Diversifying the Philippine Sugar Industry 2014 Update - by the SRA

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Presentation file by the Sugar Regulatory Administration; for use by Agribusiness Research class 2014-2015

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Diversifying the Philippine Sugar Industry 2014 Update - by the SRA

  1. 1. Diversifying the Sugarcane Industry March 11, 2014
  2. 2. Part I: The PHL Sugarcane Industry Vision and Roadmap
  3. 3. VISAYAS (18 mills + 7 refineries + 3 distilleries) MAP OF PHILIPPINE SUGAR MILLS & BIOETHANOLMAP OF PHILIPPINE SUGAR MILLS & BIOETHANOL DISTILLERIESDISTILLERIES LUZON (7 mills + 4 refineries + 1 distillery) NEGROS MINDANAO (4 mills + 3 refineries) TARLAC Batangas Sugar CAM ARINES SUR PAMPANG A CAGAYAN ILOIL O CAPI Z LEYT E CEB U BUKIDNO N DAVAO DEL SUR Dava o NORTH COTABATO NEGROS OCCIDENTAL NEGROS ORIENTAL Lopez Sa Tolong AGUSAN DEL NORTE BOHO L LANAO DEL NORTE MASBAT E MISAMIS OCCIDENTA L MISAMIS ORIENTA L SAMA R SURIGAO DEL NORTE SURIGAO DEL SUR ZAMBOANGA DEL NORTE ZAMBOANGA DEL SUR SOUTH COTABATO PALAWAN Legend MANIL A Sugar mills Mills with annexed refinery Major sugar ports SAN CARLOS 5,000 HECTARES Green Future Innovations CAGAYAN / ISABELA 11,000 HECTARES Bioethanol production areas Pampanga Bioenergy 7,000 HECTARES PANAY BATANGAS Bioethanol target areas Canlaon Alcogreen 5,000 HECTARES Bioethanol Distilleries CAVITE Cavite Biofuels 7,000 HECTARES N S EW
  4. 4. Present Profile Philippine Sugarcane Industry contributes P76B to the economy Present Profile Philippine Sugarcane Industry contributes P76B to the economy Sugarcane Farms 62,000 farmers62,000 farmers and increasingand increasing 90% of farms90% of farms are 10 hectaresare 10 hectares & below& below 422,384422,384 hectares ofhectares of sugarcanesugarcane plantationsplantations Productivity:Productivity: 58 TC/Ha58 TC/Ha 1.99 LKg/TC1.99 LKg/TC Sugarcane Farms 62,000 farmers62,000 farmers and increasingand increasing 90% of farms90% of farms are 10 hectaresare 10 hectares & below& below 422,384422,384 hectares ofhectares of sugarcanesugarcane plantationsplantations Productivity:Productivity: 58 TC/Ha58 TC/Ha 1.99 LKg/TC1.99 LKg/TC Power Generation - all mills are self- sufficient on power - 2 mills and 2 distilleries are supplying to the grid - 5 mills are preparing to supplying to the grid Bio-ethanol Producers 4 Bioethanol4 Bioethanol DistilleriesDistilleries 35% Production35% Production capacity ofcapacity of mandated marketmandated market Sugar Mills 28 Sugar Raw28 Sugar Raw MillsMills - 202,500- 202,500 MT/dayMT/day 14 Sugar14 Sugar RefineriesRefineries - 8,000 MT/Day- 8,000 MT/Day 70% capacity70% capacity utilization ofutilization of millsmills
  5. 5. Highly- Efficient Mills 10 Bioethanol Distilleries Sugar Mills Generating 500 MW power Specialty Sugar, Bio Water, Bio Plastics, etc. Expansion of Sugarcane Areas and Increase in Number of Large Farms (Block Farming) Sugarcane Eco-zones Farm Support Industrie s Mill Support Industrie s Fully Integrated Sugarcane Industry Y2027 Foundation for Development Support Activities Goals Vision
  6. 6. Vision Fully Integrated Sugarcane Industry Sugar, Ethanol, Power & Others (Bio-water, Bio-plastic, etc) Vision Fully Integrated Sugarcane Industry Sugar, Ethanol, Power & Others (Bio-water, Bio-plastic, etc) Highly Productive Sugarcane Farms - 75 tons per hectare (national average) - 2.1 bags per ton cane sugar recovery Highly Productive Sugarcane Farms - 75 tons per hectare (national average) - 2.1 bags per ton cane sugar recovery Sugar Mills and Distilleries Supplying Power To the Electric Grid - 200 MW sold to the grid Highly Efficient Bio- ethanol Distilleries - producing 100% of volume required of PHL mandatory blend - Highly Efficient Sugar Mills - 80% milling capacity utilization - 85% sugar recovery Production of other sugarcane- based products - bio-water - bio-plastic - muscovado sugar - specialty sugars - others Production of other sugarcane- based products - bio-water - bio-plastic - muscovado sugar - specialty sugars - others
  7. 7. A Multi-Product Sugarcane Industry Towards Inclusive Growth
  8. 8. Raw Sugar • Bio-Power (electricity) • Bio-water • Bio- fertilizer • Bio-plastic • Battery Refined Sugar Molasses Traditional Products from SUGARCANE Future Products from SugarcaneFuture Products from Sugarcane Future Products from Sugarcane
  9. 9. Increase Economic Contribution to P100 Billion Sugar Self-sufficiency: Local Demand of 2.3 million MT meet Annual exports of 150,000 mt sustained Bio-ethanol self-sufficiency: Save dollars for 400 million liters gasoline annually Use of Green Renewable Fuel Power Co-generation: 200 MW electric power delivered to the grid Renewable fuel using bagasse Land Productivity Improvement: 40,000 to 100,000 hectares land more productive Employment of about 50,000 to 100,000 in rural areas New Products: New Industries and New Services Established
