SUGAR INDUSTRY

Sugar cane is one of the country’s major crops and the main source of sugar. It is an essential basis for soft
drinks/sweetened beverages, convenience foods, fast food, candy / sweets, confectionery, baking products and the
respective industries. It is not a sensitive crop and can be grown in almost all types of soil, from sandy to clay loams
and from acidic volcanic soils to calcareous sedimentary deposits.

Sugar has been an important commodity historically due to a variety of factors, including the human appetite for
sweet foods and drinks, the complementarity that sugar brings to the other flavors in food, its preservation and
fermentation properties, and the calories it provides. Sugar (or more precisely sucrose) was first prepared in India.
Sugar industry subsumes the production, processing and marketing of sugars (mostly saccharose and fructose).
Globally, most sugar is extracted from sugar cane (80% predominantly in the tropics) and sugar beet (20%, mostly in
temperate climate like in the U.S. or Europe).

Around 460 million tonnes of sugar is produced every year. The largest producers are Brazil (72%), India (15%) and
the European Union (10%). Altogether, there are more than 123 sugar-producing countries, but only 30% of the
produce is traded on the international market. In 2011 global sugar export trade was worth $47bn with $33.5bn of
sugar exports are from developing countries and $12.2bn from developed countries.

GLOBAL PLAYERS
The top 10 sugar-producing companies based on production in 2010:
2010/11
Rank Company Country
Output [Mt]
1 Suedzucker AG 4.2 Germany
2 cosan SA Industria & Comercio 4.1 Brazil
3 British Sugar Plc 3.9 UK
4 Tereos Internacional SA 3.6 France
5 Mitr Phol Sugar Corp. 2.7 Thailand
6 Nordzucker Gmbh & Co KG 2.5 Germany
7 Louis Dreyfus 1.8 Netherlands
8 Wilmar International Ltd. 1.5 Singapore
9 Thai Roong Ruang Sugar Group 1.5 Thailand
10 Turkiye Seker Fabrikalari 1.34 Turkey

Global sugar industry has a low market share concentration. The top four sugar producers account for less than
20.0% of the market.
PRODUCTS
Raw/Brown Sugar
Natural brown sugar, raw sugar or whole cane sugar is sugars that retain a small to large amount of the molasses
from the mother liquor (the partially evaporated sugar cane juice). Based upon weight, brown cane sugar when fully
refined yields up to 70% white sugar, the degree depending on how much molasses remained in the sugar crystals,
which in turn is dependent upon whether the brown sugar was centrifuged or not. As there is more molasses in
natural brown sugar, it contains minor nutritional value and mineral content. Some natural brown sugars have
particular names and characteristics, and are sold as turbinado, demerara or raw sugar if they have been
centrifuged to a large degree. Brown sugars that have been only mildly centrifuged or unrefined (non-centrifuged)
retain a much higher degree of molasses and are called various names across the globe according to their country of
origin: e.g. panela, rapadura, jaggery, muscovado, piloncillo, etc.

Liquid sugar/syrup
A syrup is a condiment that is a thick, viscous liquid consisting primarily of a solution of sugar in water, containing a
large amount of dissolved sugars but showing little tendency to deposit crystals. Its consistency is similar to that of
molasses. The viscosity arises from the multiple hydrogen bonds between the dissolved sugar, which has many
hydroxyl (OH) groups, and the water. Syrups can be made by dissolving sugar in water or by reducing naturally
sweet juices such as cane juice, sorghum juice, or maple sap. Corn syrup is made from corn starch using an
enzymatic process that converts it to sugars.

Refined Sugar
Refined sugar is made from raw sugar that has undergone a refining process to remove the molasses. Raw sugar is
sucrose which is extracted from sugarcane or sugar beet. While raw sugar can be consumed, the refining process
removes unwanted tastes and results in refined sugar or white sugar.

