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Coconuts and sugarcane are the leading commercial crops. Abaca, dyed fibers
of which are shown here, is less important.
Courtesy Philippine Tourist Research and Planning Organization
From the mid-nineteenth century to the mid-1970s, sugar was the most
important agricultural export of the Philippines, not only because of the
foreign exchange earned, but also because sugar was the basis for the
accumulation of wealth of a significant segment of the Filipino elite. The
principal sugarcane-growing region is the Western Visayas, particularly the
island of Negros. In 1980 the region accounted for half the area planted in
cane and two-thirds of the production of sugar. Unlike the cultivation of
rice, corn, and coconuts, sugarcane is typically grown on large farms or
haciendas. In the mid-1980s, more than 60 percent of total production and
about 80 percent of Negros's output came from farms twenty-five hectares or
larger. Countrywide, tenancy arrangements existed for approximately half the
sugarcane farms; however, they were generally the smaller ones, averaging
2.5 hectares in size and accounting for only slightly more than 20 percent
of land planted in the crop. Elsewhere, laborers were employed, generally at
very low wages. A survey undertaken in 1990 by the governor of Negros
Occidental found that only one-third of the island's sugar planters were
paying the then-mandated minimum wage of P72.50 per day. The contrast
between the sumptuous lifestyles of Negros hacenderos and the poverty of
their workers, particularly migrant laborers known as sacadas, epitomized
the vast social and economic gulf separating the elite in the Philippines
from the great mass of the population.
In the 1950s and 1960s, sugar accounted for more than 20 percent of
Philippine exports. Its share declined somewhat in the 1970s and plummeted
in the first half of the 1980s to around 7 percent. The sugar industry was
in a crisis. Part of the problem was a depressed market for sugar. A
dramatic increase in the world price of sugar had occurred in 1974, peaking
at US$0.67 per pound in December of that year. The following two years,
however, saw prices fall to less than US$0.10 a pound and remain there for a
few years before moving upward again toward the end of the decade. Sugar
prices fell again in the early 1980s, bottoming in May 1985 at less than
US$0.03 per pound and averaging US$0.04 per pound for the year as a whole.
In early 1990, prices had recovered to US$0.14 cents per pound then declined
to approximately US$0.08 to US$0.09 per pound.
Historically, the Philippines was protected to a certain degree from
vicissitudes of the world price of sugar by the country's access to a
protected and subsidized United States market. In 1913 the United States
Congress established free trade with its Philippine colony, providing
Filipino sugar producers unlimited access to the American market. Later, in
1934, a quota system on sugar was enacted and remained in force until 1974.
Although Philippine sugar exports to the United States were restricted
during this period, the country continued to enjoy a relatively privileged
position. Philippine quotas for the United States market in the early 1970s
accounted for between 25 and 30 percent of the total, double that of other
significant suppliers such as the Dominican Republic, Mexico, and Brazil.
After the quota law expired in 1974, Philippine sugar was sold on the open
market, generally to unrestricted destinations. As a consequence, shipments
to the United States declined.
On May 5, 1982, the United States reestablished a quota system for the
importation of sugar. Allocations were based on a country's share in sugar
trade with the United States during the 1975-81 period, the period during
which Philippine sugar exports to the United States had dwindled. The
Philippine allotment was 13.5 percent. Efforts by the Philippine government
to have it raised to 25 percent, the country's approximate share during the
previous quota period, were unsuccessful. The loss of sales imposed by the
reduced quota share was compounded by a dramatic 40 percent drop in total
United States imports of sugar in the mid-1980s as compared with the early
1970s. Philippine sugar exports to the United States that had averaged just
under 1.3 million tons per year in the 1968-71 period averaged only 284,000
tons from 1983 to 1988, falling to approximately 161,000 tons in 1988. In
1988 only 273 thousand hectares were planted in sugar, about half that of
the early 1970s.
During the earlier quota period, Philippine producers enjoyed high profits,
but operations were inefficient and lacking in mechanization. Sugar yields
in the Philippines were among the lowest in the world. Increases in
production occurred through expansion of land area devoted to sugarcane.
With falling prices and the end of the United States quota, attempts to
improve productivity through mechanization increased yields, but caused a
dramatic fall in labor requirements, initially by 50 percent and, over a
longer period, by an estimated 90 percent. In an island economy such as that
of Negros, where sugar has accounted directly for 25 percent of employment,
the consequent actual and potential lost livelihood was disastrous.
The decline of the sugar industry was complicated by the monopolization that
took place during the martial law period, a process not dissimilar to what
occurred in the coconut industry. In 1976, as a reaction to the precipitous
decline in sugar prices, Marcos established the Philippine Sugar Commission
(Philsucom), placing at the head his close associate Roberto Benedicto.
Philsucom was given sole authority to buy and sell sugar, to set prices paid
to planters and millers, and to purchase companies connected to the sugar
industry. A bank was set up in 1978, and the construction of seven new sugar
mills was authorized at a cost of US$40 million per mill.
By the 1980s, considerable resistance to Philsucom and its trading
subsidiary, the National Sugar Trading Corporation (Nasutra) had been
generated. As with the monopoly in the coconut industry, the government
acquiesced in its 1985 agreement with the IMF to dismantle Nasutra. But the
damage had been done. In a study undertaken by a group of University of the
Philippines economists, losses to sugar producers between 1974 and 1983 were
estimated to be between P11 billion and P14 billion. Aquino established the
Sugar Regulatory Authority in 1986 to take over the institutions set up by
Benedicto.
Data as of June 1991
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