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Sugar Annual Manila Philippines 4-11-2011

Sugar Annual Manila Philippines 4-11-2011

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THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS

OF OFFICIAL U.S. GOVERNMENT POLICY

Required Report - public distribution

Date: GAIN Report Number:

Philippines Sugar Annual Philippine Sugar Situation and Outlook
Approved By: Philip A. Shull Prepared By: Pia A. Ang Report Highlights: Philippine sugar production is projected to reach 2.3 MMT this year, up significantly from the initial forecast of 1.88 MMT. Domestic sugar production will likely remain at the same level in 2011/12. There is no growth in sugar consumption expected this year due some shift to sugar substitutes, according to the domestic industry. Local sugar prices have softened from record highs reached in December/ January due to significantly higher sugar production achieved. The Philippine Department of Agriculture’s Sugar Regulatory Authority announced that the Philippines will be able to meet the latest increase of 60,000 MT in U.S. sugar tariff rate quota allocations and that there is no need to import any sugar this crop year.

7 MMT. while smaller farms of less than 5 hectares have an average productivity of 5. cane setts or settlings) last year. i.048 1. contributed to the downtrend in sugar production over the last three years. Crop Year 2010/11 (September/August) raw sugar production is projected to reach 2.600 sugarcane farmers in the country.700. Erratic weather conditions. Sugarcane being a plantation crop and as a result of size efficiencies.000.Commodities: Sugar Cane for Centrifugal Sugar. AREA PLANTED September/August 2008-11 2008/09 2009/10 2010/11 RAW SUGAR PRODUCTION (MT) 2.000 Source: Philippine Sugar Regulatory Administration 2008/09 and 2009/10-final and 2010/11-preliminary estimates The island of Negros still continues to account for a majority (57%) of total domestic sugar production. Philippine land reform policies have prevented consolidation of farm sizes and thus prevented many farms from achieving greater efficiencies. Domestic sugar production in 2011/12 will likely remain at the same level.46 MMT in 2007/08 to 1.3 MMT up significantly from an initial forecast of 1. Panay.970. Of these 79 percent have landholdings less than 5 hectares in size. Sugarcane production in 2009/10 went down by as much as 11 percent due to a prolonged dry spell.g. According to SRA. The increase was due to a price driven expansion in area planted coupled with favorable weather conditions. RAW SUGAR & SUGARCANE PRODUCTION. 6 percent. less than one percent have farms greater than 100 hectares. two successive years of La Niña followed by several months of El Niño..227. Total domestic sugar production comes primarily from four major sugar planter federations and three major miller associations. 19 percent. Planters and millers not affiliated with the major federations produce the remaining 10 percent. .. The SRA estimates. Producers who belong to these organized federations account for 90 percent of the total domestic sugar production.88 MMT earlier this year.03 MT/ha.100.567 385.34 MT/ha.97 MMT last year).00 TOTAL AREA PLANTED (HAS) 392. 4 percent.622 390. particularly in the Luzon provinces of Tarlac. and Eastern Visayas. sugarcane production in 2010/11 will reach 22.028 22. Nueva Ecija and Batangas. Mindanao.e. Luzon produced 14 percent.000 SUGARCANE MILLED (MT) 21. there are about 59. farm holdings of more than 100 hectares have an average productivity of 7. from a high of 2.068 19.000 2. There were also reports of a shortage in planting materials (e. Centrifugal Production: According to the latest production estimates released by the Philippine Sugar Regulatory Administration (SRA).611.

