Sugar Regulatory Administrator Rafael Coscolluela yesterday said he is hoping that the production of ethanol by sugar producing countries will reduce a surplus of highly-subsidized   cheap sugar in the world market   by 2010.

This will cushion the dire effects of the ASEAN Free Trade Area’s lifting of tariffs on sugar imported into the Philippines two years from now, he said.

There is currently a 38 percent tariff on ASEAN sugar imported into the Philippines, that will be reduced to 28 percent next year and to zero in 2010, he said.

The entry of cheap subsidized Thai sugar into the Philippines in 2010 could be disadvantageous to locally produced sugar, unless Thailand, like many other sugar producing countries, uses its surplus cane for the production of ethanol, he said.

Instead of exporting their surplus to the world market at low prices Thailand may decide to use their cane for ethanol to get higher value and save on imported oil, Coscolluela said.

All cane-growing countries are going into ethanol, including Thailand, to cushion the effect of the rising prices of oil, Coscolluela added.

Under this scenario 2010 may not be as much a problem for the Philippine sugar industry as we feared but there are still many “ifs”, he said.

The ethanol program may not be able to kick in that quickly and we may still have a large world market surplus by 2010, although it will eventually lessen, he said.

ETHANOL PLANTS

In the Philippines, aside from the ethanol plant being built in San Carlos, Negros Occidental, serious plans are underway for ethanol plants also in Bukidnon, Northern Luzon, Leyte, Palawan and Northern Cebu, he said.

These areas have been identified, there are investors, it is just a matter of time, he said.

In the meantime, given the worse case scenario in 2010, the sugar industry has submitted requests for sugar to be reclassified under the highly sensitive list of AFTA so tariffs can be retained, Coscolluela said.

“We have some favorable signals coming from the national government but it is not something that the Philippine government can declare unilaterally,” Coscolluela said.

The reclassification bid has to be brought by the Tariff Commission to the AFTA Board for deliberation, he said. The country affected most by this will be Thailand, so expect that they will have something to say, it is up for negotiation, Coscolluela said.

If sugar is reclassified, a 28 percent tariff could be retained, he said.

ASSUME WORSE

But we should assume the worse and the only way to survive after 2010 when tariffs are lifted is to work on bringing down our domestic production costs now, he said.

Coscolluela said the SRA is pushing for the use of high yielding varieties of sugarcane which has had about 60 to 70 percent adoption nationwide so far.

He said this will help amid the rapid increase in the costs of farm inputs such as fertilizer, fuel and the call of labor for wage increases, he said.

Alternative modes of fertilization are also being pushed, he said.

The sugar industry concerns and direction needs to be strategized, he said, probably at the PHILSUTECH convention in August.

Meanwhile, the SRA is continuing to keep a close watch to prevent the entry of cheap smuggled sugar, mostly from Thailand, into the country, he said. The SRA has received reports that smuggled sugar is being sold in retail markets in Mindanao cities and is investigating the matter, Coscolluela said.*CPG

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