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Sugar Industry Today, Directions for Tomorrow

A Presentation to the Rotary Club of Metro-Bacolod

Administrator James C. Ledesma


Sugar Regulatory Administration

Sugar Milling
Location of Mills
12 operating mills in Negros Island 7 operating mills in Luzon 4 mills in Mindanao 3 mills in Panay 2 mills in Cebu 1 mill in Leyte
Sugarcane is produced in 17 provinces located in 8 regions Negros island accounts for 56% of total production Milling season ~ 180 days Bukidnon Sugar Co. is the biggest mill (18,000 TCD cap) and Victorias has the biggest refinery (more than 20,000 bags/day)

Raw Sugar Production/Consumption, CY 99/00 to 05/06 (in Metric Tons)


2,500,000 2,000,000

1,500,000 1,000,000 500,000


Projected

Production Consumption

0
Production Consumption

CY 99-00 1,619,613 1,928,000

CY 00-01 1,805,203 1,908,000

CY 01-02 1,898,501 1,942,000

CY 02-03 2,161,000 2,059,000

CY 03-04 2,338,000 2,040,000

CY 04-05 2,150,746 1,950,585

CY 05-06 2,138,000 1,910,000

CY 06-07 2,240,000 1,950,000

Sugar self sufficiency attained in CY 2002-03. CY 03-04 record is a 20-year high.

Recovery Percentage
CY 2000-01 to CY 2004-05
9.6 9.4 9.2 9 8.8 8.6 8.4 8.2 8
01 02 03 04 20 00 20 01 20 02 20 03 20 04 05
CY 2000-2001 CY 2001-2002 CY 2002-2003 CY 2003-2004 CY 2004-2005 8.55% 9.00% 9.15% 9.05% 9.55%

% Recovery

SUGAR PRICES AND PRODUCTION PATTERN


2.5 1200 1000 800 1.5 600 1 400 0.5 200 0

0 CROP YEARS Raw Sugar Production Composite Prices

20002001 1.908 859.28

20012002 1.898 859.01

20022003 2.161 841.87

20032004 2.338 738.87

20042005 2.150 785.18

20052006 2.113 1,064.62

20062007 2.24

C O M P O S IT E P R IC E (P h P )

RAW SUGAR P R O D U C T IO N (M M T )

FARM SIZE DISTRIBUTION CY 2004-05


Farm Sizes (has.) Below 5.0 5.01 - 10.00 10.1 - 25.00 25.01 - 50.00 50.01 - 100.00 Over 100 Total/Mean No. of Farms 45,113 6,071 4,510 2,114 1,228 736 69,772 No. of Farmers 44,170 5,347 3,928 1,627 837 396 56,304 % 78.45 9.50 6.98 2.89 1.49 0.70 100.00

391,712 has. Total area planted to sugarcane

*In 2001 number of farmers were 51,261

For Government Policy For Research, Development & Extension For Extension & Mill District Development For Technology & Education For Social Action For Policy Advocacy (Studies, Economics, Data & Statistics, Mill Technology) For Policy Advocacy Farmers Representation For Value Added & Consumer Affairs For Development and Competitiveness

SRA PHILSURIN/SRA MDDC PHILSUTECH SIFI PSMA

Sugar Alliance of the Philippines(Planters Federations)


Confed, NFSP, Unifed & Panayfed

PASRI SUGAR MASTER PLAN

SUGAR REGULATORY ADMINISTRATION


Policy sugar allocation to its
appropriate market (A, B, C, D)
A U.S. market B Domestic C Reserve D World Market

Regulation ensure compliance to


policies

Research centered in its experiment


station in La Granja, Negros Occ.

Extension technology dissemination Training basic training for small


farmers

Sugar Board
Chairman: DA Sec Members: SRA Admin Farmers Rep Millers Rep

Services ISO certified laboratory

To help determine the policy directions of the sugarcane industry Composition:


Farmers Federations:
Confed NFSP Unifed Panayfed

Objectives:
To assist SRA in setting the policy directions of the sugar industry To maintain unity within the industry To undertake common initiatives for the benefit of the industry

Millers Groups
PSMA AIM

PHILSURIN Activities

PHILSURIN is funded from a lien on production provided by the private sector.

PHILSURIN aims to provide appropriate & cost and effective research, development, & extension support to the Philippine sugar industry with stateof-the-art technology to improve its competitiveness and attain selfsufficiency.
PRIORITY PROJECTS
Integrated Pest Management Breeding & Dissemination of High Yielding Varieties Adoption of Geographic Information System Installation of Remote Weather Stations Factory Automation & Modernization Introduction of Modern Cultural Field Practices

Mill District Development Council (MDDC)


Created by SRA in 1991 There are 26 MDDCs in operation all over the country Composed of representatives from farmers and millers in the district together with government and PHILSURIN Provides extension services and addresses the development needs specific to the district

SIFIs Plans & Programs

SUGAR INDUSTRY FOUNDATION, INC. is also funded from a lien provided by the sugar producers farmers and millers.

