Philippine sugar barons struggle to survive

Philippine sugar barons struggle to survive

By Rene Pastor

HINIGARAN, Philippines (Reuter): Rolling fields of sugar cane stretch to the horizon on either side of a narrow road in the central Philippine island of Negros.

Mariano Yulo, a Filipino congressman, can still point to huge chunks of land owned by cousins and other clan relatives, but he says the good old days are over.

"The days of the sugar barons are gone. I can hardly mention 10 on Negros," Yulo said in an interview.

It was not always like that.

Yulo can remember the time 30 years ago when cash-rich planters from Negros, the premier sugar-growing area in the country, traveled to Manila to spend money with abandon. "That was high society living," Yulo said.

"Those were the days when the bargirls in Manila would flock to you when they find out you're from Negros," said Felix Yusay, another sugar planter. "Now, no more."

For families like the Yulos, who built their fortune on sugar, times are hard as the industry buckles under rising production costs that may drive the few remaining sugar barons out of business.

The industry produces sugar at 22 cents a pound against the current world price of about 10 cents which economists and industry officials said is a gap too wide to ignore.

An agrarian reform law has made banks wary of giving agricultural loans and many institutions refuse to accept sugar farms as collateral. That has driven up costs despite low wages paid to farm laborers.

Another major cost factor is the antiquated equipment in mills and farms. Some steam trains that are used to haul sugar cane from the fields were built in 1920.

"Why should you improve your farm if the government will just take it away," one wealthy planter said in reference to the government's agrarian reform program aimed at giving land to landless peasants.

"The industry is at a crossroads. We really have to become more efficient, otherwise it is going to be a very, very difficult time for them," an industry analyst said.

The yawning difference between high-living sugar barons and poor itinerant laborers turned the island into a hotbed for communist rebels in the past, but improving pay and the capture of key rebel leaders has routed the insurgents.

Domestic demand for sugar is expected to rise five percent in 1994 as a rebounding economy means more demand for sugar-based products such as soft drinks and ice cream.

But Philippine sugar producers may not be able to take advantage of the surging demand if Manila pushes ahead with plans to liberalize the industry by allowing in cheaper imports.

"If the government liberalizes the importation of sugar, it will really kill the industry," said Alfonso Chiu, the manager of the Binalbagan-Isabela Sugar Co Inc mill.

Yulo and other legislators from Negros have mounted a strong lobby in Congress to keep sugar imports out.

The Philippine Food Processors and Exporters Organization, which sells more than US$300 million in food exports a year, accused the sugar industry of being pampered and urged Manila to allow market forces to dictate price and supply.

A sugar development plan proposed by the Agriculture Department tried to strike a compromise by raising tariffs for imported sugar to 100 percent from the current 75 percent to buy time for the industry to regain its strength.

Yulo and his three brothers run their 372-hectare (918-acre) family farm in Hinigaran from an airy, wooden house that wakes up to the crowing of roosters raised in the tree-shaded gardens.

Only 120 hectares (296.4 acres) are now devoted to sugar. The rest are vacant, used to grow coconut trees or turned into fishponds.

Yulo said the number of sugar barons is shrinking as large plantations owned by a single man or family get subdivided between children and grandchildren.

He sometimes thinks of leaving the business.

"Given the choice, I would convert our sugar lands into a subdivision or a memorial home," he said with a grin. "The sugar farms around here will soon become subsistence farms."

Production in the crop year that ended in January was projected to dip to 1.9 million tons from 2.6 million tons, according to the Sugar Regulatory Administration, government body.

The government has urged the industry to diversify away from sugar and into growing flowers, mahogany and fruit trees and raising prawns and fish.

Some have, but a hard core of planters refuse to budge.

"I've been a sugar planter all my life. It's not easy to just change into another crop. The only time I really enjoyed myself was when I was on the farm. We just have to survive," one sugar farmer said.

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