Marketing Practices

The marketing of sugar in the Philippines is already well established. This starts with the delivery of harvested millable canes to the mill where, under the present system, the sugarcane planter agrees to allocate certain percent (in Bicol forty (40)%) of the output of his sugar and molasses with the mill in payment for the processing of the cane.

As soon as the sugar is processed, a warehouse receipt called quedan is issued to planters by the mill representing his 60% share of the sugar and molasses, which after milling, is stored in the mill warehouse. This document attesting to the physical presence of the sugar and molasses in the warehouse is negotiable thus it allows the bearer to withdraw the stocks anytime. Two types of quedan is being issued by the mill as follows; A for sugar allocation for the US market in compliance with the country's quota requirements; and B for sugar for the local /domestic market. The proportion of sugar that goes to the different types of quedan is being determined by the Sugar Regulatory Administration (SRA). In Bicol, it is set at 8% for export and 92% for domestic market.

The flow of sugar for the domestic market follows an established pattern. After getting the quedans, the planters usually sell these immediately to the traders who in turn, sell them to bigger traders who accumulate the quedans and subsequently sell the volume sugar either to the wholesalers, the distributors or to the processors. The processors use the sugar as input for processing while the wholesalers and distributors sell their sugar to the retailers. The sugar eventually reaches the consumers through supermarkets, wet markets & sari-sari stores. (Figure 2)

For Bicol mill district, quedan withdrawal and marketing of sugar and molasses depends on individual loan status. Planters who have no standing loans from the PENSUMIL can withdraw and market their own product share, while those with outstanding loans received only the net surplus after loan repayments. Generally farmers sold their share to cooperatives where they are affiliated or to PENSUMIL itself. Sugar produced/stocks at the mill is sold only to accredited traders. These accredited traders are either viajeros engaged in buying and selling of sugar and other prime agricultural commodities or cooperatives, which at the same time sugarcane producers. The trader-viajeros supply the sugar requirements of the province and of the entire Bicol during milling and off-milling season. During milling season, they bought the sugar produced by the local mill and sold to traders and wholesalers in Metro Manila. According to them, local traders and consumers prefer the raw sugar produced in other sugar districts because of its lower price. Raw sugar produced in PENSUMIL is of best quality thus commands higher price and according to traders interviewed, this best fit the quality requirement of consumers in Metro

Manila. Sugar requirement for Bicol is supplied by these trader-viajeros from other sugar districts such as in Visayas, Negros and Cebu.

The identified market channels for sugar in Bicol are the accredited trader/viajeros, wholesaler/retailers and food processors/manufacturers (Figure 3).