A gray sugar scenario

Well, it's not really a bright picture. Neither was it dismal. But the facts of the future of the sugar industry, as presented yesterday to the Sugar Alliance by Harry Kopp, the Philippine industry's eyes and ears in the United States , was not encouraging either.

In short, what is going to happen within the next few years, is the continued farm bill with the Philippine share of the US Sugar quota struggling to maintain its level amid pressures from the NAFTA, CAFTA, and other bilateral trade agreements.

The bill, which has been stalled in the US Senate, may be approved by the upper chamber late this year, although US President George Bush had threatened to veto it.

But Kopp told the Alliance members that Bush will not likely do so considering that those backing the measure are among the most powerful groups of sugar farmers in the United States .

But he did point out that world price of sugar (7.53 to 10.46 cents per pound) has failed to catch up with the average production cost of 10.76 to 12.26 cents per pound.

That is because of oversupply of sugar and sugar stocks and the tendency by sugar producing countries to maintain a higher level of domestic prices of their sugar.

To offset the threat of oversupply in US sugar production, the Farm Bill includes ethanol production as a goal. In short, the demand for sugar for ethanol production may take on the excess sugar.

Regarding some proposals to re-examine our quota links with the US , Kopp pointed out that it is not easy to get back once you get out. The unfilled quota will be given to another sugar exporting country. And it won't be easy for this country to easily get back what it had given up, was the point.

In short, Kopp added, where are you going to sell your surplus sugar?

Although the profit margin of the US market may not give us much as it used to in the past (largely because of the rise in freight charges, etc. plus the fall of the dollar), Kopp said it still provides the sugar industry the profit needed for it to pursue its present program of linking up with the US market.

But Kopp refused to hazard a long-term prediction about the future of sugar.

Now, I just got reminded about the prospects of a bioethanol plant in Negros Occidental other than the San Carlos Bioenergy project which is about to start early next year.

Another thing that has caught my attention were the ethanol plant which both the Gokongwei mill in Southern Negros and another by the DP Roxas holding company intends to put up in La Carlota and the Hawaiian Central.

Both reportedly intend to use molasses, not pure cane juice.

Former Sugar Administrator Nicolas Alonso told me that SONEDCO has already increased its milling capacity by almost two-fold. And it is operating a sugar refinery.

And Bob Cuenca and Tony Trebol told me yesterday that the new mill which Don Pedro Roxas' group has ordered is supposed to come in sometime next month. This is preparatory to its ethanol plant project which will include molasses from either of the two mills. The Roxas' group mill also reportedly buy molasses from other mills.

As Alonso points out, that is going to stir a price war between hydrous and anhydrous alcohol manufacture.

"I guess those who want to drink it will pay more for the privilege of enjoying alcoholic drinks," Nico pointed out.

Based on the conversations, I guess that means that the sugar industry's future will now primarily depend on the ethanol program.

***

I got clarified yesterday about the Anti-Baha focus. And these are the floods that have invaded Sta. Clara, Mandalagan, Capitolville and other areas in the area, including Villa Valderrama.

And both Agnes Jalandoni and Jean Trebol pointed out to me that the reason they have been focusing on Sta. Clara's flooding is the fact that the drainage system of the subdivision is subjected to backing up when the tide rises by about one meter. Otherwise, the drainage of the subdivision is so big that even a battalion of troops can go through to it.

On the other hand, they asserted that we are not just focusing on Sta. Clara, but included all other areas of Bacolod which have been subjected to periodic floodings. "It is time that the city comes up with its drainage master plan," pointed out Ms. Jalandoni.

And, yes, while I had mentioned their refusal to allow the Baciwa to connect pipes of some subdivision homeowners, the two pointed out that it is an internal problem which the homeowners have decided to do by themselves – those who want Baciwa connections can do so as individually. And besides that, it has nothing to do with the flood problem, was how they pointed it out to me.

But, a warning to city officials. It is the city that had come up with their program of action. And that included a timeline of doing something before the end of November.

Hope the city officials do not temporize about the relocation of the illegal settlers.*

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