SIFI focuses on the overall growth & wellbeing of sugar-producing & milling areas. As such, the principal target of its development efforts are sugar workers & their dependents & the communities in which they live.
PRIORITY PROJECTS Education Livelihood Health Services Shelter
Scholarship, Technical Skills

Microfinance, Cooperative Development Hospitalization Insurance, Medical Mission, Ambulances, Botica sa Barangay Low-Cost Housing

Established by the Sugar Industry to address the global competitiveness of the industry in relation to developments in WTO and AFTA. Funded by the private sector

Primary Objectives of the Master Plan


To increase Productivity Improve Production Efficiency, and To reduce the unit cost of Production of sugar in the Philippines

THE FUTURE OF THE SUGAR INDUSTRY To transform itself into the

SUGARCANE INDUSTRY

BIOETHANOL

Fuel ethanol and other biofuels have regained nationwide prominence due to rising oil prices, concerns over the environment, development on technologies in production, & the need to support agriculture.

WHY SUGARCANE AS SUBSTRATE?

Ethanol Yield of Major Potential Biomass Raw Materials


Ethanol Yield (liters / ton) 70 280 180 52 370 Ethanol Yield (liters/ha/year) 4,900 588 1,440 5,200 2,960

Raw Materials Sugarcane Molasses Cassava Sweet Sorghum Corn

Can we supply the feedstock requirement?

CANE SURPLUS TO SUPPLY ETHANOL REQUIREMENT


CY 2003-2004 SUGAR PRODUCTION 2.34M MT CY 2003-2004 PHILIPPINES EXPORTED 164,000 MT SUGAR

127.4 M Liters

79% Ethanol Requirement

Fuel Ethanol as Emerging Industry


Results of Bio-Ethanol Study POTENTIAL CANE AREAS FOR EXPANSION LOCATION Lanao del Norte South Cotabato Saranggani Agusan del Norte/Sur Maguindanao Palawan Bohol/Masbate/Kalinga Cagayan/Isabela/Zambales/ Camarines Sur AREA (HA.) 19,044 15,000 19,700 45,000 69,550 20,808 19,400 61,255

TOTAL

269,757

MODELS AND INVESTMENT REQUIREMENTS OF ETHANOL PLANTS


MODEL FEATURES INDICATIVE INVESTMENT REQUIREMENTS
P 556M for 100,000 liters per day

Co-sharing of sugar mill ADJUNCT TO SUGAR and distillery of existing MILL USING amenities such as power, MOLASSES water, steam and other utilities Plants may be established STAND-ALONE at a certain distance from USING MOLASSES the mill STAND-ALONE Plants may be established USING SUGARCANE at dedicated cane areas JUICE Produces electricity for STAND-ALONE WITH own use or for distribution COGENERATION to the grid

P 568M for 100,000 liters per day P 824M for 100,000 liters per day P 1.5 Billion for 100,000 liters per day

RATE OF INVESTMENT (ROI)


(100 LPD, Stand Alone, using Cane Juice as Substrate)
COST OF SUGAR CANE COST OF SUBSTRATE

ETHANOL DISTILLERY PRICE


COST OF PRDTN P20 P22 17.29 12.41 7.53 P24 24.12 19.24 14.36 9.48 P26 30.95 26.07 21.19 16.31 11.43 6.55 P28 37.78 32.90 28.02 23.14 18.26 13.38 P30 44.62 39.74 34.86 29.98 25.10 20.22 15.34 10.46 5.58 P32 51.45 46.57 41.69 36.81 31.93 27.05 22.17 17.29 12.41 P34 58.28 53.40 48.52 43.64 38.76 33.88 29.00 24.12 19.24 P36 65.11 60.23 55.35 50.47 45.59 33.88 29.00 24.12 19.24 P38 71.94 67.06 62.18 57.30 52.42 47.54 42.66 37.78 32.90 P40 78.77 73.89 69.01 64.13 59.25 54.38 49.50 44.62 39.74

700 800 900 1000 1100 1200 1300 1400 1500

10.00 11.43 12.86 14.29 15.71 17.14 18.57 20.00 21.43

16.89 18.32 19.75 21.18 22.60 24.03 25.46 26.89 28.32

10.46 5.58

Sixteen (16) 100,000 LPD distillery plantsincreasing from 8 in 2007 to 16 in 2017 are projected to be required. The key factors of a distillery investors return on investment are the prices of the substrateestimated to be around 70% of his costand the selling price of ethanol from his distillery.

Fuel Ethanol as Emerging Industry

Challenges Ahead
1. The expedited and immediate passage of the Law that shall mandate the development and the use of ethanol as blend to gasoline. This shall create the market and consequently trigger investment in ethanol. 2. The development of an alternative scheme to raw material acquisition in lieu of the present sharing system. 3. Validation of identified areas as potential hosts to ethanol production. Some of the areas were surveyed about 10 years back necessitating validation visits/studies.

Fuel Ethanol as Emerging Industry

Challenges Ahead
4. The formulation of adequate government policy or policies to insure a positive market and investment environment in the Philippines. 5. While sugarcane is seen as a major substrate for ethanol, the development of other potential raw materials, particularly sweet sorghum and cassava, must be pursued by pertinent government as well as private institutions.

Policies & Direction in Ethanol Development Initiatives:


The Philippines intends to maintain a 2.0 million mt sugar industry Formation of a Philippine Fuel Ethanol Alliance composed of alcohol distillers, sugar industry representatives, government and some oil companies. Ethanol initiatives will focus on cane juice Canes required for ethanol will come mostly from expansion areas. Legislation is being finalized in Congress mandating a blend of 5% for the first two years and subsequently 10% after two more years.

With these directions, the Philippine Sugar Industry, if it transforms itself, will have three potential businesses in the near future: Sugar Ethanol Power

Thank You!

www.e-sra.org