"As oil prices continue to rise, sugarcane has become one of the most exciting crops not only in the Philippines, but in the world today," Sugar Regulatory Administrator James Ledesma said yesterday.

Yesterday oil prices hovered near $73 a barrel.

As oil prices rise and show no sign of dropping drastically the demand for alternative fuel like ethanol, which comes from sugarcane, will continue, Ledesma told the DAILY STAR.

As long as oil prices remain high, ethanol will become more and more an attractive alternative, that will help keep world prices of sugar up, Ledesma said.

This crop year (2005-2006) RP millgate sugar prices have been at an average of P1,150 per 50 kilo bag of sugar, compared to an average of P800 per lkg in the 2004-2005 crop year, Ledesma said.

As of Thursday millgate raw sugar was selling at P1,280 per Lkg and Ledesma said he thinks prices by the end of milling could stay at P1,200 per lkg.

"I think the fundamentals show a more sustainable good price for sugar because if world prices hold, domestic prices will hold," he said.

This crop year the Philippines expects to produce 2.018 million MT of sugar by the end of the milling season that officially is on Aug. 31, Ledesma said.

We are 92 percent finished with milling this crop totaling so far 1.9 metric tons, he said.

With prices also expected to stay good next crop year Ledesma expects RP production of sugar to increase to 2.15 million metric tons, which he said is "very doable."

We could even hit a high of 2.2 million MT, he said.

Even with the increase in next year's production, Ledesma expect prices to stay above P1,000 per Lkg because prices of sugar in the world market remain high.

This is because Thailand had a bad crop, the United States has not recovered from the devastation caused to its sugarlands by two hurricanes last year, and Brazil has kept its production steady with its sugarcane being used for ethanol production.

With the world expanding in its use of ethanol as an alternative fuel, good prices of sugarcane will hold indefinitely, Ledesma said.

In Negros Occidental construction of an ethanol plant in San Carlos City starts this year and production of ethanol is expected in early 2008, Ledesma said.

The San Carlos Bioenergy Inc. plant in San Carlos City is targeted to have a capacity to produce 25 to 30 million litters of fuel ethanol a year and 8 MW of electricity for partial export to the local grid.

"I don't see oil prices going down, so I will put my bets on ethanol," Ledesma said.

Sugarcane will be needed as a sustainable and renewable source of fuel in the future, he said.

"Definitely there are reasons to be optimistic, the environment for the sugar industry to operate profitably exist," Ledesma said.

Even if the Philippines produces more sugar than what is needed domestically, it can still export profitably to the world market at 18 (US) cents per pound or about P980 per Lkg, he said.

Ledesma said he hopes sugar planters invest their profits in further improving their production.

With the increase in earnings many sugarcane planters who could afford it have given their workers bonuses and additional benefits, he said.

Reynaldo Bantug, president of the Confederation of Sugarcane Producers Associations of the Philippines, also told the DAILY STAR he expects good sugar prices next crop year.

With the world market prices expected to remain good, we expect domestic prices to remain good, too, he said.

It has been a pretty good year for the sugar industry and as long as oil prices remain high this trend will continue, he said.

In response to good profits, he said many sugar planters had advanced the start of paying of the second half of the wage increase for sugar workers from the original deadline of April 16, he said.

Wage Order No. 13 imposed new minimum wage rates effective June 18, 2005 in Western Visayas.

Workers in the sugar industry were to receive an increase of P10 a day in basic pay upon effectivity of the new wage order on June 18 last year, and an additional P5 a day in basic pay starting April 16 this year.

Those who could afford to have also given their workers bonuses, he said, noting that some planters are still paying for debts incurred from losses in previous crop years.

Enrique Rojas, president of the National Federation of Sugarcane Planters, said domestic sugar prices next crop year will remain good as long as the world market prices do not go down.

This is because it will not be profitable to smuggle world market sugar into the Philippines, he said.

He said they do not expect the Australian, Thai and American sugar industries to recover swiftly so world market prices will remain good.

The US this crop year increased its quota for RP sugar from 150,000MT to 250,000MT because of the damage caused to its sugarlands by two hurricanes last year, he said.

We expect the US to again include the Philippines among the sources to fill its sugar quota next crop year, Rojas said.*CPG

back to top