Invest more in biofuel, sugar producers told

MANILA, Philippines - The Sugar Regulatory Administration (SRA) is urging players in the sugar industry to invest more in power co-generation and production of bioethanol from sugarcane given weak sugar prices in the world market.

In a speech recently delivered at the 62nd Philippine Sugar Technologists Association (Philsutech) annual convention in Cebu City, SRA Administrator Ma. Regina Martin said the forecast of the International Sugar Organization (ISO) for raw sugar prices in the world market for crop year 2015-2016 was “cautious and not very optimistic.”

“The ISO reports that despite a projected return of a global deficit in (crop year) 2015 to 2016, any significant price recovery may be slowed down by six consecutive years of surplus production and large build-up in inventories by importing countries,” Martin said.

The sugar crop year starts in September 2015 and ends in August 2016.

“Therefore, notwithstanding a contraction of global production against global consumption, world sugar prices are expected to remain weak as there will be less takers,” she said, noting that world prices are expected to remain at the range of $0.12 per pound to $0.13 per pound this crop year.

Because of this, Martin is urging players in the sugar industry to engage in product diversification by investing more in the manufacture of bioethanol and power co-generation using biomass.

Bioethanol is produced using molasses, a by-product of the sugar refining process.

“The environment for this product diversification strategy are supported by enacted laws of the Philippines: the Biofuels Law for Bioethanol, the Renewable Energy Law for Power Generation; and the newly-enacted Sugarcane Industry Development Act,” Martin said.

Several companies in the Philippines such as the San Carlos Bioenergy, Inc. and Roxol Bioenergy Corporation, both units of listed sugar miller Roxas Holdings, Inc. are already strong producers of bioethanol.

“The rise in the number of ethanol plants since 2010 attests to the fact that the biofuels law and its implementing rules and mechanisms have been able to lure investments in this sector,” Martin said.

 “I am confident that investments will pour in the coming years such that we shall have more plants that can produce our needed 500 million liters in year 2020,” she added.

The SRA administrator noted that a number of sugar mills and ethanol plants are now increasing power generation and are selling excess power to the national grid.

“I hope that all mills and distilleries will pursue this diversification path since energy demand will continue to increase in the years to come,” Martin said.

 “If we can increase our energy production, then this will translate to lower electricity cost to consumers. In addition, we will add value to the farms as we have to produce the feedstock of the biomass power plants.”

The need for product diversification and the need to cope with increased domestic demand entails the need for greater consolidation of sugarcane production areas to attain economies of scale such as what is being done with the SRA’s block farming program.

In line with this, Martin is also urging investments in technologies that would significantly increase sugarcane yield per hectare.