Tuesday, October 3News That Matters

Why Sugarcane is the Least Profitable Crop to Grow

by Lauro Braganza

As of this writing, the price of refined sugar in Metro Manila (retail) is P98/kg while the washed sugar is P80/kg. With this almost unaffordable price, many people would think that sugar farmers are making tons of money and perhaps, you are thinking of investing in sugarcane farming too – wait until you finish reading this article.

Sugarcane is a major Philippine agricultural product and is second only to rice in the total area occupied around the country under food crops. It is harvested only once every year and the waiting time is quite long compared to other major crops like rice, corn, and vegetables. Although the country is producing millions of tons of sugarcane, still it is not self-sufficient. The cost of production is extremely high and instead, importing sugar is quite economical when talking about sustainability.

Growing up in the mountains of Silay City and working around sugarcane fields until I finished college, I can say that working in sugarcane fields is one of the most laborious jobs and even more physically demanding than working on construction sites mixing concrete. While the island of Negros produces 64% of the total sugar production in the country, the disparity between rich hacienderos and poor sugar workers is obvious and the Agrarian Reform did little to nothing to balance this status. 

If you are here because you want to know the cost of sugarcane production or are just looking around, continue reading. I’ll explain the cost of production, profitability, why this is not a good agricultural product to farm, and why Agrarian Reform failed.

Sugarcane Production Cost, Yield, and Profitability

The following table shows the complete cash flow of sugarcane in one hectare with an average yield of 58 tons. The national average is 60 tones but we used 58 instead because this data is for small sugarcane planters who have 2 to 5 hectares of sugarcane fields. Planters with more than 20 hectares can increase their production up to 80 tonnes/ha due to mechanization. The following cost is updated at the time of this writing and the Lkg price is average. The price differs from mill to mill. We based the following data on Sugarcane Roadmap 2020 report by the SRA with adjusted inflation using the current actual price.

Note for the above table: The total expenses can change depending on the price of fertilizer. The total net income also changes depending on the price of Lkg, fertilizer price, and land ownership. The data above represents only the first season of planting (kabag-uhan). The second season can have a higher yield and lower cost due to the absence of seedpieces (patdan), and lower weed growth. Sugarcane grows faster than weeds after the first harvest (kalaanan). The mill price is the actual price as of July 2022. The Lkg also changes depending on the weather during harvest, age of crop, and variety.

Sugarcane Farming Has Low Profitability

As you see in the table above, whether you are a farmer or not, a P71,004 annual income (P5,917/month) from one hectare of land is ridiculously low. Vegetable farmers can make P200,000 in just one harvest from a half-hectare land in just 120 days. A peanut farmer can get 1 ton from one hectare and can make a net income of P80,000 in just 3 months. An ampalaya and eggplant farmer can triple the amount of profit in just 3 months, and so on and so forth. 

Assuming you have 3 hectares of land planted with sugarcane and are making a total net income of P213,012 a year or P17,751 a month, this is still not enough to feed a rural family of 6 with 3 students. And the sad reality is, that beneficiaries of Agrarian Reform are given only 1.8 to 3 hectares. What can you do with 3 hectares of sugarcane or P17,751 a month’s family income while doing much of the hard labor?

Even 5 hectares of sugarcane with a monthly income of P29,585 can barely support a family of six with one college and two high school students. A Filipino family with three students that has a total household income of P29,585 a month is considered “lower middle class”,  with just enough to buy basic needs. If both parents are working in the field, this income from a 5-hectare plantation is not worth spending time with.

Image credit iMoney.ph

On the other hand, if you have 2 to 3 hectares planted with crops other than sugarcane especially high-value vegetable crops like eggplant, string beans (pole sitaw), ginger, garlic, ampalaya, and even sweet corn, sweet potato, peanuts, and rice, you can have a higher net income within a year per hectare. My neighbor here in Batangas just harvested tomatoes from his 0.75-hectare and netted a staggering P135,000 in just his first harvest.  Tomatoes are harvested 3 to 5 times with the second harvest always having the highest yield.

Pros and Cons of Farming Sugarcane

This section will help you fully understand sugarcane farming and production.

