Facing the
liberalization crisis – 5

First let me deal with the feedback. Some complain that I am putting them in suspense by discussing what I learned in Thailand in installment. That cannot be helped because of other issues. As Mark Anthony told the eager Romans “Be patient till the last!”

On the other hand some planters are clipping the columns so they can read it in entirety later on and even re-read them. I am glad for this and I hope that the stakeholders in the industry now put pressure on government for an aggressive program to prevent a disaster that will threaten the sugar industry. I am certain that the planters and millers and their associations and federations are eager to rally behind a really good - meaning implementable program that Rep. Albee Benitez might draft. The issue here is no longer personalities and narrow agenda but the industry’s survival.

The challenge of Thailand in preparing for the impact of trade liberalization became, instead of being a factor to fear, as we do with the coming zero-tariff sugar importation – but an opportunity to progress. Sugar will never get out of style but where are we in the equation? We can choose to be complacent and wait for the trade liberalization tsunami to sweep us out the sugar world or act now, fast and aggressive.

After price the second challenge for the Thai sugar industry was efficiency in the farm and in the mill. This should later involve transport but I will leave that for another column. The efficiency must be for the entire industry and in the case of Thailand there were three main concerns – the mill, the farms and transport. In our case there are other concerns for efficiency but let us limit to that of Thailand which parallel those of our own and which every planter is familiar with.

At the onset the Thai problem with the farm was low yield and poor sucrose content that resulted in product output fluctuations. This includes, our sources said, the difference of production between the rain-fed and the irrigated fields. I have written of this already earlier in this series. The rain-fed was lower while the irrigated had a higher yield by about 15% that translates to an additional 15 tons per hectare. The variants in field production naturally affect their mill capacity although in our case the fluctuation of mill production is dictated more by the effectiveness of cane supply campaign.

In the case of Thailand the mills finance the planters under a contract for delivery of canes thus if the farmer had lower yield in terms of tonnage and sucrose content, the mill’s output is affected and it cannot campaign as we do because the farmers usually had contracts with the mill. While they can “pole vault” as we do to escape payment of loans, they do not resort to this practice. In fact, when we asked the mill management about this possibility, they said they never heard of it. While we laughed I think that laugh was on us for having perfected this malpractice in the sugar industry. I guess honesty and integrity enter into the picture in the Thai farmer-miller relations.

To deal with the problem of rain-fed which has a low output and irrigated fields, Thailand developed an elaborate and year-long irrigation system. We visited this area – the northeast where we saw this irrigation system that I described earlier. When Thailand expanded its sugar industry the new farms were located in rain-fed lands, only 10% were irrigated and even these had no year-long water supply. The need for water led to the digging of artesian wells which were sometimes dug in areas of low water table so that the farmers had to pay more. The government also bewailed the practice of furrow irrigation that was wasteful but it is also the cheapest.

In the research center we were shown the wastefulness of the furrow and sprinkling systems so that the center had advised farmers not to use them. Nevertheless we saw flooding of the furrows but although wasteful it was cheap because the farmers do not pay for them and the dams provide year-round water. The flooding also was good in drowning weeds, saving on weeding.

The free water was due to a close collaboration among the stakeholders. Initially the problem of irrigation was addressed by the mills and the farmers who were encouraged to construct the farm-level water delivery systems.  On the other hand the research centers conducted studies on the most effective way of using water. Is there anybody in our industry undertaking this kind of study?*

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