Sugar producers expect to be profitable after 100% of local production allocated to domestic market

THE SUGAR Regulatory Administration’s (SRA) decision to allocate 100% of sugar output to the domestic market in crop year 2021-2022 is expected to help producers be profitable because they will not be required to sell sugar to the US at concessionary prices.

Manuel R. Lamata, United Sugar Producers Federation president, said in a phone message that Sugar Order (SO) No. 1, which allocated 100% of production to the domestic market, will mean producers will not be loss-making.

SRA issued SO No. 1 on Aug. 31, which classified the entire crop as “B” sugar, for domestic allocation.  

“We are thankful that the SRA has followed our advice to make all of our sugar production “B.” It will positively benefit the industry since we are going to have the same price all the way. We will not post losses,” Mr. Lamata said.

Mr. Lamata said however that small volume of imports might be needed with supply expected to be tight due to the high levels of projected rainfall, which will negatively affect production. 

“In terms of supply, it is going to be tight. I think we may need to import a bit of sugar. It will depend on the weather and production in the coming crop year. We will know by May next year,” Mr. Lamata said.

The SRA’s pre-milling estimate for raw sugar production for crop year 2021-2022 is 2.099 million metric tons (MT), against the 2.138 million MT produced in the prior crop year.

It added that the production estimate was a result of higher-than-normal rainfall with the re-emergence of the La Niña weather phenomenon in late October or November this year. It is expected to run until the first quarter of 2022, according to the government weather service, known as PAGASA.

“The raw sugar supply and demand projection of SRA Regulation Department shows that even with a carry-over volume of 158,557 MT of domestic sugar, the country’s sugar supply situation is better served with an all ‘B’ domestic sugar allocation for the crop year,” according to the Sugar Order.

Raymond V. Montinola, Confederation of Sugar Producers Associations, Inc. president, said the market will still dictate price movements, but said conditions favor producers.

“I think this year will be good for the producers in terms of prices. But in terms of productivity, I doubt that, especially after coming from La Niña last crop year and the possibility of another La Niña this crop year,” Mr. Montinola said in a mobile phone message.

“As to price, market forces will dictate on what it will be, whether it is going up or down,” he added.

National Federation of Sugarcane Planters President Enrique D. Rojas said in a statement that the order is favorable to sugar farmers.

“This allocation spares sugar producers (from) the losses they suffered last year arising from selling a portion of their sugar production to the US market at a lower price, compared to the more reasonable sugar prices in the domestic market,” Mr. Rojas said.

Moving forward, the SRA said it will conduct periodic assessments during the crop year 2021-2022 and may revise allocations when necessary. — Revin Mikhael D. Ochave 

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