though retail prices remained steady due to the lifting of the government imposed Suggested Retail Price program for refined sugar (see Policy Section). P1. Prices have retreated steadily in the first four months of 2011.31 for the U. In CY 2009/10.420. see Marketing Section) in the Philippines. Industry sources expect prices to remain soft for the remainder of 2011 through next year.554. P1.587. though stay above 2010 levels with global fuel and ethanol prices projected to remain strong. Wholesale and retail prices of raw and refined sugar in Metro Manila follow: .While there is no formal trade in sugarcane due to the unique “quedan” system (a quedan is a warehouse receipt attesting to the presence of the sugar in a facility.25.350. industry sources report that in April 2011 a metric ton of sugarcane sold for about P2.084.79 for “D” sugar. the spike of domestic sugar prices was fueled by the escalation of world market prices and a delay in the start of milling season. According to SRA. P1.73 for “C” sugar.130. market.31/ 50 kg bag for wholesale refined sugar in December.S. the average mill site price per 50-kg bag of “A” raw sugar was P1. the average composite price was P1.281.80 for "B" raw sugar for the domestic market. Domestic sugar prices began rising significantly in mid-2010 to a record high of P3.

75 43.44 46.603.375.67 58.393.060.332.47 2009 47.26 52.411.08 2.46 2.095.193.93 March 1.53 61.870.74 3.11 2011 43.239.69 February 2.32 1.64 2010 45.46 40.978.87 March 1.65 52.217.18 54.52 62.57 59.614.825.25 August 2.48 November 1.34 2.82 46.81 57.92 54. Bag) per Kg.07 2.51 33.63 51.583.490.23 April 1.04 58.33 47.847.07 2.37 44.44 2.20 30.08 2.63 2.801.331.315.61 38.) 1.28 1.095.21 2.32 December 2.721.94 2.92 June 2.932.17 54.16 39.47 2.84 February 1.500.871.80 52.) CY 2009/10 September 1.00 44.73 2.43 January 2.35 October 1.236.29 2.18 October 2.375.084.742.50 30.533.541.54 63.67 January 1.01 65.42 April 1.00 37.756.84 65.23 Source: Sugar Regulatory Administration U.492. Dollar to Philippine Peso Exchange Rates from 2008-11 follows: Exchange Rate US$=PhP 2008 44.807.03 CY 2010/11 September 2.68 2.31 3.227.82 2.26 May June 1.43 51.08 51.09 July 2. 2011 Monthly Molasses Prices at millsite for CY2009/10 through 2010/11 follows: .30 2.68 56.84 52.26 Average 1.45 37.534.590.94 2. Bag) per Kg.34 51.571.91 November 2.RAW AND REFINED SUGAR PRICES Raw Sugar Wholesale Price Retail Price (Pesos/per (Pesos/ 50 Kg.70 55.86 2.15 43.503.42 50.940.34 44.67 2.444.13 May 1.973.22 30.06 51.S.93 60.805.24 Source: Bangko Sentral ng Pilipinas Note: 2011 exchange rate as of June 8.055.70 57.70 55.79 53.039.80 43.90 December 1.29 Refined Sugar Wholesale Price Retail Price (Pesos/per (Pesos/ 50 Kg.818.

552.50 June 8.88 April 4.106. which account for 50 percent of domestic consumption.28 May 2.25 Source: Sugar Regulatory Administration Consumption: According to a 2008 study by the University of Asia and the Pacific.75 October 9.411. According to SRA data. the local sugar industry has petitioned the Bureau of Customs to classify premixes as sugar.59 November 6.MOLASSES PRICES (Pesos/MT) CY 2009/10 September 6. As a result.09 January 7.027. Philippine sugar producers have reported some shift in usage from cane sugar to other sweeteners (i..36 March 7. total domestic sugar withdrawal was 1. premixes. 32 percent.169.. household users. The industry claims . which generally pays a premium price (i. etc. 18 percent.27 February 7.116. Exports to countries other than the United States are priced lower that domestic sugar and generally only resorted to during years of surplus production.411.88 October 6. the users of sugar are local consumers and the export market.00 July August AVERAGE 7.61 November 9. The export market is almost exclusively the United States. Local consumers consist of industrial users.716.).e. which are the main holders of stocks.68 March 5. higher than the world market price).799. and institutions (e.875. high fructose corn syrup.21 CY 2010/11 September 8.059.479.11 April 8.95 MMT last year. Domestic sugar consumption has been traditionally measured by monitoring sugar withdrawals from the mills.723. Domestic sugar withdrawals for CY 2010/11 will likely roughly remain at the same levels. hospital etc.e.522.378.23 May 8.257.) by some industrial users.23 December 7.363.773.274.g.075.790.88 February 6. bakeshops.23 January 6.42 February 6.68 March 5.32 December 6.. restaurants.552.

