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2009

V

A

ALUE CHAIN

NALYSIS OF

EGROS

USCOVADO

DUSTRY

N

M

IN

A

by

study commis ICCO

OF EGROS USCOVADO DUSTRY N M IN A by study commis ICCO Prepa red by: STRAT

Prepa

red by:

USCOVADO DUSTRY N M IN A by study commis ICCO Prepa red by: STRAT EGIC DEVELOPMENT

STRAT

EGIC DEVELOPMENT COOPERATION, A

THE

sioned

1

DUSTRY N M IN A by study commis ICCO Prepa red by: STRAT EGIC DEVELOPMENT COOPERATION,

SIA (SDCAsia)

A by study commis ICCO Prepa red by: STRAT EGIC DEVELOPMENT COOPERATION, A THE sioned 1

TABLE OF CONTENTS

 

CO TE TS

PAGE

 

O.

EXECUTIVE SUMMARY

5

1. EGROS’S POSITIO I THE PHILIPPI E MUSCOVADO

17

I

DUSTRY

 

A. MUSCOVADO PRODUCTION

17

 

B. IN MAJOR MARKET SEGMENTS

17

2. CHARACTERISTICS OF THE MUSCOVADO VALUE CHAI I EGROS

19

 

A. PRODUCTS

19

 

B. PRODUCTION TREND

20

 

C. VALUE CHAIN PLAYERS

21

 

D. FIRM LEVEL UPGRADING

33

 

E. INTER-FIRM COOPERATION

42

3. E D MARKET A ALYSIS

45

 

A. EXPORT MARKET TRENDS

45

 

B. DOMESTIC MARKET

46

 

C. MARKET STANDARDS/REQUIREMENTS

48

4. SUPPORT MARKET

50

 

A. PROVIDERS

50

 

B. DONOR PROGRAM

53

 

C. RECOMMENDED PROVIDERS (from ICCO commissioned study)

53

5. E ABLI G E VIRO ME T

 
 

A. ON SUGAR TARIFF AND TRADE LIBERALIZATION

55

 

B. LEVY IMPOSED ON SMALL FARMERS

55

 

C. GOVERNMENT SUPPORT FOR THE MUSCOVADO INDUSTRY

56

 

D. DOMESTIC SUGAR SUPPLY

56

 

E. ON FARM SIZE

56

6. GE DER ISSUES

57

 

A. GENDER DIVISION OF LABOR

57

 

B. ACCESS AND CONTROL OVER RESOURCES

58

7. CO STRAI TS A D OPPORTU ITIES

59

 

A. OPPORTUNITIES

59

 

B. CONSTRAINTS

60

8. UPGRADI G STRATEGIES/I TERVE TIO S

63

ACRONYMS

AECID

Agencia Española de Cooperación Internacional para el Desarrollo

AFTA-CEPT

ASEAN Free Trade Area–Common Effective Preferential Tariff

AHSSI

Asociacion de Hacenderos de Silay-Saravia, Inc.

APSSI

Associated Planters of Silay-Saravia, Inc.

ARB

Agrarian Reform Beneficiary

ARC

Agrarian .Reform Community

ASEAN

Association of Southeast Asian Nations

ATF

Alter Trade Foundation

ATG

Alter Trade Group

ATI

Alter Trade Inc.

ATM

Alter Trade Manufacturing Corp.

BDS

Business Development Service

BFAD

Bureau of Food and Drugs

BNF

biological nitrogen fixation

CADP

Central Azucarera Don Pedro

CARP

Comprehensive Agrarian Reform Program

CIDA

Canadian International Development Agency

CITEM

Center for International Trade Expositions and Missions

CSR

Corporate Social Responsibility

DA

Department of Agriculture

DAR

Department of Agrarian Reform

DOST

Department of Science and Technology

DTI

Department of Trade and Industry

EDC

Export Development Council

EU

European Union

FARM Inc.

Federation of Agricultural Resource Managers, Inc.

FOB

Freight on Board

FSDC

Farm Systems Development Corporation

GAP

Good Agriculture Practices

GMP

Good Manufacturing Practices

HACCP

Hazard Analysis and Critical Control Point

HYV

High Yielding Variety

ICCO

Inter-Church Organization for Development Cooperation

LCARB MPC

La Castellana Agrarian Reform Multipurpose Cooperative

LGU

Local Government Unit

LKg/TC

50 Kgs per Ton Cane

LTO

Land Transportation Office

MC

Moisture Content

MD

Man Day

MDCC

Mill District Development Council

MFI

Micro Finance Institution

MPC

Multipurpose Cooperative

MT

Metric tons

MUAD

Multi-sectoral Alliance for Development

NIRD

Negros Oriental Institute for Rural Development

OCCP

Orgnaic Certification Center of the Philippines

OPTION MPC

Organic Producers in the Island of Negros Multipurpose Cooperative

PCCI

Philippine Chamber of Commerce and Industry

PDAP

Philippine Development Assistance Programme, Inc

PEDP

Philippine Export Development Plan

PhilDHRRA

Philippine Partnership for the Development of Human Resources in Rural Areas

PHILSURIN

Philippine Sugar Research Institute

PHILSUTECH

Philippine Sugar Technologists Association

PhP

Philippine Peso

PO

People’s Organization

PRIME

Promoting Rural Industries and Market Enhancement Program

PSMA

Philippine Sugar Millers Association Inc.

R & D

Research and Development

SAP

Sugar Alliance of the Philippines

SDCAsia

Strategic Development Cooperation Asia

SRA

Sugar Regulatory Administration

TFM

Task Force Mapalad

UMFI

Upland Marketing Foundation, Inc.

UNIFARMS

United Farmers Association of Negros – South Inc.

UNIFED

United Sugar Planters Federation

USDA

United States Department of Agriculture

EXECUTIVE SUMMARY

Muscovado Production

Muscovado was one of the most prominent export commodities of the Philippines, especially from the Negros region from the 1800s until the late 1970s. Last year, it is estimated that Negros Occidental produced around 2330 -2430 MT of muscovado. This comprised about 20% of the total Philippine production. With two to three sugar mills diversifying to muscovado production, it is projected that Negros Occidental would be the top muscovado producing province in the coming two to three years.

Based on the 1,735-ton national muscovado export in 2008, Negros Occidental accounted for 77% of the Philippines export or about 1420 MT. It appears that Negros is geared towards the export market with Alter Trade taking the lead.

There are 8 muscovado mills in Negros Occidental with a combined monthly production capacity of 499 MT per month. To date, only 5 of the 8 mills are operating with an aggregate capacity of 337 MT per month.

Products

Muscovado is a type of unrefined sugar with a strong molasses flavor. It is also known as “Barbados sugar" or "moist sugar". In Negros Occidental, muscovado can be found in three product formats: a) amorphous muscovado sugar crystals b) muscovado rocks c) muscovado cookies. These products are sold in all major malls, pasalubong and novelty centers within the province.

With the current hype for organic and health- conscious lifestyle, muscovado industry has been revived. Muscovado sugar has nutrient content comparable only to pure bees’ honey. Likewise it is popularly recognized as natural and highly nutritious because of its low calorie content as compared to other manufactured sugar.

Value Chain Players

Input suppliers

Fertilizer suppliers may be divided into 2, the commercial fertilizer suppliers and dealers and the organic fertilizer producers.

Small and large planters vary in their requirement for seedling supply, in such a way that small planters practice ratooning, while the large planters buy their seedlings every cropping.

Equipment used in muscovado processing particularly the cane crushers can be sourced from three main types of suppliers: old cane crushers, locally fabricated crushers and those imported from India.

Sugarcane Farmers

Sugar comprises 55% of the land use in Negros Occidental, thus accounting for its largely monocrop character. 2007 statistics from SRA indicate that there are about 11,926 farms which are tilled by 13,742 farmers. Of the 13,742 farmers, 57% have farm sizes of less than 5 hectares. As of 2006, 5,191.72 hectares have been distributed to 4,459 agrarian reform beneficiaries (ARBs). Average farm size per beneficiary is about 1.16 hectares. CARP’s implementation under the current modalities in sugarcane plantation areas is considered to be the most problematic in terms of land distribution.

Small sugar planters have limited capacity to implement recommended production techniques. Their yield ranges from 40 to 60 tons sugarcane per hectare. Medium and large sugar cane planters have the capacity to utilize all necessary input materials, irrigation and production technologies. Average yield of plantations is about 80-100 tons sugarcane per hectare.

Muscovado Millers/Processors

There are 5 operational muscovado mills in Negros Occidental: Alter Trade Manufacturing Inc. (affiliate of the Alter Trade Group), Sagay Sugar Central, Philippine-Hawaiian Co., La Castellana ARB MPC and Task Force Mapalad and Seed Trade. Of these 5 operational mills, three are stand- alone muscovado mills while the two other mills are conventional sugar mills that have expanded into muscovado production. There are also 4 mills that are being set up but not yet operational as of October 2009. Of the 5 processors, Alter Trade, Sagay Sugar Central and Phil.-Hawaiian Co. are currently exporting directly to foreign buyers and/or indirectly thru local exporters.

Traders/Distributors

Manila-based distributors include Upland Marketing Foundation Inc. (UMFI) which require 3 tons of muscovado per month, Sharmila Inc. (36 tons per month), Peotraco Industries Inc. (18 tons per month) and TFN Far East Inc. (has stopped purchasing from Negros this year). Foreign buyers include Alter Trade’s Fair Trade/People-to-People Trade/Organic markets from Germany, Switzerland, France, Austria, Japan, Korea and Malaysia.

Firm Level Upgrading

1. Sugar Cane Farming

Although there was a 37% overall increase in farmers with a 68% increase in smallholders (less than 5 hectares), average farm size of smallholders decreased from 3.16 hectares in 2002 to 2.09 hectares in 2007. As per studies conducted, a sugarcane farm requires at least 5 hectares to be competitive in the global economic environment.