The sugar may be transported in bulk to the country where it will be used and the refining process often takes place
there. The first stage is known as affination and involves immersing the sugar crystals in concentrated syrup that
softens and removes the sticky brown coating without dissolving them. The crystals are then separated from the
liquor and dissolved in water. The resulting syrup is treated either by a carbonatation or by a phosphatation process.
Both involve the precipitation of a fine solid in the syrup and when this is filtered out, many of the impurities are
removed at the same time. Removal of color is achieved by using either a granular activated carbon or an ion-
exchange resin. The sugar syrup is concentrated by boiling and then cooled and seeded with sugar crystals, causing
the sugar to crystallize out. The liquor is spun off in a centrifuge and the white crystals are dried in hot air and ready
to be packaged or used. The surplus liquor is made into refiners' molasses.
Producing countries
The five largest producers of sugar in 2011 were Brazil, India, the European Union, China and Thailand. In the same
year, the largest exporter of sugar was Brazil, distantly followed by Thailand, Australia and India. The largest
importers were the European Union, United States and Indonesia. At present, Brazil has the highest per capita
consumption of sugar, followed by Australia, Thailand, and the European Union.

Molasses
Molasses, or black treacle (British, for human consumption; known as molasses otherwise), is a viscous product
resulting from refining sugarcane or sugar beets into sugar. Molasses varies by amount of sugar, method of
extraction, and age of plant. Sugarcane molasses is agreeable in taste and aroma, and is primarily used for
sweetening and flavoring foods in the United States, Canada, and elsewhere, while sugar beet molasses is foul-
smelling and unpalatable, so it is mainly used as an animal feed additive in Europe and Russia, where it is chiefly
produced. Molasses is a defining component of fine commercial brown sugar. Sweet sorghum syrup may be
colloquially called "sorghum molasses" in the southern United States. Similar products include treacle, honey, maple
syrup, corn syrup, and invert syrup. Most of these alternative syrups have milder flavors.

Sugar alcohol
Sugar alcohols (also called polyhydric alcohols, polyalcohols, alditols or glycitols) are organic compounds, typically
derived from sugars, which comprise a class of polyols. They are white, water-soluble solids that can occur naturally
or be produced industrially from sugars. They are used widely in the food industry as thickeners and sweeteners. In
commercial foodstuffs, sugar alcohols are commonly used in place of table sugar (sucrose), often in combination
with high intensity artificial sweeteners to counter the low sweetness. Xylitol and sorbitol are popular sugar alcohols
in commercial foods.

Brown sugar
Brown sugar is a sucrose sugar product with a distinctive brown color due to the presence of molasses. It is either an
unrefined or partially refined soft sugar consisting of sugar crystals with some residual molasses content (natural
brown sugar), or it is produced by the addition of molasses to refined white sugar (commercial brown sugar).

Brown sugar is often produced by adding sugarcane molasses to completely refined white sugar crystals to more
carefully control the ratio of molasses to sugar crystals and to reduce manufacturing costs. Brown sugar prepared in
this manner is often much coarser than its unrefined equivalent and its molasses may be easily separated from the
crystals by simply washing to reveal the underlying white sugar crystals; in contrast, with unrefined brown sugar,
washing will reveal underlying crystals which are off-white due to the inclusion of molasses.
 World Sugar Market Overview

Global production for Marketing Year (MY) 2017/18 is forecast to rise 13 million tons (raw value) to a record 185
million, up from USDA’s initial forecast in May. If reached, production would be 20 million tons higher than the 5-
year low just 2 years earlier. Record production in Brazil, expected recoveries in output in India and Thailand due to
favorable weather, the end of production quotas in the European Union (EU), and area expansion in China are all
contributing factors. The jump in production supports record exports and consumption at 62 million and 174 million
tons, respectively. Ending stocks are forecast up 5 percent as higher stocks in the EU and India more than offset
lower stocks in China.

2017/18 Sugar Overview

U.S. production is forecast down to 8.0 million tons due to slightly lower beet and cane sugar expectations. Imports
are expected to rise 14.3 percent to 3.4 million with Mexico supplying nearly one-half. Consumption is forecast up
slightly and stocks relatively flat. Brazil’s production is forecast to rise 1.1 million tons to a record 40.2 million based
on favorable weather, improved crop management, and lower use of cane for ethanol. Exports are projected up 1.1
million tons to a record 29.6 million on greater exportable supplies and despite China’s safeguard measure to limit
sugar imports from Brazil. Consumption is up slightly while stocks are flat. India’s production is forecast to rebound
by 25 percent to 27.7 million tons due to higher area and yields in Maharashtra, Uttar Pradesh, and northern
Karnataka. Imports are forecast lower while consumption is forecast to edge higher and close to the record seen in
2015/16. Stocks are expected to be more than sufficient to meet India’s 3-month consumption requirement prior to
the start of next season’s harvest.

