Not so sweet situation for the sugar industry

By Francis Allan L. Angelo

 

Ilonggo composer, producer, and singer Jose Mari Chan is well-known for his achievements in musical arts. He is also a byword every Christmas Season because of his hit song “Christmas in our Hearts.”

But he showed his being a businessman when he discussed his concerns about the local sugar industry, particularly diminished productivity and cheap imported sugar.

In an interview with ANC’s Market edge on Monday, Chan, whose family owns the Binalbagan-Isabela Sugar Company Inc. and A. Chan Sugar Corporation, said the sugar business has been tough, at least in the local scene.

Chan’s family also operate Central Azucarera de San Antonio based in Passi City, Iloilo.

He said the Philippines used to produce 2.6 million tons of sugar a year, but this is now down to just 2 million tons.

He also cited cheaper sugar from countries like Thailand which made it tougher for local producers to compete “as the imports of the commodity go for around P1,000 per 25-kilo bag, while locally produced sugar costs P1,500 per bag.”

Data provided by sugar stakeholders to Daily Guardian showed that the country’s sugar production in crop year 2015-16 was 2.238 million metric tons (MT) then decreased to 2.074 million MT in 2018-19 or an average of 2.224 million MT annually.

Exports between 2015 and 2019 hit 757,085.44 MT while imported sugar totaled 1.904 million MT in the same period.

From 2015 to 2019, domestic consumption (including imported sugar) totaled 10.044 million MT or an average of 2.511 million MT per year.

The figures also indicate that the Philippines has been importing an average of 476,099 MT per year to cover the supply shortage.

In September 2020, the Sugar Regulatory Administration Board issued Sugar Order No. 1 allocating 7 percent of the country’s sugar production for crop year 2020-2021 as “A” for the US market and 93 percent as “B” for the domestic market.

In a privilege speech on Oct 6, 2020, Iloilo provincial Board Member Matt Palabrica said the SRA’s move will result in a 400,000 MT production deficit.

Worse, local sugar exported to the US is sold at a much lower price of P350 per bag or P7,000 per metric ton. This could result in local sugar farmers losing more than P920 million in one crop year.

Because of the production deficit, the country must import sugar at around 350,000 MT to 500,000 MT very year and valued at around P110 billion.

The value alone has become a magnet “for certain sectors to get involved in, as a big-time business and undertake manipulations to the disadvantage of the farmers and consumers alike.”

In a resolution, Palabrica wants the Department of Agriculture and SRA to justify the continued annual exportation of about 140,000 tons of sugar (valued at P3.1 billion) “when in fact, we have a supply deficit of about 400,000 metric tons (valued at P11.13 billion).”

He added that if this “exported product were sold as ‘B’ or domestic sugar, an estimated P980,000,000.00 will be saved as the income of the local sugar farmers.”

 

LAND REFORM, FUNDING

Meanwhile, Chan said the low productivity was partly due to the breakup of large sugarcane plantations because of the agrarian reform program.

He said that while agrarian reform redistributed gave poor farmers land, there was not enough “follow up” as small farmers were not given enough funding.

“We’re down to small farmers with 5 hectares property and many of them have no access to funds, no access to financing, no access to good fertilizer and so on,” Chan said.

Chan said this has led to a decline in productivity, which in turn has led the country to become even more reliant on imports.

“I would like sugar prices to go up so that farmers will be encouraged to plant,” Chan said, but admitted that this will be a “balancing act.”

Two years ago, regulators allowed higher volumes of sugar imports as sugar prices climbed and contributed to faster inflation.

The businessman-songwriter meanwhile said he has high hopes for the government’s Balik Probinsya program, which encourages people to go back to their provinces.

He said this can give sugar producers extra manpower for the industry.

In the Iloilo Business Online forum of the Iloilo Business Club and Daily Guardian on Dec 15, 2020, Department of Agriculture Undersecretary Cheryl Marie Caballero assured to look into the concerns of the sugar planters.

Caballero recognized that Iloilo is a bastion of the sugar industry due to the numerous farms and sugar mills that operate in the province.

As a matter of policy, the DA official said they are looking into ways to help domestic sugar producers. One way is to develop and promote muscovado sugar and the use of domestic sugar for 3-in-1 drinks as value adding strategy.

“This is one thing that we are looking into as a matter of policy. We are looking at ways to help our domestic farmers,” Caballero said.