Small planters produce only 40 to 60 tons sugarcane per hectare. This is very low when compared to the yields of medium and large farms which range from 80 to 100 MT per hectare or to potential cane yields (120 to 150 tons/ha) achieved in Brazil, India, South Africa and other regions growing sugarcane with drip irrigation and fertigation. Therefore, new and innovative sustainable technologies are needed to raise and sustain sugarcane productivity per hectare.

Farm Size

Knowledge and Technology

 

Analysis of Effect of Differences

Medium/Large

Application of recommended rate of fertilization

Small planters produce only 40 to 60 tons sugarcane per hectare, while big planters have yields of 80 to 100 tons per hectare

Planters

With irrigation

 

Trained agriculture technicians –

attends

SRA

trainings

and

has

extensive experiences

 

Production cost

of

big

New

planting

materials

every

planters is about PhP50,000 per hectare. Production cost of

cropping

 

– conventional farming

Small

Planters

Minimum fertilization

Rainfed

 

small planters is about PhP25,000 to 30,000 per

 

New

planting

materials

every

3

 

hectare.

cropping

 

Small organic farmers have an average cost of PhP 45,000 per hectare with yields of 57 tons per hectare.

Usually agrarian reform beneficiaries

Small

Planters/POs

Utilization of Organic fertilizer at recommended rate of application

of

Altertrade

organic

farming

New planting materials every 3 cropping

 

system

Usually agrarian reform beneficiaries

A major criticism of the agrarian reform program is the lack of support services to the ARBs. The

recent study conducted by the provincial government of Negros Occidental revealed that 97 percent of

the approximately 100,000 beneficiaries (all crops) in the province claimed they have not received any support services from the government. Furthermore, 80 percent also said they have not increased their productivity due to lack of support services, while 70 percent believe they have not obtained any economic gain from CARP. Another group of beneficiaries in Northern Negros claimed they are not economically better off now that they have their awarded lands than when they were still employees

of their former landowner 20 years ago. In many cases, awardees have leased back their lands to

former landowners.

Based on the costs and returns of the various cultivation strategies employed in Negros Occidental, it appears that the intensive farming operation has the highest net income but has the lowest return on cost at 87%. Organic farming has the second highest net income as well as return on cost at about 94%. The low intensity cultivation used by small planters has the least net income but has the highest return on cost at more than 100%.

2. Muscovado Processing

Cane should be milled within twenty-four (24) hours from cutting to maintain high sugar content. It is, therefore, important that suppliers are contracted to supply cane at given times. This enables the plant to work continually while minimizing the time harvested cane is allowed to stand.

The efficiency with which juice can be extracted from the cane is limited by the technology used. While the upgraded sugar mills can extract between 95 and 98% of the cane juice, the old fashioned sugar mills (one tandem) only extracts 60% to 65% of the cane juice. Alter Trade has a three tandems dry crushing and is able to extract 80% to 85% of the cane juice. Yields can also be improved by careful control of the boiling process.

Upgrading from direct heating to use of steam will also improve efficiency and reduce costs. Below is the comparison on efficiency between direct heating vis-à-vis steam.

Direct Heating/Firing: Old Technology

Steam: ew Technology

Hard to control temperature

Temperature can be controlled

Bagasse or bamboo as fuel

Efficiency of fuel

Needs 15 cubic feet bamboo per 30 ton cane

Needs 10 cubic feet bamaboo per 60 ton cane

The next table is a summary of the differences and 2 types of muscovado milling and processing plant in Negros Occidental, namely: a) open pan direct to the furnace – small scale/conventional process; and b) Using steam jacketed kettles – large scale/upgraded.

Summary of Differences

Advantages of Upgraded Technology

Processors using open pan processing

- The closed pan processing reduces the risk of contamination from impurities

- Uses only open vats for preheating and cooking

- No evaporators and dehumidifiers

- Does no use steam for heating

- Fewer human contact; thus, reducing contamination

- Fewer filters along the process

- Does not use pumps for transporting the syrup/juice from process to process

- Those using closed pan processing have cleaner facilities

- Uses one crusher

- The highly upgraded facility has more juice extraction efficiency due to the more efficient system of crushing the canes

- Does not have its own weighing scale; instead, it uses the scales of transloading stations of sugar central

- Does not use metal detectors to reduce risk of having metallic impurities

Processors using both open and closed pan processing and other upgraded facilities (highly upgraded facility)

 

- Uses steam-jacketed kettles for final cooking

- Has evaporators and dehumidifiers

- Uses steam to for heating

- Has many filters along the process

- Uses pumps to transfer juice/syrup from process to process

- Uses series of crushers with cutters

- Has its own weighing scale

- Uses metal detectors to reduce risk of having metallic impurities

Interfirm Cooperation

Horizontal Collaboration

Vertical Relationship

Farmers

Muscovado Millers

Farmers – Muscovado Millers

Information Sharing and Transparency

 

Information sharing appears to be spontaneous between farmers of same sizes but is

Some degree of information sharing especially on technology but people are still very guarded in giving out market info and what they consider as their “trade secrets” or competitive edge. Not so much interaction between processors (particularly between big and small) except during meetings initiated by government agencies and PDAP. Conventional sugar millers who have diversified into muscovado tend to share information more readily

Small millers provide information to their farmer-members on price, cost, demand, and standards from the miller.

generally very limited between big farms and the small farms.

For conventional sugar millers cum muscovado processors, information shared is primarily on current market price of canes and the standards --- basic info required in procurement transactions.

Horizontal Collaboration

 

Vertical Relationship

Farmers

Muscovado Millers

Farmers – Muscovado Millers

 

with each other. From the interviews and workshops, it was apparent that millers have different perspectives on what is a “good quality” muscovado. Although there exist a draft standard for muscovado, this has not yet been fully disseminated for final drafting and to ensure consistent interpretation.

 

Value Added Services/Cooperation and Collaboration

 

Main framework for cooperation and collaboration is through the agrarian reform communities organized by DAR. However, majority of the ARCs are weak and in need of organizational development support. From the interviews conducted, it would seem that the better ARCs/farmer organizations are those supported by Alter Trade.

PDAP

has

initiated

the

Up till the present, many of the farmers and workers already awarded with land titles have opted to sell their land and/or stay under the patronage of their landlords.

establishment

of

the

muscovado

association

in

Negros.

To date, though,

the group is

not

yet fully

functional

and

activities

 

confined

were organizational meeting.

to

Alter Trade provides the following services to partner communities:

 

production credit (payable after harvest), training/technology transfer, and organizational development. TFM also provides loan for their members.

 

The ability of the sugar farmer-beneficiary to sustain the land by himself/ herself or with his/ her cooperative’s support is again especially crucial in Negros Occidental, where the patron-client relationship is so deeply embedded in the culture and has made the farmer very much dependent on his/her landlord to this day.

Supplier and Buyer Selection and Procurement Process

 

Main market of farmers is still the conventional mill. In terms of price and financial income, there is no significant difference between selling to muscovado mills and conventional mills. Main difference is on the terms of payment. Muscovado millers generally pay upon delivery.

 

Main suppliers of Altertrade and TFM are their members. When these mills have enough supply or have suspended temporarily their operations, the member-farmers sell to the conventional mills. Others who are under the assistance or are partners of the muscovado millers (e.g., partner communities of the Alter Trade Manufacturing Inc. and

Horizontal Collaboration

Vertical Relationship

Farmers

Muscovado Millers

Farmers – Muscovado Millers

   

the Task Force Mapalad) are the main suppliers of such mills. However, in instances where the mills are out of service or are in full capacity, the partner suppliers may opt to mill in conventional sugar centrals. Alter Trade schedules their procurement of canes from the different groups that they are supporting.

For conventional cum muscovado plants, they source from own farms (leased/owned).

End Market Analysis

1. Export Market

According to the commodity factsheet (2007) of the Department of Agriculture, a total of 1,815.04 metric tons of muscovado was exported to different countries with an aggregate value of PhP 101.84 million. Main countries of destination were Japan (28.7%), Germany (19.7%) and Italy (1.2%). In the same year, 13.60 metric tons of Panocha (similar to sangkaka) was exported to the United States (54.1%), Canada (18.2%) and United Kingdom (12.3%) with a total value of PhP1.1 million. There was a 54% increase in the volume of exports in 2007 over 2006 performance. In 2008, export volume decreased by 11% over 2007 figures.

In a report from the Sugar Regulatory Agency, the top muscovado importing countries for 2008 were Germany (27%), Japan (22%), Switzerland (19%) and Italy (18%). Other importing countries include USA, France, South Korea, Canada, Saudi Arabia and Malaysia.

2. Domestic Market

Data from BAS shows that prices of refined sugar have increased to PhP 42-48 per kilo as of 10 December 2009 from PhP 42-46 as of last week of November and PhP 39 – 42/kg as of same period last month. The domestic market is experiencing tightness in refined sugar supply, as traders started stocking up last month ahead of the holiday season and in the face of rising prices.

The processed food sector can potentially be a market for muscovado especially those that intend to diversify into the organic market. However, product and market development would require intensive collaboration between muscovado processors and the processed food exporters and investment. Likewise, price competitiveness of muscovado vis-à-vis other substitutes has to be improved.

Phone interviews were conducted with 46 supermarkets and food establishments in Metro Manila. The food establishments consisted of restaurants, hotels, coffee shops and bakeshops. 85% of the respondents said that they are buying muscovado while 15% are non-users/buyers of muscovado. Reasons given for non-purchase/non-use of muscovado sugar were the following: a) expensive

compared to brown sugar; and b) does not have the needed sweetness compared to white sugar. Another respondent claimed that the product was perceived as not clean.

90% of the supermarket respondents were purchasing muscovado of different brands. Most common brands purchased were AlterTrade and Hawaiian. Among the food establishments, 100% of the bakery shop respondents were aware of muscovado and purchase the products on a monthly basis at a volume of 10kg per month.

Restaurants are seasonal purchasers of muscovado depending on recipes and festivities. 83.5% of the interviewed coffee shops are seasonal buyers, purchasing only when customers demand the product and at an average of 1-2kg per month. 55% of hotels purchase less than 10kg while 18% purchase the products on a seasonal basis. 27% of hotels said that they only purchase muscovado depending on the requirements of the kitchen and this is on an irregular basis.

