Required Report - public distribution

**Date:** 10/1/2003

**GAIN Report Number:** RP3054

RP3054

**Philippines**

**Sugar**

**Semi-Annual**

**2003**

**Approved by:**

![](media/image1.wmf)David C. Miller

#### FAS Manila

**Prepared by:**

Pia Abuel-Ang

**Report Highlights:**

Sugar production is seen to hit 2.158 million metric tons for crop year
2002-03, more than sufficient to meet the domestic requirement of just
under 2.0 MMT and to meet the country\'s sugar export quota of 142,160
MT. Due to better than expected 2003 production, no sugar was imported
this year.

Includes PSD Changes: No

Includes Trade Matrix: No

Semi-Annual Report

Manila \[RP1\]

\[RP\]

+--------------------+-------+-------+-------+-------+-------+-------+
| ####### PSD Table  |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Country**        | **Phi |       |       |       |       |       |
|                    | lippi |       |       |       |       |       |
|                    | nes** |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**      | ####  |       |       |       | (1000 |       |
|                    | ## Ce |       |       |       | MT)   |       |
|                    | ntrif |       |       |       |       |       |
|                    | ugal  |       |       |       |       |       |
|                    | Sugar |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
|                    | 2002  | Re    | 2003  | Est   | 2004  | For   |
|                    |       | vised |       | imate |       | ecast |
+--------------------+-------+-------+-------+-------+-------+-------+
|                    | USDA  | Post  | USDA  | Post  | USDA  | Post  |
|                    | Off   | Est   | Off   | Est   | Off   | Est   |
|                    | icial | imate | icial | imate | icial | imate |
|                    | \[    | \[    | \[    | \[    | \[    | \[    |
|                    | Old\] | New\] | Old\] | New\] | Old\] | New\] |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Market Year      |       | 09    |       | 09    |       | 09    |
| Begin**            |       | /2001 |       | /2002 |       | /2003 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks   | 322   | 322   | 239   | 239   | 197   | 277   |
+--------------------+-------+-------+-------+-------+-------+-------+
| Beet Sugar         | 0     | 0     | 0     | 0     | 0     | 0     |
| Production         |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Cane Sugar         | 1900  | 1900  | 2000  | 2160  | 2100  | 2240  |
| Production         |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Sugar        | 1900  | 1900  | 2000  | 2160  | 2100  | 2240  |
| Production         |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Raw Imports        | 11    | 11    | 12    | 0     | 10    | 0     |
+--------------------+-------+-------+-------+-------+-------+-------+
| Refined Imp.(Raw   | 98    | 98    | 68    | 0     | 30    | 0     |
| Val)               |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Imports      | 109   | 109   | 80    | 0     | 40    | 0     |
+--------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY       | 2331  | 2331  | 2319  | 2399  | 2337  | 2517  |
+--------------------+-------+-------+-------+-------+-------+-------+
| Raw Exports        | 142   | 142   | 142   | 142   | 142   | 142   |
+--------------------+-------+-------+-------+-------+-------+-------+
| Refined Exp.(Raw   | 0     | 0     | 0     | 0     | 0     | 0     |
| Val)               |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| TOTAL EXPORTS      | 142   | 142   | 142   | 142   | 142   | 142   |
+--------------------+-------+-------+-------+-------+-------+-------+
| Human Dom.         | 1950  | 1950  | 1980  | 1980  | 2010  | 2010  |
| Consumption        |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Other              | 0     | 0     | 0     | 0     | 0     | 0     |
| Disappearance      |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Total              | 1950  | 1950  | 1980  | 1980  | 2010  | 2010  |
| Disappearance      |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks      | 239   | 239   | 197   | 277   | 185   | 365   |
+--------------------+-------+-------+-------+-------+-------+-------+
| TOTAL DISTRIBUTION | 2331  | 2331  | 2319  | 2399  | 2337  | 2517  |
+--------------------+-------+-------+-------+-------+-------+-------+

Data from the Sugar Regulatory Administration (SRA) show that efforts to
raise the productivity of the sugar industry through the use
higher-yielding varieties, adoption of new technology and rehabilitation
of antiquated milling facilities resulted in a 32.6-percent growth in
production over the last four years.