Production in the European Union is forecast to jump 3.6 million tons to a record 20.1 million on higher area and
yields. Exports are forecast to rise a whopping 60 percent to 2.5 million tons on greater exportable supplies.
Consequently, imports are down over one quarter and stocks grow; however, consumption is projected flat.
MY 2017/18 is the first year that the EU sugar market will function without the 50-year old production quota regime
and export limits. Production and export restrictions were lifted on October 1, 2017, as the EU sugar production
quota system came to an end.

Thailand’s production is forecast to expand 1.2 million tons to 11.2 million, recovering from 2 years of drought, as
favorable weather conditions are expected to improve yields. Exports are forecast to rise a similar amount on
greater available supplies. Although non-alcoholic beverage manufacturers are expected to reformulate their
products in response to the new excise tax on sugar-sweetened beverages, overall sugar consumption is forecast
down only marginally. The Thai Government is seeking public comment on the draft amendment of the Cane and
Sugar Act B.E. 2527 (1984) which aims to deregulate the domestic sugar market in MY2017/18. If the current draft is
implemented, starting on December 1, 2017, domestic price subsidies and direct payments to cane growers will
end.

China’s production is forecast to rise 1.2 million tons to 10.5 million, with expanded sugarbeet and sugarcane area.
Ending stocks continue to be drawn down after reaching burdensome levels 3 years ago. Lower carryin stocks,
higher production, and slightly higher consumption, coupled with a safeguard measure on sugar imports, are all
expected to constrain imports (see article below). Pakistan’s production is forecast up 6 percent to a record 6.5
million tons reflecting higher area, favorable weather, and improved yields. Given the recent enactment of
subsidies, exports are now forecast at 500,000 tons. Consumption is forecast up 300,000 tons with forecast record
stocks given the expansion in available supply.

Mexico’s production is forecast slightly higher at 6.5 million tons. However, exports are projected to jump 20
percent to 1.5 million tons with most of the exports going to the United States. Stocks are lowered 18 percent, in
line with higher exports and consumption.

Russia’s production is forecast up 200,000 tons to a record 6.4 million on higher yields. Consumption is forecast to
rise as a result of the boost in available supplies. Australia’s production is forecast down only 300,000 tons to 4.8
million as the tropical cyclone that hit the northern growing areas of the Queensland coast in March 2017 was less
damaging than expected. Exports are expected to be commensurate with lower exportable supplies.

China’s Safeguard Measures Drop It to Second-Place Importer

Since 2011/12, China has been the world’s leading sugar importer, followed by Indonesia and the United States.
Indonesia is expected to surpass China in both 2017/18 and 2016/17 with growing imports from Brazil. Although
Indonesia is forecast to become the world’s largest importer, it is not because of new demand but because China is
yielding the spot following its policy changes. Higher domestic production and tighter government control over
imports have resulted in China dropping from the largest to the second-largest sugar importer with this revised
forecast. Imports are estimated to have declined 1.5 million tons to 4.6 million in 2016/17 and are forecast to drop
even further in 2017/18. Conversely, China’s sugar production is forecast to expand again in 2017/18 as high prices
and favorable returns are encouraging higher plantings of both sugarbeets and sugarcane. On May 22, 2017, China's
Ministry of Commerce (MOFCOM) announced a safeguard measure on sugar imports from major supplying
countries (such as Brazil, Thailand, Australia, and South Korea). For out-of-quota imports, the tariff was raised
sharply from 50 percent to 95 percent, effective May 22, 2017. Sugar imports from many developing countries and
regions are exempted from this measure as long as the market share of any of these suppliers remains below 3
percent. The within-quota tariff remains unchanged at 15 percent and applies to 1.945 million tons annually.
According to industry reports, 70 percent of sugar import quotas are allocated to state-owned companies.
MODERN SUGAR MARKEeT

Despite the end of European colonial rule, many of the tariff agreements continue to follow the trade patterns
established in colonial times. With the emergence of the European Union (EU) as an economic union in the closing
years of the twentieth century, agricultural policy coalesced into the Common Agricultural Policy (CAP) of Europe.
The CAP established a system of tariffs to protect domestic producers from foreign competition. Historically,
African, Caribbean, and Pacific (ACP) sugar producers were given access to the European market under the CAP
through the Sugar Protocol of the Lomé Convention and its successor the Cotonou Agreement.