819 March 236.443 2010/11 35. report that smuggling of refined sugar.164 205.943. Industry sources.446 1. the SRA said in June 2011. however.508 Source: Philippine Sugar Regulatory Administration Trade: The Philippines is committed to export a total of 202.703 80.414 August 138.924 202.S.651 210.329 April 159. Executive Order No.355 January 148. However.107 86.540 December 112.293 178.S. have somewhat contributed to the sluggish consumption/withdrawal levels of sugar in the market.557 222. have been under the Philippine Government’s Tax Export Subsidy (TES) Program. This includes the additional 60. The Philippines previously announced that it will not be exporting sugar to any market this year other than the United States.737 263.509 TOTAL 1. In December 2009.that a majority of the premixes coming into the country from Thailand are 99. . Executive Order No.045 123.978 Adjustments 15.258 121.160 metric tons raw value (MTRV) of raw sugar to the United States this current crop year under the U. the Philippines is not expected to import any sugar for the remainder of the crop year due to a projected increase in sugar production. 850 was signed lowering the Common Effective Preferential Tariff Rates for ASEAN (Association of Southeast Asian Nation) member countries to 0-5 percent.886.881 86. DOMESTIC RAW SUGAR WITHDRAWALS 2008-11 (in MT) MONTH 2008/09 2009/10 September 69. Trade Representative. According to SRA.266 124.364 180.328 October 83.106 July 137.822 June 221.813 November 142. sugar tariff-rate-quota program.546 205.452 194.608 69. sourced mainly from Thailand.628 155.347 59.000 MTRV additional quota announced in April 2011 by the U. estimated at about 150-300 TMT.3 percent sugar with additional flavorings.984 167. 851 was also signed in December 2009 implementing the tariff reductions under the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) tariff reduction program. AANZFTA tariffs for sugar were reduced to between 0-5 percent in January 2010. which authorizes trading companies to bring in duty free the allocated volume of sugar. Majority of Philippine sugar imports.482 February 186.948 May 251. as a result of surplus sugar production achieved this year.439 210. that it is now studying the possibility of exporting to the world market.

Refined sugar ---.Other: --.892 was issued on June 17.Out-of-quota 50 65 50 65 1 1 50 65 1 1 50 50 50 65 CEPT [1] 38 38 38 38 38 38 0 0 38 38 0 0 38 38 Source: Philippine Tariff & Customs Code Executive Order No. with a tariff rate of up to 50 percent.Out-of-quota .Out-of-quota ----. 2010 modifying the import duty on sugar products in order to provide special consideration for sugar under the Common Effective Preferential Tariff program .Out-of-quota 1701.Other. Out-of-quota 1701.Other ----.99.In-quota --.12 -.Out-of-quota ----.In-quota ----. In-quota ----.90 ---.99.01 Cane or beet sugar and chemically pure sucrose. Tariff rates follow: HEADING ASEAN HARMONIZED TARIFF CODE DESCRIPTION 2011 MF N 17. in solid form .050 MT of raw sugar. MFN tariffs have not changed since 2005.11 -. All importation in excess of the MAV is subject to a tariff rate of 65 percent.Other.Raw sugar not containing added flavoring or coloring matter 1701.Other: 1701.Other.Cane sugar --.Other ----. 850 (2009) for AFTA-CEPT Tariff Rates [1] ASEAN Common Effective Preferential Tariff Executive Order No.In the WTO.Beet sugar --.11 -. the Philippines committed to a final 10th-year Minimum Access Volume (MAV) of 64.99. In-quota ----.19 ---.Other.In-quota ----.In-quota --. Out-of-quota 1701.White ---.99 1701.In-quota ----.