After more than a decade of experiencing production shortfalls, sugar
production is projected to hit a high of 2.158 million metric tons for
crop year 2002-03, more than enough to meet the domestic requirement of
about 2.0 million metric tons and to supply the country's sugar export
quota of 142,160 metric tons to the United States. No sugar was imported
this year, not even the Minimum Access Volume of 59,780 MT.

In the island of Negros, the country's sugar bowl, the 29-percent
increase in sugar production over a four-year period (1999-2003) is
considered quite substantial, especially in light of the fact that the
area dedicated to sugarcane planting on the island dropped by 2.8
percent.\
\
Based on SRA data, sugar production in Mindanao increased by almost 100
percent, which was attributed to a 52-percent increase in hectarage, a
9.59-percent increase in mill recovery and an 82-percent improvement in
yield per hectare by major sugar producers in Bukidnon.

In Luzon, there was a significant increase of 16.57 percent in
production largely due to higher sugar content of cane and better mill
recovery. Area planted to sugarcane and cane tonnage also increased at
2.69 percent and 3.35 percent, respectively.

Given the positive production situation for next year, the country will
likely not import any sugar including the Minimum Access Volume of over
60,000 MT. The Philippine Department of Agriculture has been studying
the possibility of exporting Philippine sugar to countries other than
the United States. For CY 2004, the US will be importing a total of
142,160 MT from the Philippines under a tariff-rate quota agreement with
the country.

+--------------------+-------+-------+-------+-------+-------+-------+
| # PSD Table        |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Country**        | ## P  |       |       |       |       |       |
|                    | hilip |       |       |       |       |       |
|                    | pines |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**      | ## S  |       |       |       | (1000 |       |
|                    | ugar  |       |       |       | HA)   |       |
|                    | Cane  |       |       |       | (1000 |       |
|                    | for C |       |       |       | MT)   |       |
|                    | entri |       |       |       |       |       |
|                    | fugal |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
|                    | 2002  | Re    | 2003  | Est   | 2004  | For   |
|                    |       | vised |       | imate |       | ecast |
+--------------------+-------+-------+-------+-------+-------+-------+
|                    | USDA  | Post  | USDA  | Post  | USDA  | Post  |
|                    | Off   | Est   | Off   | Est   | Off   | Est   |
|                    | icial | imate | icial | imate | icial | imate |
|                    | \[    | \[    | \[    | \[    | \[    | \[    |
|                    | Old\] | New\] | Old\] | New\] | Old\] | New\] |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Market Year      |       | 09    |       | 09    |       | 09    |
| Begin**            |       | /2001 |       | /2002 |       | /2003 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Area Planted       | 385   | 385   | 390   | 390   | 395   | 0     |
+--------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested     | 380   | 380   | 385   | 385   | 390   | 0     |
+--------------------+-------+-------+-------+-------+-------+-------+
| Production         | 24962 | 24962 | 25835 | 25835 | 26100 | 26100 |
+--------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY       | 24962 | 24962 | 25835 | 25835 | 26100 | 26100 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Utilization for    | 24962 | 24962 | 25835 | 25835 | 26100 | 26100 |
| Sugar              |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Utilization for    | 0     | 0     | 0     | 0     | 0     | 0     |
| Alcohol            |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| TOTAL UTILIZATION  | 24962 | 24962 | 25835 | 25835 | 26100 | 26100 |
+--------------------+-------+-------+-------+-------+-------+-------+

The Office of the Philippine President issued on August 7, 2003,
Executive Order No. 230 (EO 230), setting tariffs for all raw and
refined sugar, including cane and beet sugar, imported from all
Southeast Asian countries at 48 percent. This order was dated July 26,
2003 and took effect immediately. The new order, which reduces sugar
tariffs by two percent from the current 50 percent in-quota Most Favored
Nation (MFN) tariff, follows the decision of the Tariff and Related
Matters (TRM) Committee to grant the tariff concession to ASEAN members
in exchange for the transfer of Philippine sugar to the sensitive list.

The Philippine government notified the WTO earlier this year of its
intention to break its tariff binding for raw and refined sugar, which
raised the bound rate and out-of-quota tariff to 80 percent. Under the
Uruguay Round, the Philippines committed to unifying both in-quota and
out-of-quota sugar tariffs at 50 percent beginning January 2003.
Principal supplying country to the Philippines, by WTO definition, is
Thailand. (see Gain RP3048)