PROS

  • Marketing

The biggest advantage of farming sugarcane is that the customer is always there and ready to buy. Unlike any other farm crops that you have to look for buyers to market your harvest, sugarcane doesn’t need a middleman. Once your harvested cane is brought to a sugar mill, all you have to do is wait for your check (quedan), which is usually released on Fridays by most sugar planters associations in Negros.

  • Plant Management and Experience

Another advantage of sugarcane is that it is easy to manage and there are tons of experienced people around you. Most of the people who grew up in the rural Negros know how to manage sugarcane plantations from planting, and cultivation, to harvest. It is one of the least-sensitive crops to grow and diseases can be controlled easily if there are any. 

CONS

  • Low profitability per hectare per year

As mentioned above, sugarcane costs a lot to plant and manage but provides little income when we talk about per hectare per year profitability. Another reason why the land potential is limited is that sugarcane is not a good intercropping plant. Yes, you can plant rice, corn, and even peanuts between rows but the yield of these intercrops might only break even your expenses. 

  • Labor intensive

If you have at least 3 hectares of land and there is not enough manual labor around your neighborhood, don’t dream of planting sugarcane. The table above doesn’t even include the personal time of the sugar planter inspecting his one hectare every now and then while occasionally pulling weeds on his way. Machines are not applicable in many parts of Negros because of the hilly landscape so manual labor is highly needed. In order to load a truck of sugarcane (approx 12 tonnes), you need at least 6 people (one group of karga-tapas). Unlike farming other crops where a family can manage a hectare of land, sugarcane needs a bit of hard labor help from other people.

Workers loading sugarcane image credit NAVI G TOUR

  • Lack of labor force

Many small planters in Negros sell their standing cane to bigger planters for a lower price because they don’t have the labor force to harvest their mature canes. The selling of standing cane to other people who have money and resources to harvest has been going on for a while. It is not illegal but it could incur a big loss to the farmer.  Loading sugarcane in a truck is hard and pays less. Right now, the cost of karga-tapas (cutting and loading) per ton in rural Silay City paid by small planters is P300 (Hacienderos pay P250 to 280/ton). A group of 6 that can fill a truck of approximately 12 tons in a day can earn P600 each. This is not daily though as both the group and its truck can only manage to achieve 4 to 5 trips in a week.  Most of the younger generation, especially those who finished senior high prefer to drive, become security guards, or work in malls.

  • You don’t control the price

Unlike other crops, sugarcane needs processing in order to reach the end users. It’s not like sweet potato that when someone wants to buy, you just dig, or sweet corn, or eggplant, etc. You can control the price of these crops especially if you are selling in your local market. There is a big difference when it comes to sugarcane. The planters association controls the price together with the people who run the sugar mill. Of course, you must be a member of an association in order for your cane to get milled and get sold. The big problem is, that the Sugar Regulatory Administration (SRA), is also run by people who are mostly from the planters association. These people are powerful and mostly hacienderos with hundreds to thousands of hectares of sugarcane plantations.  

Even if you deliver truckloads of sugarcane into a sugar mill you can’t sell a single kilo of raw or refined sugar directly from your produce, and you must also agree to the price issued by the association. You won’t have any choice.

  • Not a healthy work environment

Working in sugarcane fields is far more stressful than working in rice fields or farming vegetables. Imagine pulling weeds manually inside the field where the plants are taller than you on a hot sunny day. You can get suffocated while being paid P250/day, or worse, less by greedy traditional hacienderos.

  • Waste of land and can’t provide real jobs

Yes, farming sugarcane is a waste of land, and here’s why. One of our neighbors got 3 hectares of land through Agrarian Reform. It was previously planted with sugarcane. He converted one hectare into a ricefield and the other 2 hectares into vegetables and bananas. He allocated around 400 square meters to grapes. The place became a small eco-farm and local tourists started to visit. He is now employing 10 permanent people and 12 occasional employees who are only called during the planting and harvesting of vegetables. When the land was owned by a haciendero before as part of a 120-hectare hacienda, it was not as productive as it is today. 

Another neighbor also did the same but with a different approach. He converted his 3 hectares into poultry and piggery with a small game farm for gamefowls. Now he employs 6 permanent people with full benefits. 