For supermarkets, responses with regards to volume are varied. 33% of the respondents have an average monthly volume of 100kg while the other 33% responded to have a monthly purchase volume of 10kg. Generally, processors have difficulty selling through supermarkets due to several factors:

supermarkets charges high slot/listing fees; takes too long to pay (about 3 months) and products are on a consignment basis and returns damaged products to the consignee at the consignee’s expense.

The food establishment respondents stated that they source their muscovado from the supermarket (82%). Establishments with less than 2kg required volume as well as Hotels purchase their muscovado from the supermarkets using any brand available.

3. Market Standards/Requirements

General Requirements for Muscovado

Appearance

Golden Brown with minimal small lumps and without foreign materials

Taste and Flavour

Sweet and without off flavors

Weight / Packaging

In sacks with 50kg or 40 kg weight

The export market is more stringent on its requirements with many buyers needing certifications such as fair trade, organic, HACCP, GMP and others. They are strict on food safety and sanitation standards.

Support Market

There are several support services providers operating in Negros Occidental. These include

Sugar Regulatory Administration (RD&E on farm productivity, laboratory analysis, sugar regulations, etc)

Department of Trade and Industry (market development, market info, organizational support, etc)

Department of Science and Technology (plant and equipment design, GMP, etc.)

Bureau of Food and Drugs (GMP, BFAD Certification, etc.)

Negros Muscovado Industry Association (not yet fully operational) (linkaging among stakeholders)

Alter Trade Group (technical and credit assistance, muscovado milling, organizational development, etc.)

Task Force Mapalad (muscovado milling, technical and credit assistance to ARBs, etc)

Negros Oriental Institute for Rural Development (NIRD)

SIMAG Foundation, Inc. (assistance to the members and heirs of the 2 conventional sugar associations in Silay-Saravia milling districts)

the Multi-sectoral Alliance for Development – Negros (through FARM Inc., serves as the marketing arm of assisted enterprises)

Philippine Sugar Technologists Association – PHILSUTECH (RD&E activities)

Philippine Development Assistance Program Inc. (PDAP) (set up of muscovado processing facilities).

Enabling Environment

Under the ASEAN Free Trade Agreement (AFTA) mechanism, the Common Effective Preferential Tariff (CEPT) system requires that tariffs levied on commodities traded in the region meeting a 40% ASEAN content requirement be reduced to 0 to 5% in January 2010. In the case of sugar it is pegged at 5%. To mitigate the potential negative effects on the impending tariff reduction, sugar companies are expanding into bio-ethanol production and other sugar cane by-products such as muscovado.

Another issue confronting small sugar landowners is the move of the SRA to continue imposing a levy of PhP 2 (three cents) per kilogram of sugar produced. Sugar Order no.2 Series of 1995-1996 provided for a lien of Php 2.00/l kg bag on all sugar produce in favor of PHILSURIN. It is due to expire 31 August 2005. The SRA’s Sugar Order No.8, Series of 2004-2005, issued August 18, 2005 provides for the continuity of Sugar Order No.2.

Musocvado was identified among the Revenue Streams in the Product Strategies of the Philippine Export Development Plan from 2004-2007 and from 2008 to 2010. The PEDP is prepared by the Export Development Council (EDC) under DTI. Main focus was to adopt organic certification standards with guidance from DA-BAFPS.

To ensure adequate domestic sugar supply while maintaining a strategic balance conducive to a stable and viable market environment and to enable the timely and effective merchandising of Philippine sugar, the adjustments on sugar allocations at the start of crop year 2009-2010 were promulgated by the SRA.

Too many CARP beneficiaries share on the land they work on, thus the three-hectare maximum share per beneficiary was not often met under Republic Act 6657 or the Comprehensive Agrarian Reform Law of 1988.

Gender Issues

While both men and women in sugar cane farming households engage in labor both productive and reproductive and while these work burdens take up the greater part of the 24-hour day (sometimes up to 15 hours of labor for both men and women), the labor undertaken by men is privileged in that it has more monetary value as well as psychological value. For example, manual weeding, which is usually done by women, is paid only about half of the daily wage paid to men.

In muscovado processing, women are involved in post-processing activities particularly packing. They are paid by piece or by “pakyao (bulk) system. Men are preferred for processing activities because these are physically-demanding tasks.

Women's actual contribution to sugar cane production and rural economy remains undervalued if not invisible. As a result, women have less access to productive resources than men do. Access to land, technology, extension services, capital, and infrastructure support tend to favor rural men.

Households associated with sugar production require other sources of income for their livelihood, generally provided by the off-farm employment or family farming of female family members. However, women on the plantation have limited access to resources for production and, therefore, income. They do, however, have sufficient time to engage in diversified sugar-based food production and livelihood activities.

Constraints and Opportunities

1. Opportunities:

Negros muscovado products particularly those from Alter Trade and Hawaiian Philippines are recognized by distributors, retailers, and institutional buyers to be of premium quality. Likewise, the province is known as the “sugar bowl of the Philippines” and has a long tradition as the home of innovative and export quality products (gifts and housewares/ food products). For the Negros muscovado industry to significantly expand its market share in the muscovado trade, it has to focus on product differentiation parallel to improving efficiency to boost competitiveness and profitability for all players.

The presence of established exporter such as Alter Trade and conventional sugar mills expanding into muscovado production can facilitate the entry of small scale millers into the export markets through consolidated marketing and vertical integration or network relationships.

Industrial food processors with natural/organic/healthy food product lines are potential target markets.

2. Constraints

a. Limited access to financial and non-financial services to facilitate upgrading

Extension services are mainly provided by government which experience pronounced financial constraints and inability to increase depth and breadth of outreach. There is lack of agricultural extension workers. This inadequacy limits any extension service to occasional basis rather than the required sustained regular activities. This may also explain why ARBs generally feel that they did not receive any support services from the government.

The small muscovado mills have difficulties in complying with market standards and to achieve optimum operations efficiency primarily due to the following: a) Lack of access to technology, technical expertise, financial, and systems necessary to upgrade products, operations, and practices that improve productivity and the food safety and quality of products; and b) High cost of certification and compliance/implementation of corrective measures to structural and operational deficiencies.

b. Lack of entrepreneurial orientation

The lack of entrepreneurial orientation among sugar cane farmers is to a significant extent a reflection of the perpetuation of the paternalistic relationship common in sugar plantations. It can be inferred that the fixed social arrangements developed in the hacienda by the landlords centuries ago had caused the shadow of paternalism and dependency in the lives of the farming people.

c.

Lack of economies of scale/Weak horizontal cooperation/Poor organizational dev support

Sugar cultivation requires tractors for deeper plowing; farms that employ carabao-pulled plows yield much lower harvests. Since using a tractor makes sense if one is cultivating 20 to 30 hectares, small farmers must get together to hire a tractor; hence, some institutional development is crucial.

Individual procurement of fertilizer for a small farm translates to higher cost per bag. Each hectare cultivated entails capital requirements ranging from inputs to labor and fixed capital, which may not be easily put up by an individual farmer.

Generally, small farmers lack entrepreneurial skills and capacity to interact effectively and to undertake collective action, which is necessary to induce firms to accept a high level of

interdependence.

Similarly, muscovado millers operate in isolation which to a significant extent widens the gap between the small scale and large scale producers both in terms of quality and market penetration/ market share.

d. Weak supply chain governance

There is a prevalent lack of common understanding of standards and shared responsibility between and among players which result to costly non-value added steps such as inspection, return of rejects, and delays in production schedule. Quality perceptions are different among players in the market.

e. Lack

of

awareness

development

on

muscovado

among

consumers/

No

sustained

promo

and

market

Although muscovado is now available in many of the leading supermarkets, there is still a low effective demand for the product. People are generally not aware on the health benefits of muscovado. Likewise, the image of muscovado as “dirty” (due to poor processing) still persist in the minds of many consumers. Another factor also that affects commercial viability of muscovado is the presence

of cheaper substitutes. There is also a lack of solid market information as basis in crafting a marketing

strategy.

f. Limited understanding and application of Corporate Social Responsibility (CSR)

There is a lack of know-how among muscovado mills on how to implement CSR as a tool to facilitate business growth/market development especially for products such as muscovado and, in parallel, provide more equitable returns to sugar cane farmers and workers.

Upgrading Strategies

To maintain or improve one’s market position, the industry needs to:

Increase the efficiency of internal processes such that these can be significantly better than competitors. This will involve integrated actions both within individual links in the chain and between the links in the chain.

Introduce differentiated products or improve product quality faster than competitors. This will involve changing and upgrading of farming and milling technologies and practices both within individual links in the value chain and in the relationships between different chain links.

Improve economies of scale through inter-firm cooperation

Conduct a unified marketing campaign which will also involve the development and promotion of specific image and set of product differentiation factors that the Negros muscovado industry as a whole can introduce and sustain as a marketing proposal.

Below are the specific proposed interventions:

1. Strengthening and/or establishment of sugar cane nurseries

Farmer-based/community-based nursery with strong collaboration with the relevant sugar agencies is the most appropriate strategy for developing effective sugar cane planting material system in Negros. Advantages of farmer-based nurseries include its simplicity, accessibility, and cost-effectiveness. This will involve the identification and production of outstanding varieties.

2. Expansion of pool of community-based trainors on GAP aligned sugar cane farming

Building on the initiatives of ICCO/Kerk en Actie organizations, it is proposed that these organizations in collaboration with relevant government and sugar organizations to build up indigenous capacity (within the locality) to delivery training on GAP aligned sugar cane farming rather than delivering the services themselves to each of the farmers.

The “good enough” approach to GAP or GAP aligned sugar cane farming involves promoting feasible upgrades and incremental improvements in agricultural practices that will result in the largest possible increases in yields and profits.

