Primo Esleyer in his column, Feedback, had this to say the other day.
Sugar industry diversification
International Sugar Organization Executive Director Dr. Peter Baron was in Bacolod recently and met the leaders of the sugar industry at a dinner at the residence of NFSP President Nene Rojas.
Baron has shown he has a good grasp of the Philippine sugar industry. And he is right, the industry has a bright future. And he is also right that the industry lacks government support. Sugar world consumption is increasing by 3.5 million tons a year.
He also saw the problem of our sugar industry’s lack of the economy of scale with many landholdings at an average of some two hectares per planter.
The industry cannot expect to be efficient in its operation this way.
So, he said, one solution is for the sugar industry to go full blast in diversification.
***
It is in diversification that I doubt if this can be achieved. Since many years ago, the word diversification has been overused. It is a theme everybody always mentioned when prices were low.
I recall in the 60s when then NFSP President Jose Mapa “Buchoy” Gomez took over the leadership of the planters, he already advocated for diversification and had it in his farms in La Castellana.
Because of the good price of sugar nobody paid it attention. The price of sugar was good and it was not an economic advantage to plant rice or corn in the place of sugarcane.
***
But the sugar market is also erratic. When prices were bad people talked of diversification. Then when prices improved, they forgot the diversification idea.
I recall there was a time when the price was bad and many went into putting up candy factories, knowing that candies were more profitable.
But when the price improved they abandoned the candy factories. Many lost big investments in their candy ventures.
****
Then discussions had been on ethanol to be produced instead of sugar. But our ethanol projects never got off the ground yet.
Especially now when no less than ISO said sugar has a bright future. Who will diversify?
On record world sugar price has its ups and downs every five years. So, the wise planters watch the cycle.
***
Dr. Peter Baron is right when he said what is needed here is government intervention.
Unless government controls production and marketing, diversification will just be a hollow catchphrase. It can never take off.
I bet my five centavos, we can not succeed in diversification until government changes the structure of our sugar industry.
***
There is also the idea of block farming. Planters get together and form a bigger plantation size to avail of the economy of scale.
This too was discussed and argued but never succeeded. Planters are individualistic. Besides small planters have not been used to working in corporate forms of business.
One solution to have planters take advantage in getting the best price is to have a single selling, single buying scheme.
This also did not materialize. The problem has been who would run the business? It looks like not so many planters trust fellow planters.
***
One solution is to dismantle the comprehensive agrarian reform program and allow planters to sell their small farm to one who can operate it efficiently.
And have a single selling, single buying group to avail at the best price for our sugar and in the purchase of farm inputs like fertilizer.
But all these failed in the past. There’s no possibility this can be corrected unless there is revision of our laws.