  • Sugarcane farming is bad for the environment

Both sugar mills and the burning of harvested farms emit large amounts of greenhouse gasses. Unlike rice which the stalks can be decomposed by repeated tilling, cane tops and dry leaves will attract a lot of beetle larvae which could eat sugarcane roots if left unburned. 

  • The sugar industry is a disgrace for laborers

The lowest-paying established job in Negros is working in the sugarcane field. The sugar industry contributes around P70B to our local economy yet sugarcane workers are being treated like slaves. A big atrocity is that hacienderos with more than 100 hectares of land are paying less to workers than small planters with 3 to 10 hectares of land. This tradition is rooted in the Spanish era when workers are treated like slaves. 

If you go around the rural places in Negros Occidental, those haciendas that are not yet distributed to people under Agrarian Reform, have more poverty compared to those already distributed. The reason is not only because people are working on their own land, but also because small planters who came from being laborers pay higher compared to the slave-owner hacienderos. 

Karga-tapas for example in my hometown Silay City now cost P300 to P320 per ton (small planters’ rate), while hacienderos like the Severinos, Gamboas, Locsins, Lacsons, Marañons, etc – still pay a ridiculous P280 to 290 per ton. This is the reason why the rich continue to get richer while the poor continue to get poorer. 

  • SRA corruption

The Department of Agriculture does not directly handle the sugar industry but the SRA. SRA works under DA. Former President Rodrigo Duterte in one of his speeches mentioned that he planned to abolish the agency because it is not doing its job aside from making money for the officials. 

  • Big loss in burned sugarcane

Here in Batangas, workers prefer to work on burnt sugarcane, and in fact, when the plantation is too dense, they purposely burn it. As a Negrense, we have a saying that goes “tinamad nga obra”  (trabahong tamad) or (burning sugarcane is the work of a lazy person).  This thing is not happening in Negros unless badly needed and only in smaller quantities. Burned sugarcane in Negros can be rejected by the sugar mill especially if it passes 4 to 6 days and is already smelling bad. When this happens, you can say goodbye to your money.  Therefore, it is always advisable to have people available to harvest anytime when accidents happen. Sugarcanes that are ready to harvest during the hot summer season sometimes cause stress to planters because dry sugarcane leaves can easily attract fires even when thrown with a lighted cigarette butt.

Why Agrarian Reform is a Failure in Negros

I bet you can already guess why it failed even without my explanation here. Again, even a 5-hectare of sugarcane will barely support a family of six with a college student but I will explain further.

The main reason why AR failed in Negros, particularly in Negros Occidental, is because of lack of diversity, education, and financial support from the government. Most people who converted their 2-hectare land into other crops succeeded while those people who didn’t and without other means of income, failed miserably.

This family received a total of 12 hectares divided into 5 siblings at 2.4ha each. All of them grew up working in the same fields.  Only one finished high school and became a security guard for more than 10 years. 

Because of the lack of financial capital and resources, 4 of them sold their CLOA (Certificate of Land Ownership) to another neighbor who have the resources to farm the land. When the money paid runs out, they return to working not for their farms but for the same farm that is now owned by other people. 

Meanwhile, the sibling who worked as a security guard for 10 years in Manila returned home and started planting vegetables, coconuts, bananas, and raised poultry. Now he is an egg producer and distributor selling around 2,000 eggs per day netting at least P210,000 per month. After 3 years since he started his poultry, his siblings left the sugarcane fields and work for him. 

On the other hand, the person who purchased their land started diversifying due to the lack of labor force. 

The government failed because it didn’t see that a 3-hectare sugarcane farm can’t support even a small family. In order to survive with that size of land, sugarcane must be thrown away and rice, corn, vegetable, animals, and other high-value and short-term crops and livestock must be prioritized. The government never provided any subsidy to sugar farmers, especially the small planters.  

Although Negros Occidental by gross income, is one of the richest provinces in the country, it is also one of the poorest because of sugarcane slavery by the hacienderos. The sugarcane business should be left to rich people who don’t want to pay proper wages but have enough money to mechanize their farms.  If you or your family have been working in sugarcane fields for decades, plant other crops once you get your land through Agrarian Reform. 

There are a lot of useful and rewarding things to do if you have 2 to 3 hectares of land – not sugarcane – never if you want to survive.