3. Promotion of collective farming and marketing among ARBs

For small farmers/ARBs, the operating principle is not necessarily to be big, but to look and act big through collective production and marketing, obtaining the efficiency and market access benefits of size. In collective farming, multiple entities form a coalition or alliance to develop a "better" system of production, which may reduce costs, improve quality, improve market access, help obtain scale economies, share risk, obtain more information, or obtain better access to technology.

4. Assistance to small scale mills in upgrading technology and facilities

This may include the following: a) technical assistance to upgrade technology and production systems; b) updating of business plans both to guide operations and to facilitate funding assistance from social enterprise funding agencies/donor agencies; and c) linkages to financial institutions that offer low interest loans.

5. Strengthen capacity of the Negros Muscovado Association to take the lead in the development of the industry and in improving supply chain governance

The Negros Muscovado Association, under the leadership of Alter Trade and with organizational development and technical support, can potentially take the lead in the following activities: a) establishment of quality system infrastructure; b) collective/consolidated marketing; and c) conduct of unified marketing campaign.

6. Conduct of a unified marketing campaign/collective marketing

The unified marketing campaign will involve the development and promotion of specific image and set of product differentiation factors that the Negros muscovado industry as a whole can introduce and sustain as a marketing proposal. Marketing support ranging from trade fair participation, selling

missions, brochures, packaging, etc. should be built around the agreed ‘image’ and product differentiation factors.

7. Building capacity of mills to implement CSR

It is proposed that capacity building should integrate CSR concepts to promote sustainable creation of value with triple bottom line dimensions: a) Profit, that will benefit all the players with a focus on poor/sugar cane smallholders; b) Social, that will promote the inclusivity of the poor to improve living conditions, and; c) Environment, that will facilitate the development and implementation of sound strategies and actions towards the conservation of natural resources.

8. Incremental promotion of organic farming starting with gradual shift to organic fertilizer

This recommendation builds on the ongoing initiatives of Alter Trade to promote ecological/sustainable farming. Activities may include: (a) Organic conversion strategic planning, (b) Intensified promotion and awareness campaign on the benefits of organic sugar cane production through demo farms, and (c) Support the establishment and/or strengthening of community-based production units of organic fertilizer.

SECTION 1:

NEGROS’S POSITION IN THE PHILIPPINE MUSCOVADO INDUSTRY

A. MUSCOVADO PRODUCTIO

In 2008, Region VI (Western Visayas) contributed 51.77% of the national volume of sugarcane production. Of the 13,770,505 MT sugarcane production of the region, 88.28% came from Negros Occidental. According to an SRA report released in 2006, there was only 2,071 hectares allotted for muscovado production which is only a minuscule part of the 396,135 hectares planted to sugarcane. Antique tops the muscovado producing provinces followed by Negros Occidental, and Sultan Kudarat.

Muscovado was one of the most prominent export commodities of the Philippines, especially from the Negros region from the 1800s until the late 1970s. Last year, it is estimated that Negros Occidental produced around 2330 -2430 MT of muscovado. This comprised about 20% of the total Philippine production. Bulk of Negros Oriental Production came from Alter Trade and Philippine-Hawaiian Company. With two to three sugar mills diversifying to muscovado production, it is projected that Negros Occidental would be the top muscovado producing province in the coming two to three years.

Negros Occidental is generally known for its high and export quality muscovado products. Brands produced in Negros Occidental are among the more expensive muscovado products in the country.

B. I MAJOR MARKET SEGME TS

Based on the 1,735-ton national muscovado export in 2008, Negros Occidental accounted for 77% of the Philippines export or about 1420 MT. It appears that Negros is geared towards the export market with Alter Trade taking the lead.

2008 Sales Volume and Market Distribution

 

Processor

2008 Sales Volume (In Tons)

Market Distribution (Tons)

Domestic

Export

Alter Trade

1,500

160

1,340

Sagay Sugar Central

80

 

80

Philippine-Hawaiian Co.

600-700

600-700

minimal

LCARB MPC and TFM

90

90

 

Seed Trade

60

60

 

Total

2,330-1,430

910-1,010

1,420

% Distribution

100%

42%

58%

Source: Consolidated KII in Negros Occidental, October 2009

 

As per consolidated data from key informant interviews, about 58% of the 2008 production was exported directly and indirectly by the millers. Almost all of the exports were made by Alter Trade. The Philippine-Hawaiian Co. has indirectly shipped to other countries through an exporter but the volume was still minimal and could not be accounted for with certainty.

The Sagay Sugar Cenrtral has exported around 80 tons this year to Japan but only had small production last year – its maiden year of muscovado production.

Alter Trade for its part has been exporting mainly through very specialized markets. In Europe, it taps the fair trade and organic markets. In Japan and Korea, it enters through the people-to-people trade, where the consumers and the producers regularly visit and understand each other’s concerns. For its Malaysian market, it sells organic muscovado. In the US, it caters only to Filipino buyers so far. Overall, around 89% of its production was exported and only about 11% was distributed locally.

Overseas, Alter Trade’s muscovado are used as an ingredient in making a body scrub in France and chocolate in Switzerland.

2008 Muscovado Sales Volume and % Distribution of Alter Trade

 

Country

Sales Volume (Tons)

% Distribution

Germany

400

27%

Japan

300

20%

Switzerland

300

20%

Korea

160

11%

France

100

7%

Malaysia

36

2%

Austria

12

1%

US

10

1%

Domestic

Manila

100

7%

Locally within the region

60

4%

Total

1,478

100%

Source: Alter Trade Group, Nov. 2009

SECTION 2:

CHARACTERISTICS OF THE MUSCOVADO VALUE CHAIN IN NEGROS

A.

PRODUCTS

Muscovado is a type of unrefined sugar with a strong molasses flavor. It is also known as “Barbados sugar" or "moist sugar". Since it does not undergo further purification or centrifugation just like the normal brown sugar, it appears to be very dark brown, slightly coarser and stickier than normal brown sugars. Unlike most brown sugars, which are made by adding molasses to refined white sugar, muscovado takes its flavor and color from its source, sugarcane juice.

There are three primary product forms of muscovado: a) Amorphous – soft brown sugar powder; b) Molded muscovado or rock sugar; and c) Thick concentrated syrup. The following are the three classes of muscovado produced in the country: a) Class A – golden brown; b) Class B – brown; and c) Class C – wood brown.

brown; b) Class B – brown; and c) Class C – wood brown. In Negros Occidental,

In Negros Occidental, muscovado can be found in three product formats: a) amorphous muscovado sugar crystals b) muscovado rocks c) muscovado cookies. These products are sold in all major malls, pasalubong and novelty centers within the province.

With the current hype for organic and health- conscious lifestyle, muscovado industry has been revived. Reportedly, muscovado sugar has 187 grams of calcium, 58 grams of phosphorous, 4.8 grams of iron, 757 grams of potassium and 97 grams of sodium, in which nutrient content is only comparable to pure bees’ honey 1 . Likewise it is popularly recognized as natural and highly nutritive because of its low calorie content as compared to other manufacture sugar and relatively a high priced sweetener (white sugar) 2

1 PCIERD, STII DOST. July 2008. Guide to Export Quality Muscovado Sugar Developed. 2 Magbanua Richard. October 2008. Muscovado De Antique: the Healthy Sweetener in the Market. HealthMad. www.healthmad.com

B.

PRODUCTIO TRE D

1.

Sugarcane

During the last 5 years (2004-2 008), average sugarcane production of Negros

million MT.

Oriental was at 11.5

Within this 5-year period, highest production was registered in 20 08 with a volume of

12,156,699 MT, representing a 2 1% increase over 2007 figures.

MT, representing a 2 1% increase over 2007 figures. Sugarcane Production: 2004-20 08 (in Metric Tons)

Sugarcane Production: 2004-20 08 (in Metric Tons)

 
 

2004

2005

2006

2007

2008

Philippines

25,579,21 3.93

22,917,673.67

24,345,106

22,235,29 6.61

26,601,383.8

Region VI

13,714,82 6.79

13,072,225.84

13,416,415

11,494,67 4.87

13,770,504.8

Antique

61,12 8.98

60,744.19

57,562

56,3 54.9

54,458.5

Capiz

681,46 2.64

643,049.4

497,391

580,28 8.38

551,595.09

Iloilo

97094

9.17

880872.25

962740

80377

6.63

1007752.18

Negros Occidental

12,001, 286

11,487,560

11,898,723

10,054,25 4.96

12,156,699

Source: Countrystat

2. Muscovado

There are 8 muscovado mills in Negros Occidental with a combined monthly pr oduction capacity of 499 MT per month. To date, onl y 5 of the 8 mills are operating with an aggregate capacity of 337 MT per month. The JF Ledesma F oundation muscovado mill, which is being su pported the Agencia Española de Cooperación Intern acional (AECI) via Fundacion CODESPA, is still on the set-up phase. Construction of the mill of San V icente ARB has temporarily been suspended pen ding release of grant assistance from PDAP/CIDA.

AME OF MILL/PROCESSOR

CAPACITY

Projected

VOLUME OF SUGAR

MUSCOVADO TO S/DAY

I

Monthly Volume

CA E REQUIREME T

 

of Production

Operating

     

Stand-Alone/Exclusively Producing Muscovado

 

Alter Trade Manufacturing – With 17 ARB/Pos as suppliers

5-6

 

132

tons

11,888 tons at 90% extraction rate

Seed Trade Sole Proprietor with 26 small farmers as suppliers

1

 

24

tons

1,560 tons at 65% extraction rate

La Castellana ARB/TFM ARB – 78 small farmer suppliers

1.3

 

31

tons

2,015 tons at 65% extraction rate

Conventional Mill with Muscovado Processing

 

Sagay Sugar Central Same group of suppliers for conventional sugar – 3,000 to 4000 farmers

4-5

 

108

tons

9,720 tons at 90% extraction rate

Hawaiian Philippines Inc. From own plantation – allocated 60 hectares

1.5 - 2

 

42

tons

2,730 tons at 65% extraction rate

Total Operating

12.8 – 15.3

337

tons/month

28,250 tons/month

on Operating*

     

San Vicente 1 ARB MPC Muscovado Plant

1.5-3

 

54

tons

3,510 tons at 65% extraction rate

Organic Producers in the Island of Negros MPC

4

 

96

tons

8,640 tons at 90% extraction rate

JF Ledesma Foundation Target group – 500 farmers formerly under Ledesma Hacienda

0.5

 

12

tons

780 tons at 65% extraction rate

Total on Operating

6-7.5

162

tons/month

12,930 tons/month

Total Potential Capacity

18.8-22.8

499

tons/month

41,180 tons/month

* Estimated capacity

C. VALUE CHAI PLAYERS

1. Input Suppliers

The main inputs needed in the production of sugar cane are the fertilizers and the sugar cane seedlings or commonly called top cuts. It is a common practice among farmers that the seedlings are taken from the previous plants and “left over” for replanting after the 3 rd crop cycle. Plantations procure and use new planting materials every cropping.