99.99 Cane or beet sugar and chemically pure sucrose...Containing over 65% by dry weight of sugar.99.....White: 1701.11C .00B 1701.99.Other: 1701.. In-Quota 1701.99.. in solid form.99...99.. tariff reductions for sugar under AFTA to be implemented starting in 2010 have been delayed for another 5 years. In-Quota 1701.Out-Quota .....99...00 1701.Raw sugar not containing added flavouring or colouring matter: .Beet sugar: .In-Quota .11A .of the ASEAN Free Trade Agreement (AFTA)..12.99..In-Quota .00A 1701.. PHILIPPINES COMMITMENT ON SUGAR PRODUCTS THROUGH THE INVOCATION OF THE PROTOCOL TO PROVIDE SPECIAL CONSIDERATION FOR RICE AND SUGAR UNDER THE COMMON EFFECTIVE PREFERENTIAL TARIFF SCHEME FOR THE ASEAN FREE TRADE AREA (CEPT-AFTA)/ASEAN TRADE IN GOODS AGREEMENT (ATIGA) Hdg.Containing over 65% by dry weight of sugar..Out-Quota .19 .....19A ....99.Out-Quota 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 28 28 28 28 28 28 28 28 28 28 18 18 18 18 18 18 18 18 18 18 10 10 10 10 10 10 10 10 10 10 5 5 5 5 5 5 5 5 5 5 Source: Executive Order 892 (2010) Policy: .90A . As a result..12..99.. No..Other: ...99.00A 1701.99..11B .Cane sugar: .. Out-Quota 1701. (1) AHTN Code 2007 (2) DESCRIPTION (3) Available CEPT Rates of Duty (%) Starting 01 January 2010 2011 2012 2013 2014 2015 (4) (5) (6) (7) (8) (9) 17.Other.90 . In-Quota 1701...Other...Other: 1701..19B ..12.. In-Quota 1701..Refined sugar: 38 38 38 38 38 38 38 38 28 28 28 28 18 18 18 18 10 10 10 10 5 5 5 5 1701. Out-Quota 1701.. .In-Quota 1701...Containing over 65% by dry weight of sugar..Other.90B .00 1701... Out-Quota 1701... Out-Quota 1701.Containing over 65% by dry weight of sugar.11.19C .Other.00B 1701.11..11 .19D ..99..11.01 1701.11D .

increasing to 10% by 2011. which already has an ample domestic supply. which may subsequently be converted to either A or B as the need arises.00 per kilo of refined sugar were enforced. With the present volumes of production. the sugarcane planter allocates a percentage of the output of his sugar to the mill in payment for the processing of the cane. the SRA issues Sugar Order No. President Gloria Macapagal-Arroyo signed into law Republic Act 9367 (RA 9367). threatened to pull out their sugar from the shelves if the P56. ) Marketing: Most sugar in the Philippines is produced and marketed under the long established “quedan” system.gov. Sugar allocated for the world market (Source: Action Plan for the Philippine Sugar Industry 2000.1 (2008) was issued which estimated initial raw sugar production to reach 1. On September 2010. “C” “D” Sugar classified as reserve. The marketing system in the Philippine sugar industry is already established. GAIN RP2011. 1 (SO No.88 MMT. the mill issues warehouse receipt.Suggested Reference Price: On December 1. According to a Philippine Ethanol Alliance Study. This developed after retailers. about 93 percent was earmarked for the domestic market and 7 percent for export to the U.ph/policy_so. called a quedan.html Bio-fuels Law: In January 2007. (see FAS Manila Biofuels Report. the law requires a 2% bio-diesel blend since 2009. 2010.S. which mandates the use of bio-fuels in the country.3 MMT of sugarcane and 21. The warehouse receipt attests to the physical presence of the sugar in the storage facility. Sugar for the domestic market. The bio-fuels law mandates the blend of 5% bio-ethanol starting in 2009.200 hectares of new land will be needed to produce the estimated 160 million liters of ethanol needed to meet the 5 percent blend mandate for ethanol in the first year alone. SO No. Sugar Orders: During the start of each crop year.sra. an additional 2. ethanol is still being imported by oil companies from Brazil. The SRA Sugar Orders may be obtained from: http://www. In this sharing arrangement. Philippine DA) SRA determines the proportion of sugar that is designated for different types of quedan. the National Price Coordinating Council lifted the suggested reference price (SRP) of sugar. “B-1” Sugar for Food Processors/Exporters. market. There are five different types of quedans: “A” “B” Sugar allocated for the US market in compliance with US quota requirements. Thailand and India. Similarly. citing their own purchase price of P65. only A & B quedans are assigned to producers. As soon as the sugar is processed. to the farmer representing his share of the sugar. The “A” sugar is based on the percentage of production determined by SRA from the volume of the quota allocated to the . Unlike biodiesel. 1) which establishes the production and marketing policies for sugar. with the approval of the National Biofuels Board.

