Negros Island is well known for sugar production and is known as the Sugar Bowl of the Philippines. Below is a further article by Butch Bacaoco in his series Cane Points and reproduced with his kind permission.
Butch knows his stuff about the sugar industry and in fact I listened in awe one day to a “history lesson” about the industry that involved an Englishman named Loney. This is an extract from the SRA’s website about the history of sugar in these islands:
Although sugarcane was raised since pre-Spanish times in the Visayan islands after its introduction, it did not become much of an industry until after 1850. There were a score of small plantation in the province of Iloilo and a few in Negros that cultivated the Saccharum officinarum but the output was for regional consumption and anything over a few thousand piculs were sent to Manila for the foreign market. Then came Nicolas Loney, Britanic Majesty’s Vice-Consul to Iloilo in 1856 who acted as the catalyst that skyrocketed the sugar industry of the region to unprecedented heights. Through his firm of Loney and Kee Co., he supplied most of the capital for sugarcane growing. He convinced the American house of Russell and Skurgis to open a branch in Iloilo for the purpose of giving crop loans to sugar planters. He imported sugarcane cuttings from Sumatra and brought machinery from England and Scotland which the sugar planters could buy on easy installments. Then he built a stone warehouse in Iloilo later to become an imposing wharf which inhabitants called Muelle Loney in his honor. To transport sugar from Negros, he built at Buenavista in Guimaras Island sailing crafts called Lorchas patterned after Brixham Trawlers of Downshire used for deep-sea fishing in the English channel. The transformation of the swampy ground along the strait between the town and the Island of Guimaras into a wharf were the interisland vessels and even ocean-going ships could lie alongside made Iloilo a port of call and turned it eventually into the business seaport on the archipelago next to Manila. Meanwhile, prices of sugar in the world market kept rising in 1857. He arranged for two British Brigs, the SS Pet and The SS Camilla to call at the Port of Iloilo to load several thousand piculs of his sugar to Melbourne, Australia where the Victoria Sugar Co. was avidly waiting for them. The other British colony, New Zealand, was also a good market for unrefined sugar.
Foreseeing the great future for the sugar industry in the Visayas, Loney decided to develop adjoining Negros Islands as a source of this product by offering the same liberal terms to the few Negrense planters as those he had given the Ilonggo landowners. This started the exodus of Iloilo planters to Negros in 1857, for land values in the formers had increased while in the latter province, virgin areas could be had cheaply. Thus, prominent families from Jaro, Molo and Miegao emigrated to Negros such as Simeon Ledesma to Silay, Lucio Lacson to Minuluan, Cornelio Hilado to the Hacienda Bagacay and Matabang, the Cosculluelas, Perez, Alvarez, Sotamayor and Escanilla families to Guinigaran and Himamaylan. The municipalities of Saravia and Escalante were also opened to the sugar pioneers. The Visayan island produced mainly raw sugar exported to the United States, England and Australian while in Manila, crystal grain sugar was exported to Spain.
And here is the Cane Points’ article:
CANE POINTS: HOW WILL SUGAR PRICES FARE FOR CROP YEAR 2016-17?
Submitted by ____ on Fri, 08/26/2016 – 08:10
All sugar producers wish that raw sugar prices for this coming crop year, which starts on September 1, will be at the same level as the current crop year.
In one mill here in Negros, the average millgate price of “B” sugar for Crop Year 2015-16 was P1,777.40 per Lkg, much higher compared to Crop Year 2014-15 when the composite price of sugar in that mill was only P1,546.15.
It can be recalled that, due to the projected drop in production brought about by El Ni?o, SRA allocated all sugar produced in CY 2015-16 for the domestic market. Unlike in CY 2014-15, there is no allocation for “A” sugar for the US quota (which was served thru the export replacement program) nor “D” sugar for the world market.
Molasses prices also improved. The average price of molasses was P9,345.70 per ton for CY 2015-16, compared to only P7,425.68 per ton in CY 2014-15.
Commodity prices work on the principle of supply and demand. Revisiting the supply and demand scenario for the crop year which is about to end might give producers an idea of where sugar prices are heading.
Raw sugar production dropped 3.47% compared to CY 2014-15 production of 2.31 MMT as of August 2, 2015. Raw sugar production as of July 31, 2016 was 2.23 MMT, a drop of only 80,390 tons which is lower than initially projected and just 40,000 MT short of the 2.27 MMT initial production estimate for CY 2015-16.
(For brevity, all reference dates for the cut-off period of the subject crop years are July 31, 2016 for CY 2015-2016 and August 2, 2015 for CY 2014-15.)
Refined sugar production also dropped by 11%, from 21.52 million bags to only 19.15 million bags this crop year.
As to consumption (based on withdrawals from the mills), raw sugar withdrawals dropped 209,828 MT (9.27%), from 2.26 MMT in CY 2014-15 to 2.05 MMT in CY 2015-16. SRA’s estimated domestic withdrawal for CY 2015-16 was 2.25 MMT.
Refined sugar withdrawals for CY 2015-16 were pegged at 16.33 million bags compared to 18.81 million bags in CY 2014-15, a decrease of 2.48 million bags.
It should be pointed out that the cut-off date for CY 2015-16 withdrawals is July 31, 2016. Thus, the withdrawals for the whole month of August are not yet included in the figures.
The average monthly withdrawal for CY 2014-2015 is 186,724 MT for raw sugar and 1.68 million bags for refined sugar.
If these monthly averages are included in the current withdrawals to project the consumption for the entire crop year, raw sugar withdrawals will be 2.24 MMT (only 10,000 MT short of SRA’s estimated consumption of 2.25 and only 20,000 MT short of last crop year’s consumption) while refined sugar withdrawals will be 18.01 million bags (800,000 bags short of last year’s refined sugar withdrawals).
Simply put, raw sugar production for the current crop year exceeds projected consumption by only 10,000 MT (excluding First Farmers’ production starting second week of August) while refined sugar production exceeds projected withdrawals by 40,000 MT.
CY 2015-16 is characterized by a very long dry spell (from last quarter of 2015 to second quarter of 2016) and the synchronized national and local elections.
The long dry spell and election spending should have spurred greater demand for sweetened beverages and food products and should have registered as added consumption for CY 2015-16.
How come this crop year’s consumption is still 20,000 MT lower than in CY 2014-15 when there was no long dry spell and no election? The question is not whether there was an increase in consumption but rather who supplied that increased demand, considering that such consumption was not reflected as withdrawals from the mills.
Aside from this current crop year’s projected production and withdrawal figures, the carry-over stock from CY 2013-14 and the importations for CY 2015-16 should also be considered in evaluating the supply and demand scenario at the onset of CY 2016-17.
The last time I checked, the carry-over stock from CY 2013-2014 stood at 420,630 MT, consisting of 261,999 MT raw sugar and 158,631 MT refined sugar. As to the importations for the current crop year, it’s a safe bet that it will not be less than 100,000 MT by the end of this crop year on August 31.
Perhaps the previous bidding results at First Farmers can provide a glimpse of where prices are heading. First Farmers’ “B” sugar was booked at P1,810 per bag while molasses fetched P10,100 per ton.
(For reactions and suggestions, email firstname.lastname@example.org.)
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