“Try to be like sugarcane, no matter how beaten you are, cut, pressurized or crushed always provide a sweet outcome” – Rakhi’z
The sugarcane milling year 2024-25 has just started and mill gate prices predictably remain stable. It can be recalled that before the milling season started there was a proposal to delay its opening, contemplated by the Sugar Regulatory Administration. True enough milling operations started a couple of weeks late.
The proposal came in order for the sugarcane to recover out of the drought that wilted and stunted sugarcane growth and to streamline the sugarcane supply chain to make sugar remain competitive in both domestic and international markets. According to most producers, delays in harvest makes the sugarcane recover its quality and saves operational costs among millers. Quality means sugar content from the product and will not incur additional expenses for manpower and other operational costs in the milling component.
PROJECTION VS DROUGHT
As an offshoot of the drought, the SRA earlier projected a decline in the raw sugar output for the current year 2024-2025 by at least seven percent to 1.8 million metric tons from the previous crop year’s 1.9 million metric tons. On the other hand, recent reports say that it will have a sustained and steady output of 1.85 million metric tons, yet more planters produced sugarcane for this year because of high prices.
It remains unclear though if the domestic and international market demands will be satisfied. As of May, the country’s sugar production was at 50,000 metric tons weekly and the usual policy habit of importation is once again underway, under Sugar Order 5. This is the importation of refined sugar of 240,000 metric tons “to boost domestic supply and ensuring stable prices and consumption demands”.
But will the projected sugar output for the year be realized? Current global demand was projected at almost 183 million metric tons due to “consistent consumption patterns,” despite high market prices with countries imposing policies for the reduction of sugar consumption for health reasons. And while there was no specific domestic market demand, it is expected to be on an increasing trend with SRA allocating the entire sugar output to the domestic market as a precautionary measure. The SRA’s earlier projection was quite ambitious given the impact of El Niño especially to those production areas without irrigation systems.
ACTIONS AND IMPLICATIONS
By indications, this year’s sugar output is not faced by major challenges despite the long drought and growth has recovered, albeit delayed, and the milling season was properly “streamlined” so as not to disrupt the flow of the supply chain. The assurance-cum-policy of the SRA to allocate the entire output to the domestic market is another re-assurance.
However, the season does not without potential implications as the weather phenomenon has put the season in a vulnerable circumstance. Primary was that the growth of sugarcane was affected, as attested by small farmers themselves that about 30% of their production was stunted by drought. Also, milling delays temporarily disrupted the supply chain process where product’s availability in the market causes lower supply causing price change, contributing to inflation. Short and temporary financial challenges could also surface among farmers because of late milling operations.
The delay creates a domino effect because high supply demand does not only imply direct consumption of sugar but other industries with sugar as an ingredient, such as food and beverages, can also cause output decline. Logically, this results in price increases by the manufacturers and distributors due to insufficient supply versus higher demand to avoid profit loss. Moreover, export commitments can potentially lead to penalties or loss of market confidence from the international market, if not loss of market share.
For small producers, direct impacts are financial flow disruption suspending organic flow of sugarcane production activities and possibly including other crops for subsistence. Delays also entail additional costs especially on labor and other maintenance such as pest control including the risk of sugarcane quality deterioration. Overall, in Negros small ARB’s and small sugarcane producers face the potential risk less livelihood income and financial instability.
Last year’s drought was another reminder of an uncontrollable and significant climate change impact on agriculture that costs the country not less than 15 billion, including sugarcane. Predictably, this will become worse. What mitigating and resiliency measures will be undertaken on the ground, that we can hardly predict.
We have more than enough agriculture technocrats and planners. They know better.*
