Sugar Asia Conference

Bangkok, ThailandMay 16-17, 2012

Cane Farms Sugar MillBioethanol

The Philippine Sugarcane Industry

“Challenges & Opportunities”

Presenters:Jose Rojo G. AlislaRosemarie S. Gumera

Sugar Regulatory AdministrationDepartment of AgriculturePhilippines

Profile of the Philippine Sugarcane Industry

Crop Year 2011-2012

Area Planted 420,000 Hectares

No. Farmers 62,000

No. of Operating Sugar Mills-Total Milling Capacity

29185,000 Tons Cane / Day

No. of Operating Sugar Refineries-Total Refining Capacity

148,000 MT/Day

No. of Bioethanol Distilleries-Total Annual Rated Capacity

4133 million liters

VISAYAS(18 mills + 7 refineries

+ 3 distilleries)

MAP OF PHILIPPINE SUGAR MILLS & BIOETHANOL DISTILLERIES

LUZON

(7 mills + 4 refineries + 1 distillery)

NEGROS

MINDANAO(4 mills + 3 refineries)

TARLAC

Batangas Sugar

CAMARINES SUR

PAMPANGA

CAGAYAN

ILOILO

CAPIZ

LEYTE

CEBU

BUKIDNON

DAVAO DEL SUR

Davao

NORTH COTABATONE

GRO

S O

CCID

ENTA

L

NEGROS ORIENTAL

LopezSa

Tolong

AGUSANDEL NORTE

BOHOL

LANAO DEL NORTE

MASBATE

MISAMISOCCIDENTAL

MISAMISORIENTAL

SAMAR

SURIGAODEL NORTE

SURIGAODEL SUR

ZAMBOANGADEL NORTE

ZAMBOANGADEL SUR

SOUTHCOTABATO

PALAWAN

Legend

MANILA

Sugar millsMills with annexed refineryMajor sugar ports

SAN CARLOS

5,000 HECTARES

Green Future Innovations

CAGAYAN / ISABELA

11,000 HECTARES

Bioethanol production areasPampanga 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

Distribution of Philippine Cane Areas, CY 2011-2012

Luzon

Mindanao

Panay

Eastern Visayas

Negros17,000 has.

Total Cane Area – 420,000 hectares

0 0.01 -

5.00

5.01 - 10.00

10.01 - 25.00

25.01 - 50.00

50.01 - 100.00

100.01 & above

-

20,000

40,000

60,000

80,000

100,000

No. of Farms

Cane Area, Hectares

No. of FarmsCane Area, Hectares

Profile of Philippine Cane Farms

75%

11 %

7 %4 %2 %1 %

Farm Sizes, Hectares

24% 12 %

15 %

15 %

16 %

18 %

Philippine Sugarcane Areas for the Past 10 Crop Years

350,000

360,000

370,000

380,000

390,000

400,000

410,000

420,000420,000

395,381

385,662 392,567

398,872

388,003

377,182

391,552 391,451

383,745

Area, Hectares

Crop Years

Philippine Cane & Sugar Production for the Past 10 Crop Years

Million MT

Crop Years

Philippine Farm Productivity for the Past 10 Crop Years

Philippine Sugar Production & Trade for the Past 10 Crop Years

Crop Year Pesos Per 50-kilo

bag

Peso-US $ Exchange

Rate

USCents/lb

2011-2012*

1,404 43.1529.58

2010-2011 1,864 43.4638.99

2009-2010 1,664 46.2132.74

2008-2009 945 47.9317.92

2007-2008 1,057 43.1022.29

2006-2007 844 48.1715.93

2005-2006 978 53.0116.77

2004-2005 664 55.5010.88

2003-2004 710 55.6811.59

2002-2003 843 53.4614.34

HISTORICAL PHILIPPINE RAW SUGAR COMPOSITE PRICES

* As of April 2012

Bioethanol Production, Liters

YearTOTAL

Production(Million Liters)

Mandated Bioethanol Blend

Mandated Volume

(Million Liters)

2008 0.368 Voluntary None

2009 23.11 5 % 208

2010 9.89 5 % 219

2011 4.14 10 % 461

2012* 12.00 (estimates as of

May 2012)

10 % 486

In 2012, around 486 million liters bioethanol is required under the 10% mandatedblend, however, only 4 distilleries are operational with a combined annual ratedcapacity of 133 million liters.