At the beginning of the twenty-first century, most countries that support their internal sugar price use a form of the
tariff rate quota (TRQ) which is allowed under the Uruguay Round Agreement on Agriculture. The TRQ is a system of
two tariffs. The first tariff allows the sale of a fixed quantity (or minimum access) of a commodity at a lower or first
tier tariff. Any quantity of that commodity imported above this fixed quantity is charged a higher (typically
prohibitive) tariff. Given that the second tariff level is prohibitive, the country can increase the price received by
domestic producers by reducing the fixed quantity imported under the first tier tariff. This is the policy instrument
used by both the United States and the EU to increase the price of sugar for their respective producers. However,
apart from supporting domestic producers, the TRQ gives countries in the EU a mechanism to honor its
commitments to the ACP. Specifically, former colonies can be allocated portions of the minimum access quantity, in
essence giving ACP countries access to a higher internal price of sugar at a low tariff rate. The United States
allocates its first-stage quota in a similar way to a group of forty countries.

Apart from its grounding in historical trade patterns, the international sugar market is also affected by a myriad of
regional and global trade agreements. Regional trade agreements involve a small number of countries in the same
geographic region. In this context, the agreements forming the EU are a regional trade agreement. Other regional
trade agreements include the North American Free Trade Agreement (NAFTA) and proposed trade agreements such
as the Free Trade Area of the Americas (FTAA). The effect of each of these trade agreements on sugar markets is
dependent on the role sugar plays in each group of economies.

An example of the ambiguous role regional trade agreements play in the sugar market can be found in NAFTA. As
discussed, the sugar price in the United States is protected by a system of tariffs. From this perspective both freer
trade with both Canada and Mexico raise critical issues. First, while Canada does not pose a direct threat to the U.S.
sugar industry from production, the TRQ on sugar prohibits pass-through imports of sugar into the United States
through Canada. However, NAFTA still allows for the importation of sugar containing products from Canada,
increasing the competition for confections in the United States and reducing the demand for sugar. For example,
lower sugar prices contributed to Kraft Foods’ decision to move the production of Life Savers candy entirely to
Canada in 2003.

A different set of problems was raised by the potential effects of Mexican sugar production on the U.S. sugar
market. Mexico’s government has historically been involved directly in its sugar industry through its ownership of its
sugar mills and other policies but had divested these holdings as a part of its economic liberalization program in the
late 1980s. In recognition of the potential competition from Mexico, NAFTA includes specific provisions governing
Mexico’s access to the U.S. sugar market. Many of these provisions are concerned with Mexico’s status as a net
sugar producer. Specifically, since Mexico imports sugar and other sweeteners, the domestic producers wanted to
be protected from pass-through sugar (i.e., sugar purchased at lower world market prices for sale at protected U.S.
prices). Hence, Mexico was granted duty-free access to the U.S. market for 7,258 metric tons of sugar. If Mexico
obtained the status of a net sugar-surplus producer, the quota would be expanded to 25,000 metric tons in years 1
to 6 and 250,000 metric tons in years 7 to 15. Some controversies have arisen in the implementation of these
provisions. Specifically, the original provisions were restricted to becoming a net sugar-surplus producer, ignoring
the potential impact of alternative sweeteners such as HFCS. This raised the possibility of substituting HFCS for sugar
especially in the manufacture of soft drinks to enhance Mexico’s net surplus of sugar.

HISTORICAL TRADE PATTERNS

The fact that the expansion of production and trade of sucrose was largely linked to the European colonization of
the Americas had significant implications for the institutional arrangements in the international sugar market in
place at the beginning of the twentieth century. Specifically colonization of the Americas as well as other parts of
the globe in the eighteenth and nineteenth centuries was at least partially driven by economic considerations of the
countries involved. Restrictions were placed on the countries with which colonies could trade. Raw goods produced
in the colonies were required to be sold in the mother country and significant import restrictions existed to
encourage the purchase of manufactured goods to each respective European power. This enabled the European
powers economic benefits from the colonization of the New World.

