The government is promoting the development of tracks of land in Southern Philippines into sugarcane plantations. A foreign investor engaged in food or beverage production which consumes a lot of sugar may invest in sugarcane production in the Philippines to supply its sugar requirements. Although Philippines sugar cannot be exported directly, some forms of cost leverage on the foreign investor's sugar from the Philippines can be arranged. We also consider bioethanol as another source of revenue for the sugar industry. Its demand in the domestic market is high and will further rise as the government mandates the increase in the blend of bioethanol with all gasoline sold domestically.
Promotion of agri-business projects like sugarcane plantations will make use of our undeveloped or idle lands or existing farmlands where investments are needed to make them more productive. Owners of undeveloped alienable and disposable lands, cultural ancestral domain claimants (CADCs) and beneficiaries of agrarian reform programs (ARBs) are important stakeholders.
Sugarcane production is highly desirable and very profitable. Supporting computations done by an industry player prove its desirability. Furthermore, sugarcane production is one of the government's priority activities that would be eligible for a package of incentives under the Omnibus Investment Code.Investment Opportunities
Most of the sugar produced in the country go to the domestic market. On top of this, we set aside about 200,000 tons to preserve preferential access to sugar exports to the US. The Philippines tries to always honor its commitment to the US because it is a generally favored market.
Normally, the industry is producing enough of what the country needs. It is for this reason that area expansions in the industry are geared for the production of alternative products. But sometimes, an El Nido-induced drought may damage crop resulting to low harvest. The Sugar Regulatory Administration (SRA) determines if there is a need to import sugar when the crop year ends and sugar millers had reported their actual sugar productions. When the SRA sees that there will be a tight domestic supply, importation becomes necessary for the government to ensure it keeps preferential export quotas to the US and to maintain a buffer stock. Newcomers in the industry will have this market in case such phenomenon happens. But we don't want them to exist just to address the shortage in sugar when there is tight domestic supply.
The Mill District Development Committees (MDDCs) are optimistic on increasing the country's production of ethanol. The Biofuels Act of 2006 which aims to achieve a three-pronged objective of energy security, countryside development, and environmental protection mandates the use of ethanol and/or ethanol-blended gasoline for the transport sector.
The enactment of the Biofuels law created a sure market for locally-produced ethanol but our existing capacity cannot supply the demand. To address this gap and to comply with the mandate, oil companies import their additional requirements from other countries particularly from Brazil.
Meanwhile under the said law, fuel companies are currently required to blend ethanol with gasoline at 10% this year with some exemptions. Current ethanol demand is estimated at about 219 million liters versus domestic production of merely 80 million liters, derived from sugarcane and molasses.