Following the Brazilian formula

The rise in sugar prices worldwide is leaving a sour note on Filipino consumers, with fears that opportunistic traders might hoard supplies to drive prices further up. Fortunately, Agriculture Secretary Art Yap seems to be on top of the situation, ordering concerned government agencies like the NFA and the Sugar Regulatory Administration to talk with sugar traders for the release of 150,000 kilos of sugar. He is also fast-tracking a plan to import 150,000 metric tons of sugar to stabilize prices in the local market.

While government is hard-pressed to keep sugar prices low, it can’t go lower than the P52-P54 set until the end of the month because the global shortage – estimated at nine million metric tons – might result in “reverse smuggling” with traders preferring to sell their sugar to foreign buyers from whom they could fetch a higher price.

Like most other commodities, the price of sugar is affected by global supply and demand. Brazil is among the largest producers of this commodity, exporting some 30 million tons every year or about 20 percent of overall global sugar production. Aside from sugar, Brazil also produces and exports other sugar products such as ethanol (from sugarcane), and is now considered as a bio-fuel industry leader whose sugarcane ethanol has been described as “the most successful alternative fuel to date.”

Brazil’s success in the sugarcane ethanol industry can be largely attributed to its government’s huge investments on infrastructure and research. At a time when the fledgling ethanol industry looked unpromising because production costs were very expensive (one liter of ethanol cost three times more than one liter of fossil fuel), the Brazilian government forged ahead. It diverted excess sugar into the production of ethanol and also made it mandatory to add the biofuel to gasoline.

Ethanol’s importance received a boost during the ‘70s oil crisis as the high cost of oil imports forced Brazil to lessen its dependence on fossil fuels by increasing ethanol production via a national program. Investments were then made to enhance sugar production, modernize distilleries and build more production plants. The Brazilian government also gave subsidies and reduced taxes for ethanol producers. By 1990, Brazil was producing 11 billion liters of ethanol.

During this time, research was intensified to make ethanol less corrosive to gasoline engines. Technological advances in agriculture also paved the way for the increase in sugarcane production coupled by massive research on new sugarcane breeds that would adapt better to varying climates and soils, shorter production cycles, better harvests, more resistance to pests and adaptability to water scarcity.

Today, this Latin-American country has become the second largest producer of ethanol fuel next only to the United States, producing 24.5 billion liters of the alternative energy source in 2008 or about 37 percent of the total ethanol used as fuel worldwide.

Obviously, Brazil’s economy has been sweetened by its success in the production of sugar and ethanol – products whose prices are naturally linked since they come from the same feedstock which is sugar cane. As Brazilian Ambassador to the Philippines Alcides Prates told me, Brazil has both ethanol and sugar. If the price of sugar goes up (mainly due to high demand from India), bioethanol costs go lower.

Obviously, the Philippines has a lot to learn from Brazil considering that we can produce more than three million tons of sugar – enough for food security requirements plus a little more for ethanol production. Just last year, the P3-billion San Carlos Bioenergy ethanol power plant in Negros Occidental was opened, made possible through funding from the Development Bank of the Philippines.

This is certainly a step towards the right direction, with the ethanol plant – said to be the first in Southeast Asia –expected to produce some 40 million liters of bioethanol per year or about 10 percent of the country’s requirements. The Brazilian formula of investing in infrastructure, technology and research (and we must add, a forward-looking perspective) has proven to be a success – and there’s no reason why we can’t do the same.

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With the May elections just around the corner, questions continue to pour regarding the Comelec’s ability to mount a successful – and credible – automated elections, and whether the risks associated with automation plus remedies and alternatives can be put into place before May 10. This and similar questions will be tackled during “Electoral Risks,” to be aired live over ANC and simulcast over DZMM Teleradyo tomorrow from 8-9:30 p.m.

To be hosted by Ricky Carandang and Lynda Jumilla (with commentary and analysis to be provided by “Tambalang Dos Por Dos” hosts Anthony Taberna and Gerry Baja), “Electoral Risks” is an initiative of the Coalition for Voter Empowerment composed of the Management Association of the Philippines, Kilosbayan, Movement for Good Governance and Youth Vote Philippines in cooperation with Weber Shandwick Worldwide, ANC and DZMM, among others. The show is expected to provide first-time voters and the general audience information that hopefully would lead to the conduct of peaceful, orderly and credible elections.

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