If you are planning to enter into the sugarcane fiasco now, think a million times and consider the information above.  

What do We Recommend?

If you have 2 to 3 hectares of land in Negros or any other part of the country where sugarcane is abundant, stay away from planting sugarcane. Shift to both short-term and long-term crops. Long-term crops include coconuts, bananas, fruit trees, and bamboo. Short-term and fast moneymaking crops include high-value vegetables like eggplant, ampalaya, sitaw, potato, squash, patola, etc. Do not plant one variety of vegetables in high volume. We recommend one variety of vegetables for every 300-500 square-meter lot.

Raising broiler/layer chickens and even free-range is another profitable business, including goats, pigs, and even rabbits. There is no limit on what you can do if you look away from sugarcane and try other crops. Most people in Negros have been imprisoned by the “sugarcane riches” that are impossible to achieve for small planters.

If your land is irrigated and/or if the water supply is possible, a 1-hectare rice paddy is dream-come-true for many people.

Good farm planning is essential for long-term success.  Many vegetable farmers here in Batangas who previously planted sugarcane, are living in their dreams while providing jobs to local people and paying even above the minimum wage. The market is not a problem for vegetable growers as long as you do not produce more than what is needed in your local market especially if you are far from city markets.

Instead of encouraging small planters to plant sugarcane, the government should focus on looking for cheap foreign sugar suppliers. Only rich people, especially those who own hundreds of hectares of land, are benefiting from the sugar industry without touching the soil.

Small planters who own 3 to 5 hectares of land should say goodbye to sugarcane if they want to live a sustainable life.

Frequently Asked Questions Answered

Can sugarcane grow in the Philippines?

Sugar is an important crop in the Philippines that is planted throughout the country but is most abundant in the Visayas and particularly on Negros Island. Total production of sugarcane reached $815 million in 2020, making it the fifth largest crop by value following rice, bananas, corn, and coconuts.

What is the sugar capital of the Philippines?

Negros Occidental, with Bacolod City as its capital, is considered the Sugar Bowl of the Philippines. The province produces 55% of the country’s total sugar output.

Why sugarcane is important in the Philippines?

The Philippines Sugarcane Industry contributes no less than P70 Billion to our economy annually. Out of the total land area of about 30 million hectares, sugarcane is planted in about 422,500 hectares in the Philippines, with about 62,000 farmers.

Why sugarcane production in the Philippines is low?

At present, the sugar industry is threatened by at least four factors: first, the high costs of production—inputs, labor, and interest rates; second, the low yield and low market price of sugar, which leads to low farm income; third, climate change, which has become more damaging in recent years; and fourth, a labor shortage.

Where is sugarcane mostly grown in the Philippines?

The largest sugarcane areas are found in the Negros Island Region, which accounts for 55% of sugarcane areas planted. This is followed by Mindanao which accounts for 20%; Luzon with 17%; Panay with 07%; and Eastern Visayas with 04%.

Does the Philippines import sugar?

In 2022, the Philippines greenlighted the importation of 18,294 metric tons (MT) of refined sugar from Thailand to boost domestic supply and temper rising prices of the sweetener that have continued to skyrocket to all-time highs in recent weeks.

How long does sugarcane take to grow in the Philippines?

Sugarcane is planted with a relatively wider row spacing. The sugarcane growth is very slow in the initial stages. It takes about 30 – 45 days to complete germination and another 60-75 days for developing a full canopy cover. The crop is grown under abundant water and nutrient supply conditions. It takes 9 to 10 months to harvest depending on the variety.

What does it cost to farm sugarcane?

The cost of farming sugarcane in the Philippines can range from P60,000 to P80,000 depending on several factors. See the table above.

Does the Philippines Import sugarcane?

In the 24-month period from September 2018 to August 2020, the Philippines imported 735,000 metric tons of refined sugar (in the previous 12-month period, the country imported none).

How much is sugar in the Philippines?

Manila markets have seen the average cost of a refined sugar kilogram go from 56.5 pesos to 74 pesos during the pandemic, reaching weekly peaks of 90 pesos. Food inflation in the Philippines reached 5.2% in May. As of this writing, the cost of sugar per kilo ranges from P86 to P100.

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