Another byproduct of the rise of sugar in European colonies in general and in the Americas in particular was the
linkages between sugar and slavery. As described by B. W. Higman in his 2000 article for Economic History Review,
the rise of the sugar economies in the seventeenth through the nineteenth centuries in the Caribbean has been
labeled as “The Sugar Revolution.” This revolution has been associated with several empirical facts, including the
increased importance of monoculture, the replacement of small farms with plantations, and the increased use of
black slaves. The movement toward monoculture and increased farm size has proven not to be unique to sugar;
however, certain characteristics of sugar production may make the crop more susceptible to the establishment of
plantations. The relationship between sugar and slavery may be more systematic. The exact reason for this linkage is
unclear. One explanation for this linkage could be the presence of scale economies. In 1977 Mark Schmitz found
evidence of significant economies of scale in Antebellum sugar production in Louisiana, which used slavery. Further
evidence of the economies of slavery-based agriculture can be found in Robert Fogel and Stanley Engerman’s 1977
work.

The elimination of slavery in the colonial powers and the United States in the nineteenth century changed the
institutions in the labor relationship. Slaves were replaced with contract labor, but the use of contract labor in the
sugar plantations implied a radical change in the source of that labor. Before 1770 one-half to two-thirds of the
contract labor destined for the British Caribbean and other North American colonies came from Europe. However,
the contract labor for the sugar plantations was predominantly non-white. This shift also implied significant changes
in the terms of the labor contract. In addition, the reduction of the availability of contract labor from countries such
as India undoubtedly accelerated the introduction of labor-saving technology to the industry.
The entanglement of European powers in the trade of sugar also contributed to the first significant alternative
sweetener. The British blockade of European ports during the Napoleonic wars led to the development of a viable
sugar beet industry in France. In the twenty-first century sucrose from sugarcane and sugar beets share the global
market for refined sugar. The expansion of sugar beet production in the second half of the nineteenth century
followed a host of factors—including the abolition of slavery in Britain and France and the expansion of grain
imports from Russia—that reduced the profitability of grain crops in Europe.

The decline in the price of sugar had two divergent impacts on the economy. First, lower sugar prices reduced the
cost of a primary input for a variety of industries (i.e., bakeries, breweries, and the makers of jams). Second, lower
sugar prices impoverished producers in the colonies. The same policy scenario applies to the present-day United
States. Sugar tariffs pit the interest of sugar producers against the interests of confectionary manufacturers. The
ultimate dispensation of this debate depends on the relative political power of each sector through rentseeking
behavior. One response to the declining sugar prices both in the nineteenth and in the twenty-first centuries is the
establishment of import tariffs or quotas to increase the domestic price and, thereby, protect domestic sugar
producers.
 SUGAR PRODUCTION

Various domestic factors affect the production of sugar and institutions within the U.S. sugar market. As discussed,
sugar prices in the United States are supported by a TRQ. Adding a layer of complication, the government supports
the domestic price of sugar by providing a nonrecourse loan for raw sugar at 18 cents per pound and refined sugar
produced from sugar beets at 22.9 cents per pound, according to 2002 statistics (Haley and Suarez 2002). If the
market price falls below 18 cents per pound, producers (or more accurately sugar mills) store their raw sugar and
receive a loan from the government of 18 cents for every pound of raw sugar placed in storage. If the market price
for sugar rises over 18 cents per pound plus any interest accrued, they take the sugar out of storage, sell it at the
prevailing market price, and repay the loan. However, if the market price for sugar does not exceed 18 cents per
pound plus accrued interest during the marketing year, producers simply forfeit sugar in storage to the government
in fulfillment of the loan. While the nonrecourse loan program for sugar is typical for agricultural commodities in the
United States, it is encumbered by the Dole Amendment, which requires the sugar program to be operated at no
cost to the government.

Certain characteristics of sugar production have implications for vertical integration in the market channel for sugar.
Sugar is produced from two different primary crops: sugarcane and sugar beets. While the end product (i.e.,
sucrose) is identical for each process, each crop implies a different market channel. The production of sugarcane
typically occurs in tropical or subtropical climate zones. The stalks containing the sucrose are removed from the field
for milling that produces a raw form of sugar that is relatively stable. The raw sugar is then later refined into table
sugar, removing impurities that may affect the flavor. Technical considerations require that these mills be located
close to production. When the stalks are harvested in the field the sucrose content of the sugarcane starts to
deteriorate. Further, the sucrose content of standing sugarcane deteriorates after a freeze.