Fertilizer suppliers may be divided into 2, the commercial fertilizer suppliers and dealers and the organic fertilizer producers. Commercial fertilizers are bought by the farmers through the retail

agricultural supply shops or general merchandise shops for small volumes while large sugar cane plantations purchase directly from fertilizer producer companies or main distributors.

In the case of Alter Trade, their sugar cane suppliers were trained to produce their own organic fertilizers to support their protocols in organic farming system. However, in cases where these supplier communities lack organic fertilizers, Alter Trade through its subsidiary, the Diversified Organic Enterprise, Inc., can supply the gap.

Muscovado processing entails the use of several equipment. One of the most critical of which, if not the most critical, is the cane crusher. The cane crusher initially determines how much sugar can be derived from cane. The more efficient the cane crusher is, the more sugar can be produced. Equipment used in muscovado processing particularly the cane crushers can be sourced from three main types of suppliers: old cane crushers, locally fabricated crushers and those imported from India. Cane crushers imported from India are said to be of good quality as well. However, there are constraints in costs. It is said that these crushers cost around PhP1.5 million.

Old cane crushers can be purchased from backyard type sugarcane processors from Aklan and other parts of Panay Island. Some of these cane crushers date back in the 1800s. There are muscovado makers who believe that such cane crushers are better than the locally fabricated ones due to the more durable steel composition of the former. Costs may range from PhP100,000 to PhP200,000 for a three roller sugarcane crusher. Although there are still those selling these old crushers, supply is dwindling nevertheless. There are local fabricators which can replicate a typical crusher. These are usually based in Manila. However, there is a fabricator based in Cagayan de Oro by the name of Asian Metals, which fabricates the whole equipment used in muscovado processing. It is said that the cost would be around PhP3 million and that these would already be BFAD standard.

2. Sugarcane Farmers

Sugar comprises 55 per cent of the land use in Negros Occidental, thus accounting for its largely monocrop character. The island of Negros accounts for half of the country’s total production, and is ideally suited for cane cultivation, as climatic factors such as regular monsoon rains and low typhoon incidence complement its good soils.The harvest season commences from October to December depending on whether the area is on the eastern or western seaboard, and ends more or less in May.

Currently, there are no farmers that can be exclusively referred to as “muscovado farmers”. The main market of sugar cane farmers is still the conventional sugar mills/sugar centrals. Except for farmers groups supported by Alter Trade, majority of the farmers deliver their produce to conventional sugar central mills. Current absorption capacity of stand alone muscovado mills other than Alter Trade is still low for these to be significant markets for farmers. Net income of farmers though is, more or less, of same level whether they sell to muscovado mills or to the conventional sugar mills.

Below is the comparative advantage and disadvantage to supplying to stand alone/community-based muscovado mills vis-à-vis conventional sugar mills.

ELEME TS

Muscovado Milling

Conventional Sugar Milling

Transportation and Hauling transactions

Hauling fee when transferring harvested cane to milling plant is relatively lower and within the ARBs’ sugarcane farms.

Transportation cost from sugar farm to sugar central is higher especially when farms are beyond the 50 km from the mill

Cane Queuing Ratio

Cane queuing seldom happens since farmer to miller ratio is

Cane queuing takes longer time especially during peak seasons as

ELEME TS

Muscovado Milling

Conventional Sugar Milling

 

manageable

planters compete for prioritization. Delay on processing entail reduction in sugar recovery.

Inspection of Can quality

Cane quality is not as critical compared with the standards set by sugar mills.

Good cane quality is always required by the sugar mills in order to produce more sugar as defined in the standards provided.

For AlterTrade, they allow 3% trash.

Length and complexity of Production Process

Its production process involves evaporation only and basically a non-centrifugal sugar made from boiled sugar juice – availability of market demand for muscovado sugar.

Brown sugar uses at least 4 chemicals while white sugar contains more than 20 chemicals to come out with the final product form.

Volume Requirement

Can absorb a few volume of sugar cane such as 16Tons per day to 60 tons and this is distributed to only a few ARB suppliers.

Can take in higher volume of sugarcane which can produce as much as 750 tons sugar per day However only enlisted members and suppliers are allowed to supply.

Procurement and Payment Process of Sugar Cane

Lesser paper works for cane farmers. One time transaction – once delivered, sorted and weighed, payment is given or deducted from the production loan.

Too much paper work delay cane liquidation and payment to sugar cane farmer suppliers.

   

Other disadvantages:

Big landowners are given more priority in terms of financial and technical support

Canes coming from big sugar farms are given first priority for milling

40% of sugar produced is shared to the mill for milling fees since milling operations require big capital and are labor intensive

Truckers prefer to haul sugarcanes from big sugar farms.

Source: SIMAG Foundation Study 2007 and SRA Appraisal Report 2006 Cited in PDAP Muscovado Prospects

Based on the estimated calculations of potential earnings of small farmer suppliers, their profit it is relatively the same when supplying to either a muscovado mill or a conventional mill. Buying price of muscovado millers (especially those not processing conventional sugar) range from PhP1,100 to 1,200 per ton cane regardless of the purity (Lkg/TC) while sugar centrals pay the total estimated PhP 1,196.85. The only advantage mentioned by the suppliers were the shorter payment terms for

muscovado millers that pay less than 1 week while sugar centrals pay after a few weeks from delivery. All harvesting and transport costs are borne by the muscovado millers which is not the case when milling in the sugar centrals.

For conventional sugar mills that are also engaged in muscovado processing, the same procurement practices apply for all canes whether these would be used for conventional or muscovado sugar.

Estimated revenue earned by a farmer when milling in the sugar central

 
 

o. of Units

Unit

Unit Price

Amount

Gross revenue

       

Sugar

1.7

Lkg

1,200

2,040.00

Molasses

0.033

Ton

6,000

198.35

Total

     

2,238.35

Farmers share (70%)

     

1,566.85

Less: Harvest and Transport Costs

       

Harvesting Cost

1

Ton

120.00

120.00

Hauling Cost (Karo)

1

Ton

50.00

50.00

Trucking Cost

1

Ton

200.00

200.00

       

370.00

Revenue Less Harvest and Trucking Costs

     

1,196.85

2007 statistics from SRA indicate that there are about 11,926 farms which are tilled by 13,742 farmers. Of the 13,742 farmers, 57% have farm sizes of less than 5 hectares. As of 2006, 5,191.72 hectares have been distributed to 4,459 agrarian reform beneficiaries (ARBs). Average farm size per beneficiary is about 1.16 hectares. CARP’s implementation under the current modalities in sugarcane plantation areas is considered to be the most problematic in terms of land distribution. Opponents of the extension of Comprehensive Agrarian Reform Program (CARP) point to disadvantages of small scale farming, in terms of forfeited scale economies, higher coordination cost, and unstable supplies due to the preference for diversifying away from sugarcane by land reform beneficiaries once land is redistributed. On the other hand, this opposition may be viewed as motivated by preservation of industry rent.

DAR’s approach of focusing on the transfer of land but without putting into place the social infrastructure and support services proved to be counterproductive especially in sugarcane areas. land acquisition and distribution by itself does not free poor farmers from the bondage of poverty nor does it lead to production increases, especially in sugarcane farms.

Farm Range (in hectares)

 

o. of Farms

2002/03

2003/04

2004/05

2005/06

2006/07

Less than 5

5,403

6,744

8,787

8,496

6,838

5.01 - 10.00

1,688

1,721

1,820

1,801

1,816

10.01

- 25.00

1,507

1,441

1,560

1,554

1,535

25.01

- 50.00

870

910

931

935

935

50.01

- 100.00

572

555

559

555

552

100.01 - up

501

257

253

246

250

Total

10,541

11,628

13,910

13,587

11,926

Source: SRA Region VI

 
   

o. of Planters

Farm Range (in hectares)

2002/03

2003/04

2004/05

2005/06

2006/07

Less than 5

5,320

6,649

8,549

8,371

8,959

5.01 - 10.00

1,658

1,660

1,763

1,758

1,764

10.01

- 25.00

1,425

1,349

1,438

1,432

1,409

25.01

- 50.00

823

825

859

856

856

50.01

- 100.00

542

525

529

518

516

100.01 - up

248

240

239

236

238

Total

10,016

11,248

13,377

13,171

13,742

Source: SRA Region VI

         

Small sugar planters have limited capacity to implement recommended production techniques. Their yield ranges from 40 to 60 tons sugarcane per hectare. It was cited in the Evaluation study of the CARP Implementation in Negros Occidental conducted by the provincial government that ARBs have either mortgaged, leased, or placed their awarded lots under a financing scheme which is usually to the former landowner due to the following: a) Sugarcane farming is capital intensive and ARBs do not have access to financial resources; b) the cropping period is long and ARBs do not have other sources of income; and c) it operates on the economies of scale. This set-up has perpetuated the tenancy relationship, the eradication of which was the original purpose of land reform.

Others who are under the assistance or are partners of the muscovado millers (e.g., partner communities of the Alter Trade Manufacturing Inc. and the Task Force Mapalad) are the main suppliers of such mills. However, in instances where the mills are out of service or are in full capacity, the partner suppliers may opt to mill in conventional sugar centrals.

