Agrimano, Shebel Marie C.

11447443
IPOLECO A55
March 28, 2017

Cane is a tall lasting grass that is widely grown in warm climates

as a source of sugar, in the Philippines, there are 7 sugar factories and
1 refinery in Luzon, 4 sugar mills in Mindanao, and the rest are situated
in the Visayas, which creates around 65% of the nation's sugar yield.
The fast growing region of Mindanao in the Visayas, especially in
Negros Island, follows the greatest sugarcane hectarage. The
Philippines Sugarcane Industry contributes no under P70 Billion to our
economy every year. Out of the total land range of around 30 million
hectares, sugarcane is planted to about 422,500 hectares in the
Philippines, with around 62,000 agriculturists. There are 29 working
crude factories with consolidated pulverizing limit of 185,000 metric
ton stick for every day. Sugar produced in the Philippines in the last
recent decade, in any event until year 2010, has been almost entirely
for the local market and the US quota. In the last couple of years due
to high production, the Philippines started exporting out sugar to the
world with a volume of more than 300,000 metric tons and another
300,000 metric tons last product year. The main factors to the
competitiveness of sugar are the huge disparity in the price of
domestic sugar against imported sugar. The export market is almost
exclusively to the United States, which generally pays a premium price.
The Sugar Regulatory Administration regulates sugar trading in the
Philippines and the Philippines have an obligation to export sugar
under the US tariff-rate quota scheme. Exports outside the quota are
generally only resorted to during years of surplus production and
usually priced lower that domestic sugar. Despite domestic prices
being well above world prices most years, the Philippines typically
export 100-250,000 tons of sugar as a way to support local producers.
Post forecasts total raw sugar exports will be 250,000 MT, the majority
of which will go to markets other than the United States. These export
markets include Japan, South Korea, Singapore, Canada, Samoa, Tonga
and Malaysia. Nevertheless, it still brought the Philippines to win over
into the worldwide sugar trade map. In the course of the most recent
four years, the Philippines studied the factors that influence sugar
costs. Another factor is the risk of tariff-free trade with ASEAN has been
the force that empowered the country to draw effective strategies for
worldwide competitiveness. Subsequently, the last three product years
saw better composite costs for Philippine sugar a much better in
contrast with the costs of ten years earlier.
 The Philippine sugar market is driven by market strengths. There
are makers of shifting sizes, mill operators of differing business sector
impact including mill operators who are likewise traders, and dealers
running from little neighborhood administrators to enormous
multinational players. This reality brings to fore a specific level of
weakness to compete in the fast changing environment of world trade,
where measure matters. The sizes of Philippine sugarcane farms
demonstrate an extensive segment of little measured family-worked
farms. This fracture of farm property is to a great extent due to the
agrarian change program embraced by the Philippine government. This
has prompt decreased profitability, which is innate in small sized
farms. Small farms more often than not don't have the money related
capacity to develop their farms without bounds potential. Combined
with past absence of government support to foundation, the small
farmers won't have the capacity to exploit economies of scale. On the
other hand the mills of sugar have begun gearing up to improve their
efficiencies to be competitive in the world. Overall recovery has been
quite low with modest improvements over the past decade. All
financial assistance has been provided by private institutions, including
BDO, which have substantially invested in our industry. Thus, the
proposed Sugarcane Development Act must be enacted into laws to
provide comprehensive assistance to the industry. Furthermore, the
Philippines is using a Quedanning System in processing sugarcane.
This framework gives the growers 70% of the sugar and molasses
produced. Translated to investments, the mill, which will spend, for mill
improvement will recover investments at a longer time because it can
only get 30% from its output. This has deterred higher investments for
mills, most of who are still profitable at their present state. In order to
stimulate the future of the sugar industry, the Philippines should push
through with the implementation of Biofuels Law and Renewable
Energy Law because bioethanol and energy will come from the
sugarcane. The Biofuels Law orders that all locally created bioethanol
should be purchased by oil companies before using imported ethanol.
While as of now, regardless we must be extremely cautious to
guarantee this developing industry will develop faster than it is now.
The development of sugarcane areas is expected to deliver enough
sugar and bioethanol. A large portion of the current sugar factories has
underutilized processing limits as it only demonstrates 68-80% usage.
This needs investments, and enhanced technologies in developing
sugarcane. In the meantime, we need to be globally competitive in
terms of productivity and cost. We should also build our efficiency to
70 tons for every hectare and sugar recuperation of 2.1 sacks for each
ton canes or about 150 packs for every hectare. In the meantime, we
should deal with our cost to about P70,000 to P80,000 per hectare or
about P850 per pack of raw sugar. At 5% tariff on imported sugar by
year 2015, this competitiveness is imperative to support a steady
domestic market, which has for quite a long time been selling sugar
higher than world market costs. All our productivity programs require
funds and a large portion of our farmers and mill operators will without
a doubt look towards the lead of the banking community for help. Farm
mechanization should also be prioritized because due to our countrys
high population growth rate, there is a decrease in the number of
laborers in joining the sugarcane industry particularly in planting and
harvesting. This is primarily because of the preferences of the younger
generation nowadays to shy away from serious labor jobs. And
because of this, the sugarcane farmers will simply need to mechanize.
The future of the sugarcane industry is in dire need of technological
help from companies and the support of the government.

The Philippines has long maintained high tariffs on raw and

refined sugar imports, but significant changes are also possible.
Executive Order No. 892 reduced tariffs under the ASEAN Free Trade
Agreement from 38 percent in 2010 to five percent in 2015. This
reduction in AFTA tariffs is expected to significantly impact Philippine
sugar production and trade, as other ASEAN producers, particularly
Thailand enjoys lower production costs. Under the Uruguay Round of
the WTO, the Philippines focused on a last tenth year Minimum Access
Volume of 64,050 MT of crude sugar, with a tax rate of up to 50
percent. All importation in overabundance of the MAV is liable to a levy
rate of 65 percent. The tax on sugar is the most astounding of all
farming items, which basically hinders all imports. Possible
recommendations for the Philippine sugar policy is that every year SRA
should issue a focal arrangement on production and promoting of
sugar for the nation, which would fundamentally allots the amount of
production goes to the domestic and export market. These recommend
policies should be adjusted as it progresses. The Philippine Department
of Agriculture should also aim to make the nation's sugar industry
globally competitive for the full execution of AFTA through projects, for
example, the Sugar Industry Roadmap, which will advance the
cultivation and the operational union of small farms to take advantage
of manor scale production for the better future of the Philippines sugar
industry. The Philippines shall keep the approach that our domestic
market should prefer our local sugar, so that we can benefit our US
sugar quota, that we are interested in bilateral sugar supply agreement
with different countries, that we can give all the bioethanol needed for
blending with our gasoline requirement, that we can expand the
profitability of our sugar mills and ethanol refineries by pitching energy
to the electric grid, and that we can transparently compete in the
worldwide trade of sugar.
 Resources

Highkot. (2011). Excessive Sugar Production in the Philippines Needs to

Export Thousand Tons. Retrieved from
http://www.highkot.com/2011/07/excessive-sugar-production-
in.html

Sugar Regulatory Administration. (2016). The Sugarcane Industry.

Retrieved from http://www.sra.gov.ph/

Sy, T. (n.d.). The Philippine Sugarcane Indutry: Challenges and

Opportunities. Retrieved from http://www.sra.gov.ph/the-
philippine-sugarcane-industry-challenges-and-opportunities/

5m Publishing. (2013). USDA GAIN: Philippines Sugar Annual. Retrieved

from http://www.thecropsite.com/reports/?id=1956