Problems & Constraints of the Industry

The following are the identified problems and constraints that hinder the growth and expansion of the sugar industry in the Philippines, specifically in the Bicol Region and the province of Camarines Sur:

1. Low Productivity

Records show that the average yield of sugarcane per hectare in Bicol and Camarines Sur in crop year 2000-01 is 43 ton or 50.52 bags of sugar per hectare, which is 39% way behind the average yield of 70 tons/ha of sugarcane or 70 bags of sugar in Bukidnon and Negros sugar districts.

Following are some of the factors that contribute to low farm productivity of sugarcane plantation in the region/province:

a). Use of Old released Variety

Sugarcane planters in the districts are not particular in choosing the right cane variety to use. Majority about 65% still use the old variety, Phil 6667, Phil 56226 and Phil 6723 released in 1974. Some other, about 13% practiced the use of mix varieties (Refer to Table 3).

b) Inability of Many Farmers to Apply the Necessary Farm Inputs

Majority of the planters about 83% are considered small farmers (below 5 hectares) with income below the poverty level hence cannot afford to sustain the input requirement in sugarcane farming without outside financial support. As they are relying solely from the releases of production loan from cooperatives and or PENSUMIL, right time and rate of application of fertilizers and other farm inputs is hardly observed. Fertilizer application is usually late and most of the time one time application only.

c) Solely Dependent from Rain Water for Irrigation

Almost all sugarcane plantations are dependent on rainfall for its water requirement. Hence time of application of fertilizer is affected. Based on PATDAN reports, irrigation can increase yield to as much as 100 MT cane per hectare, which means an increase of 78.6% from the present national average of 56 MT per hectare and 132.5% from 43 MT per hectare for Bicol.

d) High Cost of Starting Capital and Production Inputs

Sugarcane production requires quite big amount ranging from P 31,000.00 to P 36,000.00 (please refer to Annex Table 7) as starting capital for a hectare plantation. Of these, 18% accounts for planting materials and 14% for fertilizer. For the period 1995 to 1999, price of farm inputs especially fertilizer continue to increase at a rate of 4.38% per annum. (Refer to Annex Table 6)

e) Lack of Technology/Knowledge and Facilities on Proper Land Preparation Technique and Method

Majority of sugarcane planters especially small farmers still use animal-drawn disc plow in land preparation such as plowing and harrowing. Very few farmers, only big planters with machineries employ mechanical land preparation. Available units are not sufficient to serve small farmers in the neighboring area and not big enough to accommodate sub-soiler.

2. Production credit is not available to producers especially to small farmers

Production loan for sugarcane production is normally served to farmers by lending institutions like Philippine National Bank, Land Bank of the Philippines and rural banks. But as reported by BISUPLA and SRA, these banks are no longer providing loans since 1994. This resulted from poor loan repayments by farmers during the crop years 1993-94 and 1994-95. Many sugarcane plantations at that time were devastated by super typhoon thus resulted to low sugar production and income.

At present, planters are relying mainly to PENSUMIL offering a 60-80% financial assistance of the total farm inputs. It started on crop year 1993-94 at an interest of 24% per annum, now 18% compounded monthly for cooperatives and farmers with at least 5 hectares area cultivated. Small farmers with area below 5 hectares are advised to secure loans from their respective cooperatives, which are funded also by PENSUMIL. The cooperative in turn charge an additional service charge of 0.5% per month or 30% per year, which is 150 % higher than LBP interest charges of 12% per annum.

3. Poor condition and lack of farm to market roads contribute to delayed in delivery and lower recovery.

4. Technology transfer and proper technology application are inadequate.

On Cane Milling Sector

1. Low Capacity Utilization

The local mill district facility is operating below capacity. Over the past five years from 1992-93 to 1995-96, the mill average capacity utilization is only 49.02%compared to national average of 60.21%. This can be attributed to insufficient cane supply due to decreasing area planted that often results in intermittent mill operations. SRA reports that aside from the weekly shutdown for cleaning and repairs, the mill remains idle for 17% of the time due to cited above reasons, which lowers mills efficiency and correspondingly increases production cost. Reasons such as conversion of sugarcane plantation to competing crops, industrialization/ urbanization, disintegration/fragmentation as a result of CARP implementation and environmental degradation are among some cited causes of decreased in land area devoted to sugarcane (PATDAN Report).

2. Low Mill Recovery/Efficiency

Records show that Philippines mills, with an average over all recovery (OAR) of 79.01%, lag behind their foreign counterparts when it comes to mill performance. Compared with an international norm of 90% mechanical time efficiency (MTE), the local mills' 86% is low (PATDAN Report).

In Bicol, specifically the PENSUMIL district, the mill's records of performance show a decreasing efficiency as evidenced by percent pol extraction that has decreased to an average of 89% in crop year 1996-2001 compared to 93.91% in crop year 1975-1980. Also, with the percent loss of pol in molasses, bagasse, filter cake and unidentified source that has almost doubled, from an average of 17.98% in crop year 1975-80 when it started, to an average of 33.04% in 1996-2001 indicates that the mill has mechanical problem that needs immediate attention. Other parameters like PS/TC and LKG/TC likewise show a decreasing trend. PS/TC has decreased to an average of 0.96 in crop year 1996-2000 compared to 1.52, 1.14 and 1.23 in the years 1975-1980, 1981-1990 and 1991-1995, respectively. On the other hand, LKG/TC has decreased to an average of 0.97 in crop year 1996-2000 from an average of 1.90 in crop year 1975-80 (refer to Annex Table 8). However, these are not only affected by milling but majority by the kind and quality of cane delivered for processing.