Alter Trade has about 17 people’s organization (POs) under its assistance. These are agrarian reform beneficiaries located in the municipalities of La Castellana and Murcia and in the cities of Talisay, Bago and La Carlota. They comprise 879 individual members who own 812 hectares. In order to assist these POs better, Alter Trade has assigned an agriculturist, an organizer and a credit staff to each PO. Through them, services can be easily translated to the communities. Alter Trade schedules each PO’s activities from planting to harvesting. Before planting, the POs are required to submit their budget so as to avail of the credit assistance. They are also required to maintain and submit financial, production and management records so as to monitor the activities. The price of sugarcane is fixed throughout the year and is on a per ton cane basis. Payments are made after milling with all the expenses deducted.

For TFM/LCARB MPC, the sugar cane suppliers are the members of the LCARB and other neighbouring farmers. Since the plant does not have a large weighing scale, canes are weighed first in the transloading stations of the sugar centrals for a fee. Payments are then made after delivery of the cane and are on per ton cane basis.

Land Distribution under the Comprehensive Agrarian Reform Program (CARP) egros Occidental CY 2006

City/Municipality

Area (in Hectares)

o. of Farmer Beneficiaries

Bago City

261.7283

279

Cadiz City

388.6061

331

Escalante City

385.2407

229

Himamaylan City

204.4396

203

Kabankalan City

365.4453

266

Land Distribution under the Comprehensive Agrarian Reform Program (CARP) egros Occidental CY 2006

City/Municipality

Area (in Hectares)

o. of Farmer Beneficiaries

La Carlota City

15.0404

9

Sagay City

121.5910

109

San Carlos City

262.2437

162

Silay City

137.8086

100

Sipalay City

49.0922

21

Talisay City

101.3219

88

Victorias City

242.7410

161

Binalbagan

118.4314

56

Calatrava

211.5505

155

Candoni

39.1869

17

Cauayan

233.8638

168

E.B. Magalona

325.5427

378

Hinigaran

20.9199

15

Hinoba-an

72.3465

56

Ilog

134.7473

104

Isabela

440.3769

662

La Castellana

180.7144

250

Manapla

46.3489

43

Moises Padilla

68.2541

102

Murcia

240.7035

163

Pontevedra

241.7086

185

Pulupandan

1.3437

2

S. Benedicto

59.8940

25

San Enrique

15.1397

12

Toboso

195.2465

102

Valladolid

9.6552

6

Total

5.191.2733

4,459

Source: DAR Bacolod

Medium and large sugar cane planters have the capacity to utilize all necessary input materials, irrigation and production technologies. Average yield of plantations is about 80-100 tons sugarcane per hectare. It is a usual practice in Negros that large planters can become a member with different Sugar Centrals and thus able to supply to different sugar mills. This method maximizes their full production. include hacienda farms with at least 20 hectares and above. Generally, big planters deliver their produce to the conventional sugar central mills. They

Farm workers in haciendas are divided into two categories:

- Permanent farm workers (Dumaan): work in the haciendas whole-year round, albeit for 2 to 3 days a week only

- Migrant workers (sacadas): work during the milling season only when there is a need to harvest the sugarcane faster for milling.

Much of the work in the haciendas are done during the milling season (October-May), where much of the work involved is the cutting and loading of sugarcane. Land preparation, planting and weeding are also done during these months. The months of June to September is considered by the sugar workers

as the "tiempos muertos" or "dead season" where only about 10% of the workforce during milling is able to engage in farm work in the haciendas.

3. Muscovado Millers/Processors

There are 5 operational muscovado mills in Negros Occidental: Alter Trade Manufacturing Inc. (affiliate of the Alter Trade Group), Sagay Sugar Central, Philippine-Hawaiian Co., La Castellana ARB MPC and Task Force Mapalad and Seed Trade. Of these 5 operational mills, three are stand- alone muscovado mills while the two other mills are conventional sugar mills that have expanded into muscovado production. There are also 4 mills that are being set up but not yet operational as of October 2009.

a. Operating Mills

Alter Trade

Alter Trade Foundation Inc. was established and registered in June 30, 1987 to assist agrarian reform beneficiaries and other marginal farmers in need of production capital, technology and market access for their goods. It aims: (1) to promote sustainable agriculture among farmers and other organized groups through organic farming; (2) to provide technology for productive and sustainable use of the land by organized farmers and small farming households; (3) to extend soft-term financial assistance to marginal farmers; and (4) to solicit grants and donations from institutions both local and abroad for its funded programs.

The 17 peoples organizations/ARBs supported and trained by Altertrade on sustainable agriculture / organic farming system and Fair Trade comprise its supply base of sugar cane for muscovado processing. Altertrade is considered the leading producer of muscovado in the country.

Muscovado was first exported by Alter Trade Manufacturing to Japan in 1987. It has since expanded to several markets in Europe and Asia through the principles of Fair Trade and the Sustainable Agriculture – Organic Agriculture. As such, it has acquired fair trade and organic certifications internationally. Out of the 1500 tons produced and sold in 2008, it was able to export 89% while 165 tons was sold locally or in the Domestic market. Main export destinations of Altertrade are: Europe – Germany, France, Austria and Switzerland, United States and Asian Countries – Japan, Malaysia and Korea.

Sagay Sugar Central

This conventional sugar mill produces around 3 million bags of 50kg sugar annually. Most of these are for domestic market, while some are for the US market. In 2008, it started to produce muscovado to cushion potential negative impact of the ASEAN zero-tariff regime for several products including sugar which will take effect on January 2010. The Mill aims to mitigate the possible drop in conventional sugar prices by producing more of the high valued muscovado sugar. Currently, it only produces muscovado if the price of class D sugar is less attractive. Suppliers of sugar cane come from its member planters (3000-4000 farmers) mostly small farmers. Their main buyer is a trader and at the same time member of Sagay Sugar Central that ships the bulk products to Japan where they are repacked and sold in retail packs.

Philippine-Hawaiian Co.

It is a large sugar miller based in Silay City with a capacity of 15,000 – 19,000 50kg bags per day. Hawaiian’s recovery of 2.12 LKg/TC for conventional sugar is the highest all over the country. Central Azucarera Don Pedro (CADP), the biggest raw sugar producer and the second biggest sugar refiner in the Philippines, has a 45 percent share in the Philippine Hawaiian Company. CADP of the Roxas Holding is also setting-up a bio-ethanol plant.

To fully optimize the use of its existing infrastructure, the company diversified into muscovado processing sometime in 2005. It initially produced muscovado only for showcasing. However, since yearly sales growth has doubled or even tripled, management has decided to invest more on the improvement and marketing of its muscovado. It has a capacity of 1.5 to 2 tons muscovado per day.

Hawaiian muscovado products are among the top preferred brands by leading supermarkets and distributors. As with its refined sugar, the company works with distributors rather than selling directly to supermarkets and institutional buyers. The products are currently sold in supermarkets in Manila such as SM and Landmark. About 10% of its production is sold within Negros.

La

Castellana

ARB

MPC

and

Task

Force

Mapalad

LCARB MPC, which was organized in 2005, has 141 members of agrarian reform beneficiaries. It is being assisted and supported by TFM. The muscovado mill project is under a build-operate-transfer scheme, that was entered into by the cooperative and TFM. The plant is co-managed by TFM and LCARB. It is also expected that TFM pay for the rental of the land where the plant is built on. The plant also serves as an alternate destination for LCARB’s sugarcane.

serves as an alternate destination for LCARB’s sugarcane. Currently, the operations are intermittent due to lack

Currently, the operations are intermittent due to lack of supply of sugarcane and the needed repairs on the plant. Main market for its products is UMFI of Manila and the neighborhood stores. The cooperative delivers Class A muscovado to UMFI at Php 40.00/kg and sells the second class sugar (rocks) to local traders who buys it at the same price and sells it in the town market at PhP 45.00/kg. TFM however are looking for alternative channels and had some initial talks with a Chinese buyer operating in Cebu. It has a capacity of about 1.3 tons muscovado per day.

Seed Trade Inc.

This company is privately owned by a former affiliate of Alter Trade and registered under a single proprietorship business permit. It started producing muscovado in 1989 under a home-based facility which has a capacity of about 1 ton muscovado per day. Thru years of experience, it was able to design and utilize a mobile sugar cane crusher which can be brought from farm to farm, while the extracted juice can be transported to the plant for further processing. Currently, the plant operates intermittently due to lack of supply of sugarcane and working capital. Seed Trade currently sells locally to retail shops such as to the MUAD-assisted FARM Inc. Marketing center and café shops in Bacolod. The owner has been tapped by PDAP to provide technical assistance to CIDA funded muscovado processing facility of the San Vicente 1 ARB MPC.

b. Non-Operating Mills

San Vicente 1 ARB MPC Muscovado Plant

This ARB is a PDAP-assisted muscovado processing plant. For the construction of the plant, PDAP has released about PhP2 million as loan to the cooperative funded by CIDA through PDAP and accessed through FSDC. The Processing Plant is still not operational due to funding problems; which still

PDAP and accessed through FSDC. The Processing Plant is still not operational due to funding problems;

needs about PhP800,000 to finish plant construction and operate. The proposal to construct was submitted in 2006, but the funding was released only in 2008. The price of materials for construction has since increased. Loan payment is said to start upon the onset of the processing. Originally, the cooperative was assisted by MUAD for the development of the muscovado plant. This responsibility was since transferred to SIMAG. Currently, there is confusion as to the extent of assistance to be provided by SIMAG. Once operational, the mill is said to have an estimated capacity of 1.5-3 tons muscovado per day.

Organic Producers in the Island of Negros MPC (OPTION)

Still not producing commercially

Uses the reverse process in producing muscovado – from raw sugar to muscovado by adding molasses

It is said that the lower class of raw sugar is used as the primary raw material

JF Ledesma Foundation

The Foundation is said to operate a 0.5 ton muscovado capacity in February of 2010. The set up of the processing plant is supported by Fundacion Codespa and funded by AECID. The processing plant will service and secure supply from 500 small farmers formerly belonging to the Ledesma hacienda.

