Philippines says sugar production under pressure

KAMUELA, Hawaii, Aug 5 (Reuters) - Philippine sugar production will remain under pressure for the next two years because of high fuel and input costs and the country may run into problems in following a law to blend ethanol into gasoline, an official said.

Rafael Coscolluela, administrator of the Manila government's Sugar Regulatory Administration, said in an interview at the annual meeting of the American Sugar Alliance that some Filipino cane farmers are "switching to corn" because of possibly higher returns in the grain.

He said the steep spikes in fertilizer and fuel costs "will keep pressuring" Philippine sugar production.

The Southeast Asian nation's sugar industry officials said they expect output in the 2008/2009 season beginning in September to fall 10 percent after hitting 2.427 million tonnes in 2007/08.

"We're going to see a rather volatile production trend for the next two years," said Coscolluela.

Another potential problem facing the Philippine sugar industry is the law mandating a 5.0 percent ethanol blend in gasoline products in the years ahead, and the fact that this should rise to 10 percent beyond 2010.

"Where are we going to supply feedstock for the ethanol sector?" he asked. (Reporting by Rene Pastor, Editing by John Picinich)