The Philippines will not be able to fill up its sugar export quota to the United States in the 2012/13 season and changes are coming for the sugar industry when a Southeast Asian regional free trade area is implemented from 2015, a report by the U.S. agriculture attaché said.
The attaché report is compiled by agriculture experts of the U.S. embassy and is considered as authoritative by the commodity trade.
Among the changes for the Philippine sugar industry is that it will no longer be protected by a tariff wall when the free trade agreement under ASEAN goes into effect in 2015, the report explained.
Philippine government tariffs on raw and refined sugar imports are supposed to drop to 5 percent in 2015 from 38 percent in 2010.
“This reduction in AFTA (ASEAN Free Trade Area) tariffs is expected to significantly impact Philippine sugar production and trade as other ASEAN producers, particularly Thailand, enjoy lower production costs,” the attaché report concluded.
The very real danger for Philippine sugar producers is they could be displaced and even eliminated by their Thai rivals.
The Agriculture Department is trying to implement programs to consolidate farming operations, but the record so far has been mixed.
On another front, it looks like the sugar quota awarded the Philippines by the United States will go unfilled.
The Philippines has a sugar export quota to the U.S. of 144,901 metric tons, but the attaché report said the quota “will not likely be filled this year due to ample U.S. (sugar) supplies.”
The Philippines is normally the third biggest supplier of sugar under the U.S. import quota program.
The U.S. is a top market for Philippine sugar because prices of sugar in America would normally run around 35 to 45 U.S. cents a pound while prices of sugar in the world market fetch about 18 to 20 cents.