Report sees big drop in local sugar output this year and next due to land conversion

April 21, 2020
Jasper Y. Arcalas (Business Mirror) |

The country’s sugar output in crop year (CY) 2020-2021 may fall to an 11-year low of 2 million metric tons (MMT) as sugarcane areas continue to shrink due to land conversion, according to a Global Agricultural Information Network (GAIN) report.

The GAIN report said the projected output is relatively flat with the estimated production of 2.025 MMT in the current CY 2019-2020.

The report, prepared by the United States Department of Agriculture Foreign Agricultural Service in Manila, attributed the decline in output to erratic weather conditions.

The report added that the uncertainty of the economic managers’ proposal to liberalize the sugar industry would also play a factor in the planting intention of sugarcane farmers for the next CY.

“Post forecasts CY 2020/21 raw sugar production to drop to 2.0 million MT, as sugarcane areas continue to shrink due to the conversion of sugarcane lands, particularly in Luzon,” the report read.

“Sugar producers also remain cautious about the impact of possible deregulation, as Philippine economics managers consider further trade liberalization beyond rice, such as the sugar and corn sectors,” it added.

The GAIN report estimated that total area planted to sugarcane in CY 2020-2021 would drop to 404,000 hectares from 406,500 hectares estimated in the current crop year.

Furthermore, the Gain report said the country’s refined sugar imports in the next crop year may increase by 12.5 percent to 450,000 MT from 400,000 MT in the current CY to meet the higher local demand for the sweetener as businesses recover from the virus pandemic.

“CY 2020/21 sugar demand is expected to increase marginally to 2.35 million MT, as cane sugar consumption rises with the global economic recovery from Covid-19 and with food/beverage manufacturers expanding production,” the report read.

“Refined sugar imports in CY 2020/21 will likely increase to 450,000 MT to meet this growing demand,” it added.

In March, the BusinessMirror reported that the country’s raw sugar output could fall to 2.025 MMT, the lowest level in nearly a decade, as El Niño and rains battered plantations in key sugar-producing areas in the Philippines.

Erratic weather has been the Achilles heel of the sugar sector in recent years. Sugar output declined for two consecutive crop years after the Philippines produced a record-high 2.5 MMT in CY 2016-2017.

Based on government documents obtained by the BusinessMirror, latest Sugar Regulatory Administration (SRA) forecast indicated that sugar output in CY 2019-2020 may be slightly lower from the previous crop year’s 2.072 MMT.

The projected output is the lowest since CY 2009-2010, when it fell to 1.97 MMT due to the ill effects of El Niño, based on historical data from the SRA.