IT IS no longer efficient and profitable for sugarcane planters to mill their sugarcane harvest at Cebu’s oldest and only sugar milling firm, Bogo-Medellin Milling Company Inc. (Bomedco), according to an official of a group of sugarcane planters in Cebu.
Since the 2022-2023 milling season, the planters have already been milling their harvest in the neighboring province of Negros Occidental, Al Lim, president of the Bogo-Medellin Sugarcane Planters Association Inc., told SunStar Cebu on Monday, August 7, 2023.
He is currently the vice mayor of the municipality of Medellin, regarded as the sugarcane bowl of Cebu.
The sugarcane planters group currently has 98 members, tilling around 2,500 to 2,800 hectares of sugarcane plantation in Medellin.
The relationship between the planters and the milling firm has not been good due to the operational inefficiencies of Bomedco, Lim said, adding that the 94-year-old facility located in Barangay Luy-a, Medellin was also on the brink of permanent closure, due to years of incurred operational and business losses.
“They are not anymore capable to operate the mill. Katung ilahang giingon nga ready sila nga mo-operate og balik (What they said about being able to operate again), I challenge them,” Lim said.
Lim was referring to the July 27, 2023 disclosure of Bomedco at the Philippine Stock Exchange (PSE) Inc. website clarifying a news article about its announcement of the “temporary shutdown until further notice” of its milling operations starting January 2023.
Bomedco blamed its suspension of milling operations on sugar planters’ delivery failing to satisfy its rated capacity of 2,500 tons.
Bomedco assured that measures had been put in place to settle the issue of the insufficient delivery of sugarcane from the planters that had affected its milling operations. And it said the rest of the company’s farming and agricultural services were ongoing.
Bomedco is a publicly listed company on the PSE. It first started operations on June 4, 1928, with a production capacity of 3,000 tons of sugarcane which are processed into sugar.
On Wednesday, August 9, SunStar Cebu reached out to Melbert Mepieza, general manager of Bomedco, for comment; however, he declined to comment, saying they still needed to get clearance from the milling firm’s chairman.
Mepieza added that the firm is currently setting in motion the measures towards settling the issue with the planters, which he declined to specify.
More profitable
Lim said it was more profitable for planters to mill their harvest on the neighboring island of Negros, despite the close proximity of Cebu’s oldest and only milling firm.
It started in the 2019-2020 milling season when a few of their members discovered that milling their harvest at Lopez Sugar Corp. and the Sagay Central Inc. in Sagay City, Negros Occidental yielded more raw sugar where the profit also enabled them to recover the cost of shipping their sugarcane to the neighboring island.
It was followed by more than half of the group in the 2021-2022 milling season, and finally all of its members, shipping and milling their harvest in Negros Occidental rather than in Bomedco.
This was due to Bomedco’s milling equipment that was already inadequate and outdated, which Lim said had not been replaced since the firm’s inception in 1928.
The result is low yield of raw sugar in terms of the number of bags produced, affecting the profit of the sugarcane farmers, resulting in their operating at a loss most of the time.
He added that sugarcane farmers were already struggling from the high cost of inputs such as the fertilizers, in addition to other expenses.
The country’s continued reliance on importation added to the farmers’ dilemma as this also affected their production when the government tended to prioritize less the local production of sugarcane.
Production decline
In the 2016-2017 season, Bomedco produced around 500,000 bags, a bag containing 50 kilos of raw sugar. However, Lim said that after this, it started to decline until in the 2021-2022 milling season when it produced only around 90,000 bags.
A ton of sugarcane harvest can produce on average of 1.28 bags of raw sugar in Bomedco, which is far lower than the average 1.84 bags produced by the milling firms in Negros Occidental.
He added that Bomedco gets a share of 36 percent, while the planter gets 64 percent of every bag of raw sugar produced, while in Negros Occidental, the farmer enjoys 70 percent to the 30 percent share of the milling firm.
This percentage of the share of the bags of raw sugar serves as payment for every milling transaction.
Lim said a bag of raw sugar milled in Sagay City was priced at P3,000 based on last year’s milling season.
“Bisan og dako pa ang gasto didto (in Negros Occidental), ang turnover namo kay bawi ra kaayo. Laliman ka anang half bag ang diperensya for every ton?” Lim said.
(Even if we spend a lot there in Negros Occidental, we can recover our costs. Can you imagine the difference of a half bag for every ton?)
Sugarcane planters can also enjoy the transportation allowance from Sagay Central, which is P6,000 for every 10,000 tons or P9,000 for every 15,000 tons.
A single truck can transport 15,000 tons of sugarcane. So if the travel expense totals P11,000, Lim said that with the P9,000 allowance, he only needed to spend P2,000 from his own pocket for shipping his harvest to Sagay City.
During the milling season, Lim said he could ship 12 trucks of harvested sugarcane in a week to Negros Occidental.
Lim said September 1, 2023 is the start of the new milling season, and they are now preparing to ship their harvest to Negros.