Sugar Industry Situationer

A presentation by Administrator James C. Ledesma Sugar Regulatory Administration

Highlights of Sugar Production

as of January 29, 2006

CY 2005-06 Prod - Raw W/drawals Prod-Refined W/drawals 1,053,109 678,907 383,706 408,526

CY 2004-05 1,095,865 663,827 377,394 446,016

% Inc/Dec (3.90) 2.27 1.67 (8.41)

Stock Balance Position

as of January 29, 2006 Metric tons 50 Kg Bags

Raw Sugar

527,532

10,550,640

Refined Sugar

113,186

2,263,720

Total

640,718

12,814,360

* Average Raw Monthly Consumption: 160,000 mt

Production and Withdrawal for Week Ending January 29, 2006

Raw Production Withdrawals Refined Production Refined Withdrawals 83,233 mt 57,185 mt 30,285 mt 20,872 mt

*Production almost double consumption at this time.

Why are sugar prices going up

The entry of speculators in sugar trading The perceived tightness in the supply of domestic sugar The skyrocketing prices in the world market The 50,000 mt increase in U.S. quota

World Market Prices of Sugar

Spot Market in US cent/lb. for Raw and US $/metric tons for Refined

Raw
January 12 January 19 January 20 January 26 January 31

Refined
359.00 379.70 385.00 428.00 428.10*

14.77 15.58 16.26 17.80 18.17*

*Estimated Landed Cost per kg. P24.60 raw and P28.70 refined

Graph of World Market Prices of Sugar

(US $/Metric Tons)

450

400 Raw Sugar Refined Sugar 350

300
1/ 12 /0 6 1/ 14 /0 6 1/ 16 /0 6 1/ 18 /0 6 1/ 20 /0 6 1/ 22 /0 6 1/ 24 /0 6 1/ 26 /0 6

Raw Sugar Supply/Demand Projection

Starting Inventory Add: Projected Production Less: Domestic Consumption Less: Traditional US Quota Less: Additional US Quota Year End Stock Balance 154,584 2,018,000 2,172,584 1,950,000 222,584 137,000 85,584 50,000

35,584 MT

Refined Sugar Supply/Demand Projection

Starting Inventory Add: Projected Production 2,872,429 22,179,611 25,052,040 Less: Projected Withdrawal 22,686,757 Ending Balance 2,365,283 bags or 118,264 MT

Import/Export Counter Trade Program

Export 50,000 mt additional US quota. Import 50,000 mt refined sugar through the Philippine International Trading Corporation (PITC) as replenishment at 1:1 ratio. Imports must be granted Duty Free privilege. Program has been endorsed by the Sugar Industry Stakeholders.

Parallel Response Program Proposal

SRA to classify B2 sugar at 0.5% of production every week from hereon only for NFA procurement. This will be around 100,000 bags. NFA to buy B2 sugar at a fixed price of P950/bag (current levels now above P1,200/bag). NFA to refine said sugar and sell through its outlets/rolling stores at a target price of below P30.00/kg.

THANK YOU

AND HAVE A SWEET DAY!