international market by 2014 or 2015.

At the same time, Mr. Trebol said that the government plans to hold the auction for the rights to import up to 150,000 MT of sugar next week, even as the tax expenditure fund (TEF) application remains pending with the Department of Finance.

Through the TEF, the government shoulders the duties and taxes on state firms’ imports. This means private groups that will win the state-bestowed rights to import with TEF coverage will be bringing in sugar tariff-free.

"[The TEF application] is still with the Finance [department]," Mr. Trebol said. "Hopefully, we can conduct [the tender] within next week, and it will be delivered to us before September 30."

The additional imports are meant to augment buffer stocks to ensure adequate supply amid delayed milling. They will add to the 150,000 MT set to arrive before July 30 to cover a shortfall due to the dry spell.

Milling of locally produced sugar will be delayed by about a month to October after crop growth was stunted by the dry spell, Mr. Trebol said. "The cane was stunted without the rain. Because of El Niño, there was no moisture on the ground," he said.

SRA estimates that production for crop year 2009-2010 will reach 1.97 million MT, short of the projected 2.18 million MT. The Philippines produced 2.1 million MT for 2008-2009.

Archimedes B. Amarra, SRA board member and executive director of the Philippine Sugar Millers Association, said the country needs to immediately order the imports because shipment will take 40 days from Brazil. "We are running out of time."

The country now has a buffer of 550,000 MT, good for two to three months.

KAM/Reuters