4. Traders/Distributors

a. Manila Based Distributors

Upland Marketing Foundation Inc. (UMFI)

UMFI started its operation as a marketing arm-distributor of processed food products from community-based enterprises. It aims to provide the appropriate mechanism that can directly support communities’ efforts to establish livelihood projects that are in line with sustainable resource use. Presently, it has around 200 retail outlets that include all the major supermarket chains in Metro Manila such as SM, Rustans, Robinsons, Ever Supermarkets and Seven Eleven Convenience Store. Distribution activities have also expanded to include Northern Luzon, Southern Tagalog and Visayas. UMFI distributes muscovado and 11 other products from communities to mainstream markets in Metro Manila. There are also more than 30 other CBEs serving the seasonal markets of UMFI. As per interview, UMFI requires 3 tons of muscovado per month.

per interview, UMFI requires 3 tons of muscovado per month. Sharmila Inc. Sharmila Inc. is a

Sharmila Inc.

Sharmila Inc. is a Manila based distributor of marine products, seafood products, herbal food supplement and muscovado. The company started in 1970's with bottled fish as their first product entry. It sources its muscovado from Alter Trade and Philippine- Hawaiian Co. at a volume of 36 tons per month. It then repacks and displays the sugar in retail outlets such as the major supermarkets in Metro Manila under the brands Marisco and Alter Trade. Based on an interview with their Administrative Officer, they also export monthly to the Europe, US and Guam depending on the purchase order. They also repack the muscovado into 5cm x 5 cm (1 tsp.) sachet and supply these to coffee shops and restaurants.

order. They also repack the muscovado into 5cm x 5 cm (1 tsp.) sachet and supply

.

Peotraco Industries Inc.

Peotraco Industries Inc. started

sugar, copra and other comm odities. The company later ventured into t he manufacture of confectioner's sugar and recently , muscovado.

in 1924 as People's Trading Company. It was

involved in trading

According to their Purchasing O fficer, Ms. Virgie, it sources muscovado from Ne gros (Hawaiian) and Bais. Negros price is 10% highe r than Bais. Last month, 400 bags were supplied by Negros (200bags

@ 40 kilos and 200 bags @ 50 k ilos. They repack it at 250g and 500 g and distri bute mainly to malls

last year. There are

(80%) and bakeries. There’s a 20 % increase in price of muscovado purchase from

inquiries for organic muscovado from their contacts abroad. Peotraco Industries Inc. passed the TUV

Product Service and is ISO 900 2 certified since December 2000 and ISO 900 1:2000 certified last December 2003.

TFN Far East, Inc. (Makati City)

TFN Far East is a trading comp any based in Makati, Metro Manila. According to Ms. Rose Roque, the Administrative Officer, they stopped purchasing muscovado from Negros (t hey did not disclose the main source) only this year.

b. Foreign Buyers

Of the 5 processors, Alter Trade , Sagay Sugar Central and Phil.-Hawaiian Co. ar e currently exporting

directly to foreign buyers and/or

to Japan and Korea

through the people-to-people tra de. It also exports to Malaysia through the organi c market. For its US

shipments, Filipino traders are t he main buyers. The Sagay Sugar Central has J apanese buyers who repackage it under the local Japa nese brand.

indirectly thru local exporters. Through the fai r trade market, Alter

Trade has buyers from German y, Switzerland, France and Austria. It exports

France, Alter Eco distributes their musco vado to cosmetics/ produce natural/organic body scrub. It is said t hat muscovado adds

moisture to the body scrub wh ile providing exfoliating properties. In Switzer land, in addition to retailing in specialty/organic sho ps, muscovado are utilized as an ingredient in f air trade and organic

chocolates.

The buyer of AlterTrade in pharmaceutical companies that

The buyer of AlterTrade in pharmaceutical companies that Various muscovado products packaging formats from Alter
The buyer of AlterTrade in pharmaceutical companies that Various muscovado products packaging formats from Alter
Various muscovado products packaging formats from Alter sold in the export market. and Trade
Various muscovado products
packaging formats from Alter
sold in the export market.
and
Trade

31

NEGROS MUSCOVADO VALUE CHAIN MAP SCHEMATIC DIAGRAM VALUE CHAI ACTORS CONSUMPTION Fair Trade Chocolate Processors
NEGROS MUSCOVADO VALUE CHAIN MAP SCHEMATIC DIAGRAM
VALUE CHAI ACTORS
CONSUMPTION
Fair Trade Chocolate
Processors
Fair Trade / People to
People Trade consumers
Filipino and Asian
consumers in the US
Local Filipino consumers
Cosmetics and
Pharma
Asian Organic and
natural food shops
EU Fair Trade and
Specialty Shops
US based
Manila
Manila Food
Negros
Negros
Supermarket
Establishments
Grocery stores
Asian Food
Coffee Shops
RETAILING
International Trading:
DISTRIBUTION AND
Individual trader
Hawaiian
PEOTRACO
UMFI Mnla
Local
TRADING
Cortez
EU – Germany, Swiss,
Austria, France
Asia – Japan, Korea
and Malaysia; US
Sharmila Inc.
Manila
V: 36T/mo
Retail Pack: US
Philippines Inc.
V: 18T/mo
V: 2T/mo
traders
Php68/kg
Php 45/kg
Seed Trade
V:1 ton /
day
V: 1.5-2
Php:45/kilo
tons/day
AlterTrade Manufacturing Inc.
Php: 39.50/kg
La Castellana
Sagay Sugar Cen.
V: 4-5 tons/day
TFM
MUSCOVADO
V: 1.4
PROCESSING
V:5-6 tons/day certified organic and Fair
Trade; Php:41/kilo
Area: 60 ha
tons/day
Php: 40/kilo
# Employees:
♀ : 28 (38%)
♂11 (100%)
♂: 46
LaCastellana
LaCastellana
Area: 62ha
SUGAR CANE
Sagay Member
Growers 3,000 to
4,000; Php: 1150/TC
Murcia
Bago
LaCarlota
Talisay
LaCastell
♀0%
♂# 4 – small
1100/TCPhp:
PRODUCTION
scale
cuttings
# 879 growers (♀45%), Area: 812 ha , Php:1250- 1400/TC
PhP: 1100/TC
♂ #: 26
Area: 75 has
Php: 1100/TC
INPUT SUPPLIERS
Commercial Fertilizer
Equipment
Suppliers
17 POs ARBs Producing Organic
fertilizers;
Equipment
Suppliers
Commercial Fertilizer Suppliers /
General Agricultural Supply
Suppliers

32

CONSUMPTION BFAD LTO SRA EXPORT DOCUME BFAD International Cert. Bodies (USDA NOP, EEC 2092/91, Bio
CONSUMPTION
BFAD
LTO
SRA
EXPORT
DOCUME
BFAD
International Cert.
Bodies
(USDA NOP, EEC
2092/91, Bio
Suisse, Naturland)
Export
Cert
RETAILING
LGUs –
Business
Permits and
health cert.
DTI
Market linkage
Promotion thru trade
fairs
TRADERS
FACILITATORS
DOST ITDI Food
Processing Division
PDAP
-
MUSCOVADO
PROCESSING
GMP for micros, based
on availability and
request only
TFM
MUAD
ALTER TRADE
SEED TRADE
FOUND.
SIMAG
Sugar Regulatory Agency
SUGAR CANE
PRODUCTION
(SRA)
Annual Training on sugar
Cane Production
INPUT SUPPLIERS
SIMAG FOUNDATION
– FERTILIZER LOAN
ALTER TRADE
FOUNDATION
-Production Loan
Legend:
CAPACITY
FACILITATORSSUPPORTERS
OPERATORS
INFLUENCERS
BUILDERS

D.

FIRM LEVEL UPGRADI G

1. Sugar Cane Farming

Although there was a 37% overall increase in farmers with a 68% increase in smallholders (less than 5 hectares), average farm size of smallholders decreased from 3.16 hectares in 2002 to 2.09 hectares in 2007. As per studies conducted, a sugarcane farm requires at least 5 hectares to be competitive in the global economic environment. Small farms appeared to be economically inefficient compared to the large ones while medium and large farms appeared to be equally economically efficient. Analysis of input use differences among farm size class shows that the higher input usage by the large farms tends to increase the quantity produced and with the low price of inputs, generates a larger profit per hectare. The higher input prices faced by the small farmers tends to reduce the amount of input used thus giving a lower profit. Thus, part of the allocative efficiency differences between the farm size groups may be attributed to the differences in the input price, resulting from market power. This implies the need for farmers to work collectively from input procurement to marketing to achieve economies of scale.

   

Total Area

Farm Range (in hectares)

2002/03

2003/04

2004/05

2005/06

2006/07

Less than 5

16,801.72

19,212.07

17,512.53

17,991.08

18,714.17

5.01

- 10.00

13,368.65

12,708.10

13,122.46

13,430.11

10,979.10

10.01

- 25.00

26,073.04

24,574.72

26,563.04

26,322.28

25,787.36

25.01

- 50.00

30,459.57

32,465.76

32,725.83

32,713.03

32,761.25

50.01

- 100.00

36,620.81

37,501.32

37,277.64

36,752.94

36,795.16

100.01

- up

35,966.80

37,061.16

30,125.44

37,097.87

37,553.36

Total

159,290.59

163,523.13

157,326.94

164,307.31

162,590.40

Source: SRA Bacolod

 
   

Average Farm Size

 

Farm Range (in hectares)

2002/03

2003/04

2004/05

2005/06

2006/07

Less than 5

3.16

2.89

2.05

2.15

2.09

5.01

- 10.00

8.06

7.66

7.44

7.64

6.22

10.01

- 25.00

18.30

18.22

18.47

18.38

18.30

25.01

- 50.00

37.01

39.35

38.10

38.22

38.27

50.01

- 100.00

67.57

71.43

70.47

70.95

71.31

100.01

- up

145.03

154.42

126.05

157.19

157.79

Source: SRA Bacolod

 

Sugar cane can either be an annual or semi-perennial crop. Its output depends on the daily and monthly maintenance operations on the farm, starting from land preparation up to harvesting and ratooning (second and subsequent years production). The cultivation of sugar cane involves around 21 farm operations and approximately 6 farm inputs. The study entitled “ Determinants of sugar can yield in agrarian reform communities in Negros Occidental” (De los Santos/Mendoza) indicated that the seven variables found to significantly affect sugarcane yields were the amount of nitrogen applied, irrigation, row spacing, practice of chopping cane stalks, number of ratoons, beneficiary's age, and farm size.

