A VERY prosperous, peaceful and successful new year to all the avid readers of Cane Points! It has been slightly over a year since I started this column upon the invitation of Mr. Jimmy Golez and I find it very fulfilling to write about the industry, which has played a lead role in shaping the history and fueling the development of the province.
This opportunity to disseminate relevant information and to share my thoughts with you is just one of the blessings which came last year. Before we contemplate what the year ahead has in store, it is best to look back and thank God for the graces He showered upon us in 2009. Surely, there will be countless reasons for which to be grateful, not the least of which is the fact that we and our families are still alive and well this 2010.
* * *
2009 was a very encouraging year for the sugar industry. Domestic sugar prices reached levels which most producers did not even dream of. Take, for instance, the comparative composite prices of sugar in Negros for November and December of CY '08-'09 and CY '09-'10.
The percentage allocation during November '08 was A = 10%, B = 68%, C = 15% and D = 7%. Prices for A sugar was just a little over P800 per bag while B sugar barely surpassed the P1,000 per bag level. Worse, the 7% allocation for D sugar fetched only P600 or so per bag while C sugar was between P850 to P900 per bag. Thus, for November '08, composite price per week ranged between only P926 to P961 per bag.
For November '09, the allocation was A = 4%, B = 90%, and C1 = 6%. US quota sugar sold for more than P1,300 per bag, domestic sugar reached more than P1,400 per bag while even the strategic reserve eventually sold at P1,250 per bag. Thus, composite prices for November '09 was more than P1,300 per bag compared to less than P1,000 for the same period in 2008.
December '08 was even bleaker than November '08 prices for Negros because D sugar, which was split into De (for ethanol) and Dx (for export to the world market) fetched even lower prices than those of November '08. De sugar sold at slightly above P600 per bag while Dx sugar prices were only between P552 to P592 per bag. Thus, December '08 composite prices per week did not even reach P900 per bag.
December '09 was a different story altogether as domestic sugar prices surpassed the P1,500 per bag level while US quota and strategic reserve sugar sold at more than P1,400. On top of that, molasses fetched more than P6,000 per ton, even reaching more than P6,500 per ton in some mills.
The past year, particularly from the start of the current crop year, was very encouraging, indeed. However, as shown by the comparative composite prices, CY '08-'09 was not a very good year. During the crop years before that, the sugar producers took a beating with the double whammy of low sugar prices and very high fertilizer and fuel costs.
The poor prices and other challenges of the past several crop years before this current crop year discouraged the other producers from continuing with sugar farming. Fortunately, the country has stouthearted sugarmen who continue to plant sugarcane year in and year out, whether sugar fetches poor or good prices.
Had it not been for the persistence and faith of these sugarmen, the country will suffer the fate of other countries that are right now scrambling to secure their sugar supplies. The global sugar deficit had made it possible for these stouthearted sugar producers to enjoy the present high prices. They should not be begrudged of this benefit as they are only reaping the rewards of their courage and persistence.
* * *
What's in store for the rest of CY '09-'10 this 2010? Though Nostradamus or Madame Auring might have an idea, only God knows for sure. I tried reading the veins that are starting to appear at the back of my hands for any clue but I'm sure you will not be interested in data from that kind of source.
Suffice it to say that SRA has noted a "significant" increase in raw and refined sugar withdrawals in the Visayas from the start of the crop year up to the middle of December last year when compared to the same period in 2008. Domestic demand has spiked despite the high millgate sugar prices.
Does this mean that Filipinos all of a sudden developed a greater craving for the sweetener despite the allegedly high retail prices of sugar? Or is the industry finally looking at the "true" sugar consumption of Filipinos?
Producers often bewail that sugar consumption refused to increase in proportion with the growth in population. When sugar prices plummet, some sectors in the industry were quick to point at smuggling as the cause of the price drop. Allegedly, the entry of cheaper smuggled sugar lessened the demand for domestically produced sugar, thereby resulting to low domestic sugar prices.
That might be true when world sugar prices were way below domestic prices. Now, from $25.59 cents in September '09, world sugar prices reached more than $27 cents per pound last December 31. At these price levels, smuggling is no longer profitable because the landed cost of the smuggled sugar will be higher than present millgate prices.
World sugar prices are still expected to reach $ 30 cents per pound this crop year due to the very tight supplies. With the elimination of competition from smuggled sugar and with the significant increase in domestic sugar withdrawals, you won't need Nostradamus nor Madame Auring to have an idea which way the wind is blowing.
(For reactions and suggestions, email email@example.com.)