  10. 10. The ASEAN Economic Integration in 2015: Implications and PHL Preparations PART II
  11. 11. NY #11: World Market Price ($US cents per pound)NY #11: World Market Price ($US cents per pound) US$0.14 US$0.15 US$0.16 US$0.17 US$0.18 Dollar:Dollar: PesoPeso ExchangeExchange RateRate ₱40.00 ₱896.80 ₱943.00 ₱989.20 ₱1,035.40 ₱1,081.60 ₱41.00 ₱912.97 ₱960.33 ₱1,007.68 ₱1,055.04 ₱1,102.39 ₱42.00 ₱929.14 ₱977.65 ₱1,026.16 ₱1,074.67 ₱1,123.18 ₱43.00 ₱945.31 ₱994.98 ₱1,044.64 ₱1,094.31 ₱1,143.97 ₱44.00 ₱961.48 ₱1,012.30 ₱1,063.12 ₱1,113.94 ₱1,164.76 ₱45.00 ₱977.65 ₱1,029.63 ₱1,081.60 ₱1,133.58 ₱1,185.55 Tariff Rate: 5% Shipment & Other Costs: P250.00 per bag Sensitivity Analysis of Imported Raw Sugar Price at 5% Tariff
  12. 12. Cost of Production per Hectare ₱60,000 ₱70,000 ₱80,000 ₱90,000 ₱100,000 SugarcaneSugarcane ProductionProduction perper HectareHectare (tons/Ha.)(tons/Ha.) 40 ₱1,111 ₱1,296 ₱1,481 ₱1,667 ₱1,852 50 ₱889 ₱1,037 ₱1,185 ₱1,333 ₱1,481 60 ₱741 ₱864 ₱988 ₱1,111 ₱1,235 70 ₱635 ₱741 ₱847 ₱952 ₱1,058 80 ₱556 ₱648 ₱741 ₱833 ₱926 90 ₱494 ₱576 ₱658 ₱741 ₱823 Sharing: 67.5% Planter share Sugar Recovery: 2.0 LKg/TC Sensitivity Analysis on Cost of Production Per 50-kg Bag Raw Sugar
  13. 13. Industry Competitiveness Strategy • Increase Farm Productivity • Reduce Cost of Production • Increase Mill Efficiency • Diversify Product Stream to Increase Income of Producers
  14. 14. Preparations for the ASEAN Integration in 2015 1. Productivity Improvement - Technology Adoption - Block Farming 2. Industry Diversification - Now Sugarcane Industry - not just a sugar industry - Diversified products of Sugar, Ethanol and Power 3. Responsive Regulatory Framework - Enactment of rules and its proper and transparent implementation 4. Development of Infrastructure Support - Improvement of Farm-to-mill roads, irrigation, mechanization 5. Active Market Research 6. Enactment of the Sugarcane Development Act
  15. 15. Development Imperatives • Active Government Support • Productive Public-Private Partnership • Strong Research and Development (R&D) • Innovative Technology Transfer System • Responsive Support Industries for the Farms, Mills and Distilleries • Responsive Financial and technical assistance packages
  16. 16. IDENTIFYING THE SUGARCANE FARM: MAPPING PER BARANGAY
  17. 17. BLOCK FARM Agribusiness Unit DAR - organizational devt - land tenure improvement DA - Other crops -Infrastructure SRA - Technical Assistance - Technology Transfer DTI - Marketing - Investments DOLE - skills Devt, Agriprenuership, productivity improvement DOE MDDC: Conduit of Initiatives & Coordination INCREASING NUMBER OF LARGE FARMS: BLOCK FARMING Service Provider Farm Management & Technical Consultancy Equipment Services Finance and Financial Services Support Services Planters Association/ Sugar Mills/ Ethanol Distilleries/ Industrial Users Enterprise Dev't. Marketing Investment
  18. 18. FARM SUPPORT INDUSTRIES: MUST BE PRIVATE BUSINESSES SUGARCANE FARM SUGARCANE FARM Farm Management & Technical Consultancy Tractor Services Finance and Financial Services Supply of Fertilizer & Other Inputs Equipment Manufacturing Product Diversification Harvesting and Hauling Services
  19. 19. MILL SUPPORT INDUSTRIES: MUST BE PRIVATE BUSINESSES SUGAR MILL / DISTILLERY SUGAR MILL / DISTILLERY Foundry and Machine Shop Engineering & Design Construction Repair and Maintenance Product Diversification Equipment Design and Manufacturing
  20. 20. SUGARCANE ECO-ZONES: RURAL DEV'T HUBS SUGAR MILL / DISTILLERY SUGAR MILL / DISTILLERY Sugar-based Food Manufacturing Foundry and Machine Shop Block Farms Equipment Manufacturing Equipment Manufacturing Consultancy & Advisory Fertilizer & Input Manufacturing Bio-water, Bio- plastic & other by- products Bio-water, Bio- plastic & other by- products
  21. 21. MILL DISTRICT DEVELOPMENT COUNCIL (MDDC) MDDC: Managing the Dev't of the Mill District MDDC: Managing the Dev't of the Mill District Farm-to-Mill Road HYV Planting Irrigation Farm Database Crop Estimate Equipment Services
  22. 22. How the Sugarcane Act Can Help • Task concerned government agencies to support the industry • Provide development funds for improvement of the farms and mills • Line budget funds for farm-to-mill roads and irrigation systems • Incentives to Block Farms • Mandate the creation of Sugarcane Eco-zones • Framework for development of other sugarcane-based products
  23. 23. Website : www.sra.gov.ph Email : srahead@sra.gov.ph info@sra.gov.ph Tel. No. : (632) 929-3633 (632) 455-2135

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