AGRICULTURE Secretary Arthur Yap was quoted in a Business World story dated July 1 as saying that to fully realize its diversification potentials in bioethanol production and electric power generation, the sugar industry needs P15 billion. That’s roughly the cost of two Smartmatic projects, dagdag-bawas a couple of millions, of the Comelec’s poll automation program!

"The business of sugar millers should not just be in producing sugar anymore. There has to be co-generation in power and there has to be energy for fuel for transport," Mr. Yap reportedly said. The modernization of sugar mills will allow the industry to tap additional revenue streams, thereby making their production capacities more efficient and their profit margins more favorable.

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In the same article, Philippine Sugar Millers Association executive director Archie Amarra said that "we have the capability [to produce electricity], except we will have to increase boiler pressure and put in a new generator." Marriz B. Agbon, president of the Philippine Agricultural Development and Commercial Corp., added that "bioethanol can already be produced if you add additional distillation columns in the mill."

According to Secretary Yap, he has already asked permission from PGMA to make available the resources of government financial institutions for sugar mills who want to go into power generation. While Secretary Yap is focusing on this issue, he might as well include financing for sugar mills which wish to produce ethanol.

The industry has excess sugar production. Its mills have the capacity to produce ethanol and, they are already generating electric power for their own needs, freeing thousands of watts of electric power produced by other power generators for use by businesses and industries.

The sugar sector needs financing and access to modern technology to maximize its production capacities. These diversification endeavors will increase the demand for sugarcane. The industry will then produce only enough sugar for domestic consumption, sparing the producers the agony of selling excess sugar to the world market at prices below production cost. All excess cane will go into ethanol production.

Imagine the day when all sugar mills in the country can produce not only sugar and molasses but also ethanol fuel for vehicles and electric power for businesses and industries!

The industry should not stop producing sugar to ensure the country’s food security. Right now, world raw sugar futures reached almost 18 US cents per pound or about P950/LKg, excluding freight, premiums, handling and profit-margin. Its landed cost will definitely be higher than yesterday’s millgate prices of P1,075/LKg in Bukidnon, P1,060/LKg in Hawaiian and P1,040/LKg in Lopez.

Without modernization and diversification, sugar prices cannot be expected to improve. Sugar farmers might turn to other crops, resulting to a production shortfall and necessitating the importation of sugar. At present world sugar price levels, imported sugar’s landed cost is higher than the price of locally-produced sugar. Both producers and consumers will be at the losing end in this scenario.

Energy Secretary Angelo Reyes has repeatedly warned of a looming power shortage in the country. The National Biofuels Board admits that domestic ethanol production does not even reach 20% of the required volume for the minimum 5% blend, much less for the 10% to 15% blend required a few years from now.

The industry is in the position to secure the country’s food security and energy self-sufficiency. Government should act with extreme dispatch in providing the needed financing and technology for the modernization of the sugar industry.

As my friend Maning Diaz so aptly puts it, “Words are fleeting unless they are put into writing.” And immediately and zealously put into action, I might add.

Yap, that’s true.

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