Diversifying the Sugarcane Industry

March 11, 2014

Part I: The PHL Sugarcane Industry

Vision and Roadmap

VISAYAS(18 mills + 7

refineries+ 3 distilleries)

MAP OF PHILIPPINE SUGAR MILLS & BIOETHANOL DISTILLERIESMAP 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

LE

YT

E

CE

BU

BUKIDNON

DAVAO DEL SUR

Davao

NORTH COTABATON

EG

RO

S

OC

CID

EN

TA

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

Present ProfilePhilippine Sugarcane Industry

contributes P76B to the economy

Present ProfilePhilippine Sugarcane Industry

contributes P76B to the economy

Sugarcane Farms

62,000 farmers 62,000 farmers and increasingand increasing

90% of farms are 90% of farms are 10 hectares & 10 hectares &

belowbelow

422,384 hectares 422,384 hectares of sugarcane of sugarcane plantations plantations

Productivity:Productivity:58 TC/Ha58 TC/Ha

1.99 LKg/TC1.99 LKg/TC

Sugarcane Farms

62,000 farmers 62,000 farmers and increasingand increasing

90% of farms are 90% of farms are 10 hectares & 10 hectares &

belowbelow

422,384 hectares 422,384 hectares of sugarcane of sugarcane plantations plantations

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 Bioethanol 4 Bioethanol DistilleriesDistilleries

35% Production 35% Production capacity of capacity of

mandated marketmandated market

Sugar Mills

28 Sugar Raw 28 Sugar Raw Mills Mills

- 202,500 MT/day- 202,500 MT/day14 Sugar 14 Sugar

RefineriesRefineries- 8,000 MT/Day- 8,000 MT/Day

70% capacity 70% capacity utilization of millsutilization of mills

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 Industri

es

Mill Support Industri

es

Fully Integrated Sugarcane IndustryY2027

Foundation for

Development

Support Activities

Goals

Vision

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

A Multi-Product Sugarcane Industry Towards Inclusive Growth

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

Increase Economic Contribution to P100 Billion

Sugar Self-sufficiency: Local Demand of 2.3 million MT meet

Annual exports of 150,000 mt sustainedBio-ethanol self-sufficiency:

Save dollars for 400 million liters gasoline annuallyUse of Green Renewable Fuel

Power Co-generation: 200 MW electric power delivered to the grid

Renewable fuel using bagasseLand Productivity Improvement:

40,000 to 100,000 hectares land more productiveEmployment of about 50,000 to 100,000 in rural

areasNew Products:New Industries and New Services Established

The ASEAN Economic Integration

in 2015:

Implications and PHL Preparations

PART II

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: Peso Peso

Exchange Exchange 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

Cost of Production per Hectare

₱60,000 ₱70,000 ₱80,000 ₱90,000 ₱100,000

Sugarcane Sugarcane Production Production per Hectare per Hectare (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

Industry Competitiveness Strategy

• Increase Farm Productivity

• Reduce Cost of Production

• Increase Mill Efficiency

• Diversify Product Stream to Increase Income of Producers

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

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

IDENTIFYING THE SUGARCANE FARM: MAPPING PER BARANGAY

BLOCK FARM Agribusiness Unit

DAR- organizational

devt - land tenure improvement

DA- Other crops

-InfrastructureSRA

- Technical Assistance

- Technology Transfer

DTI- Marketing

- InvestmentsDOLE

- skills Devt, Agriprenuership,

productivity improvement

DOE- ethanol & power

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.

MarketingInvestment

FARM SUPPORT INDUSTRIES: MUST BE PRIVATE BUSINESSES

SUGARCANE FARM

SUGARCANE FARM

Farm Manageme

nt & Technical

Consultancy

Tractor Services

Finance and

Financial Services

Supply of Fertilizer &

Other Inputs

Equipment Manufacturi

ng

Product Diversification

Harvesting and

Hauling Services

MILL SUPPORT INDUSTRIES: MUST BE PRIVATE BUSINESSES

SUGAR MILL / DISTILLERY

SUGAR MILL / DISTILLERY

Foundry and

Machine Shop

Engineering & Design

Construction

Repair and Maintenanc

e

Product Diversification

Equipment Design and

Manufacturing

SUGARCANE ECO-ZONES: RURAL DEV'T HUBS

SUGAR MILL / DISTILLERY

SUGAR MILL / DISTILLERY

Sugar-based Food

Manufacturing

Foundry and Machine

Shop

Block Farms

Equipment Manufacturin

g

Equipment Manufacturin

g

Consultancy & Advisory

Fertilizer & Input

Manufacturing

Bio-water, Bio-plastic &

other by- products

Bio-water, Bio-plastic &

other by- products

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

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

Website : www.sra.gov.ph

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

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