SUGAR INDUSTRY IN THE PHILIPPINES

The sugar industry contributes no less than P70 Billion to the Philippine economy annually. Out of the total land area
of about 30 million hectares, sugarcane is planted to about 422,500 hectares in the Philippines, with about 62,000
farmers. At least seventeen provinces of the Philippines have grown sugarcane. The biggest sugarcane hectarage is
in the Visayas, particularly in Negros Island, followed by the fast-growing area of Mindanao.

History
The history of the sugar industry in the Philippines pre-dates pre-Spanish colonization. Early Arab traders brought
from the Celebes cuttings of sugarcane and planted them in Mindanao. Later sugar were shipped north and planted
in the Visayas and Luzon. By 1521, beginning of the Spanish Era in the Philippines, sugarcane farming were already
extensive on many islands, particularly in the Visayas.

Sugarcane farming however only became an industry only after 1856 when Nicholas Loney, a British Vice-Consul,
was sent to Iloilo City and convinced the American house of Russell and Sturgis (also known as Russell & Co.) to open
a branch in Iloilo for the purpose of giving crop loans to sugar planters. Loney through his firm, Loney and Kee
Company, facilitated the fast development of sugar industry by importing sugar cuttings from Sumatra and
machinery from England and Scotland to Iloilo, which the sugar planters can buy on easy installment loans. Loney
also built sailing boats called lorchas, patterned after Brixham Trawlers of Downshire used for deep-sea fishing in the
English channel, at Buenavista on Guimaras Island to transport sugar from Negros. Envisioning the prosperity of
sugar industry in Visayas in the near future, Loney initiated the development of industry in Negros and offered
liberal terms to few Negrense planters similar to those he had given the Ilonggo sugarcane growers. Consequently,
some prominent families of sugarcane planters from Iloilo like Ledesma, Lacson, Hilado, Cosculluela, Perez, Alvarez,
Sotamayor and Escanilla moved to Negros in 1857 due to its promising development of sugar industry. The raw
sugar, which is the island of Visayas’ main product, was exported to the United States, England and Australia. Crystal
grain sugar was the product of Manila which was exported primarily to Spain.

Free Trade with the U.S. and the Quota System

The transfer of Philippines as a colony from Spanish regime to American occupation was not easy due to strong
resistance from Filipino leaders like Emilio Aguinaldo and Gregorio del Pilar. Soon after the death of del Pilar in the
Battle of Tirad Pass and seizure of Aguinaldo in Palanan, Isabela, Philippines was completely under the American
rule. The Americans, unlike their predecessors, provided partial liberty to the Filipinos by preparing the latter to
achieve independence and run its own government through a Commonwealth form of state.

The initial resistance turned into market cooperation that emanated from trust and good will of Filipino people
towards the American colonizers and vice versa. United States’ colonization of the Philippines protected the country
from vicissitudes of world sugar prices due to its free access to a protected and subsidized U.S. market, which
started in 1913, when the U.S. established free trade with its Philippine colony.
The U.S. treated the Philippines like one of its American states that resulted to state protection of the Philippine
sugar market. Twenty-one years later in 1934, U.S. enacted a quota system on sugar that remained enforced until
early 70s. In 1965, U.S. Sugar Act was amended to provide the following terms in Quota system:
 A basic quota of 1,050,000 short tons plus 10.86% of any U.S. consumption increase from 9.7 million to
10.4 million tons or a total basic quota of 1,126,000 short tons for the Philippines;
 47.22% of the deficits of U.S. domestic producers and other foreign country suppliers which conservatively
is estimated to be about 200,000 tons, shall be allotted to the Philippines;
 The encouragement, if not a requirement that the Philippines maintain in reserve the equivalent of 15% of
her U.S. quotas or roughly 180,000 tons;
 The premium recaptures fee and a quarterly system of allocation during the first semester of each calendar
year.
Despite restrictions on sugar trading, exports of Philippine sugar to the U.S. remained in a relatively privileged
position especially during the 70s. Philippine quotas for the U.S. ranged between 25 and 30 percent, a rate that is
higher than other sugar suppliers like the Dominican Republic, Mexico and Brazil.

