The Philippines' plan to resume exporting raw sugar to the US is drawing closer as a draft sugar order (SO) has been put forward to facilitate the shipment of about 24,700 metric tons (MT) of the commodity.

The country is keen on fulfilling its trade obligation after two straight crop years of not shipping a single volume of raw sugar to the US market due to lackluster production.

Since crop year 2020-2021, the Philippines has been unable to export raw sugar to the US after its domestic output fell below its overall demand.

At the start of the current crop year 2023-2024, the Sugar Regulatory Administration (SRA) did not allocate a single domestic raw sugar production for export to the US due to projected anemic output amid the El Niño phenomenon.

The decision forced the US to reallocate the 141,142 MT initial raw sugar allocation to the Philippines for fiscal year 2024 (Oct. 1, 2023 to Sept. 30, 2024) under its tariff-rate quota (TRQ) system.

However, in November last year, the SRA sought a quota under the TRQ system of the US 'to relieve the raw market of supply.' The request was granted by the US, resulting in a 24,700 MT allocation for the current fiscal year 2024.

Exports of commodities under the TRQ system of the US are levied with a lower tariff rate.

'The Philippines, being a long-time trade partner of the USA and a member of the WTO (World Trade Organization), has an unwavering commitment to honor its commitment to the USA in particular and to the international community in general,' according to the draft SO obtained by The STAR.

The country's raw sugar output has exceeded 1.92 million MT, allowing it to fulfill its quota to the US, according to the document.

The last time that the country exported to the US was in crop year 2020-2021 with a total volume of 112,008 MT.

The shipment of raw sugar to the US is one of the ways the government thought of to lift domestic farm gate prices of the commodity, by siphoning off some of the country's supply amid a drop in market demand.

Import privilege

The draft SO stipulated that the same entities that participated in the SRA's previous program of buying raw sugar from farmers at a premium price would be the ones fulfilling the country's export quota to the US.

The document noted that the same industry players have volunteered to help the government fulfill the country's quota 'despite the lower return and the additional cost and uncertainty inherent' to raw sugar exports.

The 24,700 MT of raw sugar exports to the US would be proportioned to the participants of the SO 2 using a formula to be approved by the SRA board.

Furthermore, the participants in the US export program will get the privilege to import a maximum of 2.5 kilograms of raw sugar for every kilogram they export in the future import programs of the government.

Nonetheless, participants under SO 2 will be prioritized over the exporters of raw sugar to the US in the event that a future sugar import program is implemented by the government.

In April, SRA administrator and CEO Pablo Luis Azcona told The STAR that they plan to fulfill the US sugar quota before the next crop year 2024-2025 begins on Sept. 1.

The country can ship its raw sugar quota to the US until Sept. 30 before the sugar fiscal year 2025 begins on Oct. 1.

Copyright © 2022 PhilSTAR Daily, Inc Provided by SyndiGate Media Inc. (