The Philippine Sugar Regulatory Administration reported a record-high sugar output, a 25-year high actually. This is mainly due to favorable market prices which have lasted five to six years, and the introduction of high yield varieties here at home like the H1 VS which has increased the yield of sugar crops per hectare across plantations all over the country. Mindanao appears to have benefited the most, reporting much higher yields than the Visayas, with Luzon trailing the two. A third reason which bears looking into is the advent of professional sugar cane producers. This crop of young planters, schooled in the latest agri trends, are leasing farms from traditional farmers who have not maximized the potentials of their land over the last few years, or leasing land from agrarian beneficiaries who do not have the knowledge or lack the proper logistics support mechanism to make a go of the land they were awarded. These maverick planters have improved production so much that the sugar industry now has a problem in its hands.
If they had a record production, they now have record surplus. The basic law of supply and demand will overtake the euphoria of increased and efficient production, raising the spectre of collapsed prices unless the industry reacts fast. Next crop year, production will drop by about eight percent.
Actually, our planters prefer to sell sugar domestically because world prices are very low. D sugar, as sugar intended for the world market is known, sells far less at P660 than A sugar which is sugar intended for the US at P850. That is why our sugar export to the United States accounts for only six percent of our total output, and the rest of the world even far less than that.
Because of the surplus, we will have to serve it to the world market, having served the US quota, even if we have to absorb severe price cuts compared to US and domestic prices. Why do we need to sell D sugar? Because we need to provide food exporters assurance that they can continue buying Philippine sugar and will continue to have an allocation whatever the prices are in the world market, according to SRA’s head Rafael Coscolluela whose inputs were very enlightening.
Despite the surplus, planters are urged to plant more cane because of the government’s bio-fuel program. Apparently, we still cannot serve the mandated blend because we do not have enough ethanol production. For next year, the National Biofuel Board authorized oil companies to import 184 million liters of ethanol in order to meet the mandated blend. The dollars intended for these could have easily gone to our local farmers if we had only acted quicker and more decisively.
We have the land, we have the technology, and we’ve been raising cane for generations. We can easily shift to ethanol. Given the right allocations, world prices for sugar can be improved. Higher production of ethanol can help us cope with rising oil prices and can in fact drive erratic oil prices down. We need to speed up the government’s biofuel program so investors can come in and create an entirely new industry that can propel our economy. Given all the negative factors staring us in the face, the Philippines has no choice but to develop our indigenous resources.
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We’re giving space here for some reactions from our readers.
Our thanks to Mr. Alex Buenafe who reminded me that instead of saying Overseas Filipino Workers Remittance, Bangko Sentral refers to it as Overseas Filipino (no Workers) Remittance. Indeed, the remittances that have been propping up our economy for so long do not just come from Filipino expats or contract workers but from Filipino citizens abroad. They could be immigrants or long time residents sending money to family left behind in the Philippines. Or, these remittances could be for something else, as Mr. Buenafe enlightens us.
“There’s a big chunk of remittances that doesn’t properly belong to the OFW category, that of balikbayans, ex Filipinos, immigrants who have established themselves primarily in North America. Their remittances tend to be for themselves rather than family support, which explains partly the high end con and real property boom. Some of that money also goes into micro or SME investments (with relatives or by themselves). You might say these are individual small investors, contributing to their personal hedge funds for retirement or their future in the Philippines. POEA has good programs for the OFWs but other than tourism and retirement programs, the government should look at this other group for some safe, financial programs…..Here’s a hint, if Israel has the State of Israel Bonds, and the US has this highly questionable Patriot Bond to finance the Iraq war, can’t the government come up with something similar that can be focused on infrastructure or flagship project developments? It can be a mutually beneficial endeavor.”
Thanks for your insights, and yes, your stats seem be in order!
We wrote about the sentiments of the association of cement manufacturers to the proposed scrapping of the five percent tariff on imported cement last week as verbalized by its president, Mr. Ernesto Ordonez. They were virtually up in arms about the idea.
Just to show the other side of the fence, so to speak, here’s a reaction from the president of the country’s association of exporters, Mr. Sergio Luis-Ortiz who, incidentally says the export sector is not perturbed by the current economic turmoil sweeping across the Atlantic, even if the US, their biggest market, now comprises only 12 percent of their total market, down from 30 percent.
“Removal of the tariff on cement might be good….. construction should not suffer….. we must support our construction industry.”
What’s good for the goose might not be good enough for the gander.
Memories…and more
Friends and readers alike wrote in to say how much they enjoyed reliving the radio programs of old. They had virtually forgotten about Tayo’y Mag-aliw and Eddie Junior Detective until a reader sent in his contribution last week. Thanks again.
And here’s one from Amor Consejo of Pandacan.
“Now that the Christmas season is here, I can already see a proliferation of imported fruits, at exorbitant prices. I remember buying apples at 4 for P1.00, juicy pears at 25 centavos each, and grapes (wala pang seedless noon) at P10.00 per kilo. We would often buy them at the Lawton Bus Terminal. Does this qualify for your Memories segment? I just suddenly thought about them when I saw the crates of fruits in Quiapo.”
You bet it does. Thanks again and keep them coming.
Mabuhay!!! Be proud to be a Filipino.
For comments and suggestions: (e-mail) businessleisure-star@stv.com.ph