Establishment of Sugar Regulatory Administration (SRA)

After the 1986 Revolution, which ousted the former dictator, President Corazon Cojuangco Aquino immediately
appointed Mr. Fred J. Elizalde as Officer-in-Charge (OIC) of the institutions that will regulate the sugar industry since
the administration that time was technically in revolutionary form of government. On May 28, 1986, Executive
Order No. 18 was issued by Malacañang that established the current Sugar Regulatory Administration. SRA is
mandated to carry out the following functions:
 To institute an orderly system in sugarcane production for the stable, sufficient and balanced production of
sugar for local consumption, exportation and strategic reserve;
 To establish and maintain such balanced relation between production and requirement of sugar and such
marketing conditions as will insure stabilized prices at a level reasonably profitable to producer and fair to
consumers;
 To promote the effective merchandising of sugar and its products in the domestic and foreign markets so
that those engaged in the sugar industry will be placed on a basis of economic viability;
 To undertake such relevant studies as may be needed in the formulation of policies and in the planning and
implementation of action programs required in attaining the purposes and objectives set forth under
Executive Order No. 18.

Sugar Industry and the Philippine Economy

The sugar industry provides substantial socio-economic contribution to the Philippines. This include but may not be
limited to employment, gross domestic product (GDP), investments, social amelioration, Research & Development
(R&D), and energy development.
 Employment
It is estimated that as of 2012, the industry provides direct employment to 700,000 sugarcane workers
spread across 19 sugar producing provinces.

Gross Domestic Product (GDP)

On annual basis, production of sugar contributes about 69.7 billion pesos to the national GDP with Value
Added Tax (VAT) collection for the sale of refined sugar reaching over 1.92 billion pesos yearly. Sugar is
primarily produced in the whole Negros Island Region, as well as in Central Luzon, Western Visayas and
some parts of Mindanao. As of Crop Year 2007-2008, the province of Negros Occidental accounted for 54%
of sugar produced and accounted for 18 billion pesos of Negros' GDP.

Investments
In 1998 alone, investments to sugar industry have amounted to 20 billion pesos, according to the Board of
Investments. These investments are private sector secured, sourced and funded, without cost or security
from government.

Social amelioration
Sugar industry has a social component, benefiting sugarcane workers. Through the Social Amelioration
Fund (SAF), a lien is imposed on the volume of sugar produced. This fund is shouldered by sugar planters
and millers and collected by the Bureau of Rural Workers. The benefits for the sugarcane workers under
the lien include cash bonus, death benefit, maternity benefit, and educational grant and livelihood projects.

Research & Development (R&D)

The sugar industry funds its own research, development and extension programs through the Philippine
Sugar Research Institute Foundation, Inc. (PHILSURIN) with aim to develop high yielding cane varieties. The
Philippine government, through SRA, provides the extension efforts in partnerships with the Mill District
Development Councils (MDDC). PHILSURIN assists this initiative through the hiring of Mill District
Coordinators and financial support to many programs of the MDDC.

Energy Development
The sugar industry is now among the forefront of alternative and renewable energy sources which include
biofuel through bioethanol production and co-generation activities.

Sub-sectors
The sugar industry has two major sub-sectors: the farming sub-sector and the milling sub-sector.
Farming Sub-sector
There are at least 11 regions/19 provinces that produce sugarcane in the nation. Ranges from 360,000 to
390,000 hectares are devoted to sugarcane production. The largest sugarcane areas are found in the
Negros Island Region, which accounts for 51% of sugarcane areas planted. This is followed by Mindanao
which accounts for 20%; Luzon by 17%; Panay by 07%; and Eastern Visayas by 04%. It is estimated that as
of 2012, the industry provides direct employment to 700,000 sugarcane workers spread across 19 sugar-
producing provinces.
Milling Sub-sector
There are currently 27 operating raw mills with combined crushing capacity of 204,300 metric ton cane per
day based on the Sugar Production Bulletin for Crop Year 2017-2018 and 12 refineries, all operating adjunct
to the raw mill. Geographically, there are seven sugar mills in Luzon, four in Mindanao, and the rest are
located in the Visayas region, which produces about 65% of the country’s sugar output. The industry is also
an important player in the production of bioethanol and at present, there are a total of 10 operating
bioethanol distilleries and 6 power generating plants in the Philippines.
SOURCES
(1) http://www.encyclopedia.com/history/united-states-and-canada/us-history/sugar-industry
(2) https://en.wikipedia.org/wiki/Sugar_industry
(3) https://en.wikipedia.org/wiki/Sugar_industry_of_the_Philippines
(4) www.agribenchmark.org/comvosfilelist/.../8b44429badfc055ca39f7cde50a89ef5
(5) https://apps.fas.usda.gov/psdonline/circulars/sugar.pdf