By: Modesto P. Sa-onoy
SHOULD the Philippines ship out to the United States five percent of its sugar produced this crop year?
Philippine sugar has been sold to that market since the last decade of the 19th century except during the years of World War II when our sugar was sent to Japan, for free, as part of the war booty. Philippine sugar even played a vital role in our struggle for independence from the United States. That is why sugar for the US is not merely an article of trade but a political commodity as well.
There is therefore a sense of historicity to keep the American market in our list of buyers. Moreover, the United States Department of Agriculture determines on a periodic basis how much sugar it would import from the many producers in the world because American consumers pay a high price for this commodity so we must stay there.
In earlier years we produced more sugar than we could consume so that as much as 60% of our annual production went to the US.
The income from the US sale is denominated in dollars, earning for the Philippines as high as 60% of our foreign currency even after the war. Those were the times when the price of sugar for the United States exceeded the price sold in our local market; it was the premium destination. We fought hard to retain our foothold there.
The local price was in peso, it was a market the sugar producers ignored. Every crop year the most awaited price is the US benchmark because that practically dictated whether we have a boom or a bust.
There were annual trips of producers and government officials to the US to lobby for a high US quota. The industry even employed professional lobby groups in the US to either preserve our quota or increase it. Indeed, the US market was so priced that the wealth of the industry and individual producers was measure in terms of their share in the US quota.
But from the beginning of this century things changed drastically. Our population has now exceeded over a hundred million while our production has reached a point of uncontrollable declined. There is no way this situation will change considering the restraining factors against the industry.
Industry leaders are now asking the government that all sugar produced locally be allocated to the Philippine market. We should scrap the US market because, as I have written here several times before, that market is no longer profitable without any hope that it will be better soon or later. Nobody wants to produce and lose money.
A few wants to keep the US market even with just a token quantity because once we are out of this market, getting back is an extremely difficult effort. The world is producing plenty of sugar and other sources of sweeteners are available and cheaper. Most have come to the inevitable conclusion that to continue selling there is a foolish way of doing business.
The data from the Sugar Regulatory Administration since the country began milling support the idea that the entire national production should be allocated to the local market.At this stage when the mills had just started operations, the national production for CY 2019-2020 is at best an approximation based on field estimates by SRA personnel. The reported 2.096 million metric tons has its critics. Even SRA member Emilio Yulo expressed doubts about this estimate. He did not elaborate on his disbelief.
Whether it is 2.096MT or a bit higher or lower is not important though I believe it is lower considering several factors that we shall deal later. In the 2013-2014 crop year we produced 2.461MT but for the crop year that closed last August 2019 the national output was down to 2.072 million tons. The annual slide has been consistent. Board Member Yulo is right in expressing doubts. We could even lose another 100,000 MT for the coming year. Last year the SRA estimated production to be 2.255 MT which made the SRA estimate a guesswork but enough excuse to allocate to the US market.
More than the output is the reality of how much the producers will lose if the SRA insisted on allocating 5% of our production to the US or “A” market.
Let’s continue next week.