Power Situation in the Philippines2010 Power Generation by Plant Type, GWh

28,043

9,92921,678

7,803 288 GWh Coal

Geothermal

Oil-based

Hydroelectric

Wind / Biomass /SolarGross Power = 67,743 GWh

Total Electricity Sales in the Philippines, 2009 vs. 2010

0

10,000

20,000

30,000

40,000

50,000

60,000

17,5

04

14,7

56

17,0

84

1,52

3

50,8

67

18,8

33

16,2

61

18,5

76

1,59

6

55,2

66

2009

2010

GWh

2010 Installed and Dependable Capacity, Philippines

0

1000

2000

3000

4000

5000

6000

7000

8000

4,86

7

3,19

3

1,76

8

650

775

2,86

1

1,96

6 3,40

0

33 1 39

4,24

5

2,48

8

1,20

4

646

638

2,75

6

1,35

0

3,02

1

20 1 20

Dependable Capacity, MW

Installed Capacity, MW

Gross Installed Capacity – 19,553 MWGross Dependable Capacity – 16,389 MW

MW

CHALLENGES

• Sugar Tariff Schedules and Implications

• Maintaining Profitability in the Philippine Sugarcane Industry

• Performance of Philippine Sugar Mills and Deterrents to Mill Improvements

• Implementation of the Biofuels and Renewable Energy Laws

Sugar Tariff Schedules and Implications

AFTA – CEPT Tariff

Schedule:

2011 - 38 %

2012 - 28 %

2013 - 18 %

2014 - 10 %

2015 - 5 %

Implications:• Entry of imported sugar would threaten

the livelihood of the 62,000 farmers

and 600,000 workers of the

Philippine sugarcane industry

• Entry of imported sugar will push

downwards the millsite price of locally-

produced sugar

Maintaining Profitability in the Philippine Sugarcane Industry

• Fragmented farms due to the Comprehensive

Agrarian Reform Law

• Small farms have low farm productivities

• Small farmers have no financial capability in

procuring the necessary farm inputs

• Lacks infrastructure support from government

Performance of Philippine Sugar Mills and Deterrents to Mill Improvements

• Less efficient sugar mills, low capacities

• Majority of Philippine mills need to be

rehabilitated and upgraded

• Lack of financial package from government

financing institutions

Implementation of the Biofuels and Renewable Energy Laws

• Uncertainty in the buying price of bioethanol –

how successful is the implementation of the price

index of locally-produced bioethanol

• Feed-in-tariff rate for biomass is still pending

with the Philippine Energy Regulatory Commission

• Prospects for Cane Expansion Areas

• Access to Japan Sugar Market thru PJEPA

• Creating Greater Value for Sugarcane

• Bioethanol Production

• Power Cogeneration

• Increased Farm Mechanization Due to Labor

Supply Shortage

• Sustaining Domestic Requirement and

Maintaining World and US Quota Exports

OPPORTUNITIES

Prospects for Cane Expansion

Areas• Most Philippine sugar mills are underutilized due to the lack of cane supply

• Development of expansion areas for sugarcane to supply the feedstocks

for bioethanol fuel

Access to Japan Sugar Market thru

PJEPA• Proposal of the Philippine gov’t under the Phil.-Japan Economic Partnership

Agreement (PJEPA) for a TRQ of 150,000 MT raw cane sugar with an

in-quota rate of 4.415 yen per kilo and 1,000 MT of muscovado sugar

with an in-quota rate of 17.65 yen per kilo.

Creating Greater Value for Sugarcane

• Product diversification or development of alternative or

high-value products

• Production of organic sugar

• Turning a community of small cane farmers into an

agribusiness enterprise

Bioethanol Production

• Thirteen more distilleries with an annual capacity of

30 million liters are required to meet the volume requirement

of the 10 % mandate of bioethanol blend

Power Cogeneration

• Existing power generating capacity of all the sugar mills in the

Philippines is 200 megawatts;

• Given the right investment environment, the boilers and power

generators of such mills can be upgraded up to 600 megawatts

making available 400 megawatts for power cogeneration

• The Philippines is currently experiencing power shortages and

the power generated by the sugar mills could help solve the

country’s problem on power deficit

Increased Farm Mechanization Due to Labor Supply Shortage

• Farm laborers in the Philippines became scarce and the

new generation are no longer inclined in farming but

preferred to work overseas

• The shortage of farm labor triggered the shift to farm

mechanization in the Philippines

Sustaining Domestic Requirement and Maintaining World and US Quota Exports

• The Philippines has to be a net exporter of sugar by 2015 in

order to be in the offensive move rather than be flooded with

imported sugar

• More opportunities for investment in mill

modernization, infrastructure and farm and equipment are

seen to flourish in the Philippines given the need to be

competitive in world sugar production

Thank You

Website : www.sra.gov.ph

Email : srahead@sra.gov.ph info@sra.gov.ph

Tel. No. : (632) 929-3633 (632) 455-2135