Due to financial limitations, ARBs apply inadequate amount of fertilizer and adopt suboptimal land preparation practices, narrow furrow spacing, and improper harvesting and hauling of canes. The ARBs chop sugarcane stalks to increase the hauling capacity of their trucks. Financial constraints also

force them to increase the number of ratoon crops as a cost-saving measure. Land preparation and cultivation are carried out by person-animal power and or by person-machine combinations. It is estimated that 1 hour of animal work is equal to 0.13587 hours of machine work. Likewise, ox-drawn plows cannot create furrows deep enough for the cane's optimum growth. Sugar cane roots must reach one meter (1m) deep for higher yields and more efficient harvesting. However, small farmers generally cannot afford to buy a tractor and the small sizes of their farm do not warrant individual investment on mechanization. Small farmers usually hire tractors and since the scope of work is on a per hectare basis, the cost is high, whereas those large farms with tractors can maximize their use although they pay more overheads, fuels, repair and depreciation costs. A large hectareage can produce sufficient cane tops and planting material, thus, minimizing the cost of seeds. The small farmers have to buy seeds from neighboring farms. Similarly, while medium and large plantations have access to drip irrigation, small farmers rely on rainfall for its water requirements.

Small planters produce only 40 to 60 tons sugarcane per hectare. This is very low when compared to the yields of medium and large farms which range from 80 to 100 MT per hectare or to potential cane yields (120 to 150 tons/ha) achieved in Brazil, India, South Africa and other regions growing sugarcane with drip irrigation and fertigation. Therefore, new and innovative sustainable technologies are needed to raise and sustain sugarcane productivity per hectare. Fertilizer inputs into sugarcane, for instance, are a significant cost of production. Determining the correct blend to use, determining its cost per hectare and comparing to other blends/suppliers is very important for growers. When determining the best blend to use the first and most accurate way is to have soil test taken from the block and for it to be interpreted by a reputable advisor. A soil test will provide accurate recommendations on the rates of nutrients required and a recommended blend or prescription blend to meet this soil and crop needs. Unfortunately, though, technology access/transfer among small farmers is dependent on cut and load) government extension services and peer-to-peer learning. Cut and load (Tapas-karga) and other sugar production-related skills are the only skills most Agrarian Reform Beneficiaries in the sugar plantation possess. The application of technology and management on the farm are entirely new fields to them.

The table below summarizes the differences in knowledge and technology of the 2 levels of farmers in the province.

Farm Size

 

Knowledge and Technology

Analysis of Effect of Differences

Medium/Large

 

Application of recommended rate of fertilization

Small planters produce only 40 to 60 tons sugarcane per hectare, while big planters have yields of 80 to 100 tons per hectare

Production cost of big planters is about PhP50,000

Planters

With irrigation

Trained agriculture technicians – attends SRA trainings and has extensive experiences

New planting materials every cropping

– conventional farming

Small

Planters

Minimum fertilization

Rainfed

per hectare. Production cost of small planters is about

New planting materials every 3 cropping

Usually agrarian reform beneficiaries

PhP25,000 to 30,000 per hectare.

Small organic farmers have an average cost of PhP 45,000 per hectare with yields of 57 tons per hectare.

Small

Planters/POs

Utilization of Organic fertilizer at recommended rate of application

of

Altertrade

 

organic

farming

New planting materials every 3 cropping

system

Usually agrarian reform beneficiaries

A major criticism of the agrarian reform program is the lack of support services to the ARBs. The

recent study conducted by the provincial government of Negros Occidental revealed that 97 percent of the approximately 100,000 beneficiaries (all crops) in the province claimed they have not received any support services from the government. Furthermore, 80 percent also said they have not increased their productivity due to lack of support services, while 70 percent believe they have not obtained any

economic gain from CARP. Another group of beneficiaries in Northern Negros claimed they are not economically better off now that they have their awarded lands than when they were still employees

of their former landowner 20 years ago. In many cases, awardees have leased back their lands to

former landowners. Anecdotal stories also indicated that farm sizes of smallholders are continuously

decreasing since they pawn of sell parts of their land to cover production costs or emergency needs (e.g., when family member is sick, tuition, etc.). This also implies the lack of safety nets.

The lack of adequate accomplishment of the CARP program in sugarcane industry may in fact have a technical and economic policy origin. The World Bank (2009) study finds that sugarcane farming differs markedly from the farming of other major crops under tenanted cultivation. Specifically:

Significant impediments to competition due to regulation are in place, and more are forthcoming owing to the biofuel mandate.

There are moderate scale economies in sugarcane farming

Small scale farming is associated with higher coordination cost

Cost and Return Analysis

Based on the costs and returns of the various cultivation strategies employed in Negros Occidental, it appears that the intensive farming operation has the highest net income but has the lowest return on cost at 87%. Organic farming has the second highest net income as well as return on cost at about 94%. The low intensity cultivation used by small planters has the least net income but has the highest return on cost at more than 100%.

Below are the cost and return analysis based on Altertrade’s experiences:

Cost and Return: Intensive Farming

Gross Income

   

99,733.00

Ave. yield per hectare (tons)

80.00

   

Ave. L-kg/TC

1.50

   

Price per L-kg

1,100.00

   

Net planter share on yield per hectare at 67% (No. of bags)

80.00

   

Cost of production per hectare

   

52,858.22

Land clearing

 

1,080.00

 

Land preparation

     

Plowing (1 pass)

2,500.00

   

Disch harrowing (2 passes)

2,500.00

   

Furrowing

1,350.00

6,350.00

 

Canepoint preparation and plantings

     

Canepoint preparation at P305.79/lacsa x 4 lacsa/ha

1,223.16

   

Hauling in field at P100/lacsa x 4 lacsa

400.00

   

Planting at P305.79/lacsa at 4 lacsa

1,223.16

   

Cost of canepoint at P1,800/lacsa x 4 lacsa

7,200.00

   

Cost and Return: Intensive Farming

 

Hauling cost of canepont at P300/lacsa x 4 lacsa)

1,200.00

Unloading cost of at P70/lacsa x 4 lacsa

280.00

11,526.32

Fertilization

 

5

bags 18-46-0 at P1400/bag

7,000.00

6

bags urea at P1040/bag

6,240.00

6

bags 0-0-60 at P800

4,800.00

Hauling cost of 17 bags at P15/loading-unloading

255.00

Transport cost at P30.00/bag

510.00

Cost of application at P60/bag

1,020.00

19,825.00

Weeding and cultivation

 

Chemical

 
 

1 pack KARNEX

1,720.00

 

1 galoon 24D

1,500.00

 

1 liter stiker

150.00

 

Labor cost of 8 man days at P180/MD

1,440.00

4,810.00

Cultivation

 
 

On barring 3 x 2 passes at P176/pass

1,056.00

 

Offf barring 3 x 2 passes at P176/pass

1,056.00

 

Ridge basting 2 x 3 passes at P176/pass

1,056.00

 

Final hilling up 2 x 3 passes at P176/pass

1,056.00

4,224.00

Weeding 3 x P850/ha

 

2,550.00

Replanting

 
 

1/2 lacsa at P305.79/lacsa

152.90

 

Cost of planting material

900.00

1,052.90

Drainage 8 MD at P180/day

 

1,440.00

et Income

 

46,875.00

Cost and Return: Small Farmers

 

Gross Income

   

66,000.00

Ave. yield per hectare (tons)

60.00

   

Ave. L-kg/TC

1.50

   

Price per L-kg

1,100.00

   

Net planter share on yield per hectare at 67% (No. of bags)

60.00

   

Cost of production per hectare

   

31,490.00

Land clearing

   

1,080.00

Land preparation

     

Plowing (1 pass)

 

2,500.00

 

Disch harrowing (2 passes)

 

2,500.00

 

Furrowing

 

1,350.00

6,350.00

Canepoint preparation and plantings

     

Canepoint preparation at P305.79/lacsa x 4 lacsa/ha

 

1,223.16

 

Hauling in field at P100/lacsa x 4 lacsa

 

400.00

 

Planting at P305.79/lacsa at 4 lacsa

 

1,223.16

 

Cost of canepoint at P1,800/lacsa x 4 lacsa

 

7,200.00

 

Cost and Return: Small Farmers

 

Hauling cost of canepont at P300/lacsa x 4 lacsa)

1,200.00

 

Unloading cost of at P70/lacsa x 4 lacsa

280.00

11,526.32

Fertilization

   

6

bags urea

3,120.00

 

3

bags 0-0-60

2,400.00

 

Cost of application at P60/bag

240.00

5,760.00

Weeding and cultivation

   

Cultivation

   
 

On barring 3 x 2 passes at P176/pass

1,056.00

 
 

Off barring 3 x 2 passes at P176/pass

1,056.00

 
 

Ridge basting 2 x 3 passes at P176/pass

1,056.00

 
 

Final hilling up 2 x 3 passes at P176/pass

1,056.00

4,224.00

Weeding 3 x P850/ha

 

2,550.00

et Income

 

34,510.00

Organic Sugarcane Production Cost per Hectare

   

Rate/Ha.

Soil Analysis

 

150.00

Land preparation

 

8,000.00

Liming

   

Agricultural lime and transportation

3t/ha

1,500.00

Lime application

 

300.00

Planting material

   

Canepoints

4L/ha

4,000.00

Transportation of canepoints

 

600.00

Infield hauling and detrashing of canepoints/ selection

 

200.00

Planting of canepoints

 

800.00

Fertilization