Gov't may increase sugar imports to steady prices

The government is importing as much as 150,000 metric tons (MT) of raw sugar to stabilize rising prices, the Sugar Regulatory Administration (SRA) said on Wednesday. "There seems to be heightened demand for sugar this year, judging from the rate of withdrawals from the mills, plus the fact that world sugar price is at its 28-year high," Sugar Administrator Rafael Coscolluela told a briefing. The last time the government brought in sugar was in 2006 for 50,000 metric tons as counter-trade for the US quota. Coscolluela said withdrawals from the mills averaged 14 percent or 300,000 MT more than last year's total of 1.9 million MT. Smuggling has been dealt with, that is why local consumption has increased, he added. The government is projecting a 2.6-million MT inventory for the current crop year from a carry-over stock of 421,000 MT from the previous crop year, and 2.18-million projected output during the current crop year. "If we remove the projected demand, which is 2.3 million metric tons and the estimated US [export] quota of 75,000 metric tons, then we'll be left with an ending balance of 215,000 metric tons," Coscolluela said. "But our ideal stock should be at least 360,000 metric tons to rationalize prices," he added. He said the government was also depending on the US quota hike that should be served since the Philippines is one of the preferred nations allowed to sell sugar at a premium. "We want to preserve the US quota. We don't want to lose it, it might be reallocated to other countries," he pointed out. World sugar prices have been rising, while the price of local sugar is higher at P1,700 per 25-kilogram bag than the US export quota at P1,600 per bag. "This is indeed a peculiar year. The US [export] quota has been traditionally higher than domestic sugar. Local demand likewise increased, possibly because of the surge in spending due to election-related activities," Coscolluela said. Sugar imports are projected to arrive not earlier than April, after the peak of the milling season in July. Initial importation is about 60,000 MT by April. Imported sugar will come in tariff-free since the government will shoulder the expense via a tax subsidy. Landed cost of tariff free sugar is P48.35-P50.86 per kilo. Forgone revenues from the duty-free imports will amount to P100 million for every 10,000 metric tons. Normally, imported sugar is slapped with a 38-percent duty if it comes from the Association of Southeast Asian Nations, and 50 percent elsewhere. For the current 2009-2010 crop year, the SRA has scrapped the allocation for both the strategic reserve sugar and the world sugar exports, leaving 6 percent for the US export quota and 94 percent for domestic demand. — GMANews.TV