Barons, Brokers, and Buyers: The Institutions and Cultures of Philippine Sugar

3: Production, Financing, CARP, and the U.S. Quota

60 3 No matter how one measures productivity, the Philippines is no longer one of the world’s most prolific or efficient producers of cane sugar, and the situation shows little sign of reversing itself. In 1997, sugar was grown on 367,000 hectares in the Philippines, down from a peak of 573,000. Total mill capacity is less than three million tons. Over the last twenty-five years—a period in which sugar consumption in the Philippines itself has increased rapidly— Philippine production has fallen from 3.3 percent of total world production to 1.3 percent. The United Nations’ Food and Agriculture Organization estimates worldwide production in 2000 at 127.20 million m.t.; Philippine production was 1.68 million m.t. in that year, making the country eighteenth in world sugar production, just behind Italy and ahead of Ukraine.1 In 1975, when the world produced 79.64 million m.t., Philippine production was 2.62 million m.t., while Thailand only produced 1.14 million m.t. and Australia produced 2.86 million m.t. That year the Philippines was the world’s eleventh leading producer with 3.3 percent of global production. Some simple contrasts serve to illustrate not only the stagnation of Philippine production but also the declining position of the country among the sugar producers in its own region. Philippine production in 1971, 1981, 1991, and 2000 was (in million metric tons): 2.06, 2.40, 1.74, and 1.68. Australian production in those same years was: 2.79, 3.44, 3.11, and 5.78. Thai production was: 0.41, 1.64, 4.05, and 5.72, reflecting that Thailand has made a concerted effort to boost its production of sugar over the last four decades. While sugar production varies from year to year in every country, the secular trend for the Philippines has been downward, contrasting with the decidedly upward trends in Thailand and Australia. In the 1990s, the most productive year for Philippine sugar was 1993 (2.13 million tons); the least productive (owing to an El Niño-related drought) was 2000 (1.68 million tons) (fao). The relative inefficiency of Philippine sugar production is evident in the low yields. Dividing sugar tonnage by the number of Production, Financing, CARP, and the U.S. Quota hectares planted in sugar gives a rough approximation of the yields in the three countries. For 1994, 1995, 1996, and 1997 the values (in tons per hectare) are as follows: Philippines—4.66, 6.00, 4.83 and 4.84; Thailand—5.01, 5.97, 6.29, and 5.78; Australia—13.92, 13.18, 14.11, and 13.80.2 Thailand has a slightly lower farm yield of cane per hectare than the Philippines, but far more efficient mills and more productive cane varietals. This means that despite having a lower cane yield per hectare, the Thai yield of actual sugar per hectare is higher than in the Philippines. Australia has the highest farm yields and most efficient mills of any sugarcane-producing country (data from fao). Whereas the Philippines needs, on average, eleven tons of sugarcane to produce one ton of raw sugar, the Australians need only seven tons of cane (sra Administrator Arsenio Yulo, interview). While the trend in other countries is toward more efficient mills, Philippine centrals are large, superannuated, highly polluting dinosaurs that continue to use older technology, to depreciate rapidly, and to function at low-capacity utilization. The average age of centrals in the Philippines is over fifty years; in Thailand less than twenty years. While other countries’ extraction efficiencies are high and increasing, Philippine extraction rates are low and declining. In sugar-producing areas, the most often discussed statistic is pstc, piculs of sugar per ton of cane. Overall Philippine pstc was 1.31 in 1989, 1.46 in 1990, and 1.33 in 1991.3 In mid-1998, Victorias Milling proudly announced that it had reached 1.49 pstc—the highest of any of the twenty-three still-operating mills in the nation (Balita-L listserve, 10 July 1998). In contrast, Thailand, whose farms are not more efficient than those of the Philippines, has an average pstc above 1.7. But even more striking than the contrast with other countries is the temporal contrast within the Philippines itself. In the five-year crop period 1946/7–1950/1, Philippine pstc was 1.81. Ten years later (1956/7–1960/1) it was 1.79, then...