This is normally less than 10 percent of total domestic output. The major traders accumulate the quedans and subsequently sell them in volume to wholesalers.S. distributors.Philippines by the U. planters usually sell them immediately to local traders who in turn sell them to larger traders. government and the estimated volume of production for the crop year. The processors use the sugar as an input for food and beverage processing while the wholesalers and distributors sell their sugar to major retailers. From the retailers. The rest of the output is classified as B sugar. Upon receipt of their quedans. Because it is a negotiable instrument and the bearer may use it to withdraw his stocks at any time. or processors. there is a thriving secondary market in the trade for quedans. . wet markets and sari-sari (mom-and-pop) stores. the sugar eventually reaches consumers through supermarkets.

500 USDA Official New Post 395 390 22.492 2.000 2.500 19.000 2.500 0 22.492 2.500 0 19.100 2.300 2.572 2010/2011 Market Year Begin: Sep 2010 USDA Official New Post 394 394 0 0 2.500 New Post 395 390 19.300 0 0 0 0 0 0 2.100 2.500 0 22.572 2.000 2.000 0 0 2.300 2. Supply and Demand Data Statistics: Sugar.792 Beginning Stocks Beet Sugar Production Cane Sugar Production Total Sugar Production Raw Imports Refined Imp.000 394 394 2.500 19.200 2.792 142 142 0 0 142 142 2.000 0 0 250 250 250 250 2.(Raw Val) Total Exports Human Dom.000 2.572 2.694 202 202 0 0 202 202 2.694 2011/2012 Market Year Begin: Sep 2011 USDA Official New Post 392 492 0 0 2.500 20.000 2.500 22.500 22.500 . Consumption Other Disappearance Total Use Ending Stocks Total Distribution 1000 MT Sugar Cane for Centrifugal Philippines 2009/2010 Market Year Begin: Sep 2009 2010/2011 Market Year Begin: Sep 2010 2011/2012 Market Year Begin: Sep 2011 Area Planted Area Harvested Production Total Supply Utilization for Sugar Utilizatn for Alcohol Total Utilization 1000 HA.000 350 650 2.500 22.500 New Post 395 390 22.500 19.Production.594 2.500 19.500 20. 1000 MT USDA Official 404 400 19.500 22.000 0 0 2.200 2.500 0 20.000 2.594 2.500 USDA Official 404 400 20.000 0 0 2.300 0 0 0 0 0 0 2.000 2.000 2.572 178 178 0 0 178 178 2. Centrifugal Philippines 2009/2010 Market Year Begin: Sep 2009 USDA Official New Post 322 322 0 0 2.000 2.000 392 492 2.(Raw Val) Total Imports Total Supply Raw Exports Refined Exp.500 0 19.

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