Spoonful of Sugar
How a Sugar Crisis Will Shape Marcos' Presidency and the Future of the Philippines
Philippine President Ferdinand Marcos Jr., son of the infamous kleptocrat and dictator, was elected in a June 2022 landslide. Just two months into his six-year term, the man known as “Bongbong” has found himself embroiled in fiasco and controversy involving the country’s agricultural industry.
Since entering office, Marcos Jr. has imposed strong regulations limiting the import of sugar amidst a nationwide shortage, but his decision didn’t track with members of the Sugar Regulatory Administration, or SRA. Instead, the group went behind Marcos Jr.’s back and authorized the the import of roughly 300,000 tons of sugar. An investigation is underway to determine if the authorization was completed without the President’s knowledge.
SRA administrator Hermenegildo Serafica and board member Roland Beltran have resigned from their posts following the controversy, and both resignations were immediately accepted by Marcos Jr.’s administration. A week before, Agriculture Chief of Staff and Undersecretary for Operations, Leocadio Sebastian, delivered his resignation as well.
Marcos Jr. has now taken the helm of the Department of Agriculture to navigate the looming food crisis and rising prices, establishing near-total control over sugar regulation.
Marcos Jr. initially rejected the proposal to import the 300,000 tons of sugar, with his administration saying the decision needed to be studied to strike a balance between protecting consumers from rising prices while prioritizing local industry. But by Aug. 16, he changed his opinion altogether, with his administration now stating he was looking into importing more sugar.
The flippant stance on the situation and push for control over regulation continues to swell with corruption and deception, foreshadowing what another Marcos reign might bring to the country.
On Aug 21, Bloomberg News reported some 60,000 bags of suspected hoarded sugar from Thailand were found in warehouses during weekend inspections, leading the government to declare the sugar shortage was “artificial” and caused by traders allegedly hoarding supplies to rake in profits.
But following extreme weather events that damaged crops, increasing fertilizer prices, and worsening conditions for sugarcane field workers, the country missed its sugar production target in 2022 which delayed exports and exacerbated the problem.
In May, overall food inflation for the country rose to 6.1% in June, with the retail price of sugar jumping from 53.7 pesos last year to 65.82 pesos in April (roughly $1.21 per kilogram).
The shortage caused Coca-Cola Beverages Philippines Inc. to announce on Aug. 25 that its production lines have been disrupted as a result.
In a rare move, the government is considering allowing industrial sugar users, including beverage companies like Coca-Cola Beverages Philippines, to directly import the sweetener, side-stepping the mandated government approval designed to protect local producers.
In addition to Coca Cola, the shortage has impacted local industry leaders like ARC Refreshment Corp and Pepsi-Cola Products Philippines.
The question boils down to whether or not sugar imports should be allowed, and if so, who should direct the decision, the government’s oversight groups, or individual businesses? But the uncomfortable question beneath it is, what would be the repercussions for prioritizing outside industries over localized suppliers, and can it end in bloodshed?
Domestic sugar prices in the Philippines have consistently been higher than international prices over the last two decades, and the gap continues to widen. SRA data shows raw sugar prices have been between 1.3 and 2.4 times higher than average world prices from 2001 to 2019 due to lower productivity and higher production costs.
Sugar productivity for the country has lagged behind other major producers as well, yielding between 60-65 tons annually as compared to the 70-75 tons averaged by Thailand, India and Brazil, or Australia’s 75-80.
The gap widened even more in 2022, with sugar prices in the Philippines 2.7 times higher than Brazil, 3.1 times higher than Australia, and 4 times higher than Thailand.
The drop in production was noted by government officials in 2021, showing they were aware of the ongoing domestic production issues.
“Excessive trade protection stifles the impetus (of both producers and government) to invest in higher productivity - and this goes well beyond sugar,” wrote Cielito F. Habito in an opinion for the Philippine Daily Inquirer. “And that, my friends, is the continuing story of Philippine agriculture.”
But let’s take a step back from viewing importation as the panacea for the entire agriculture industry throughout the country.
In 2019, The Philippine Society of Mechanical Engineers reported roughly 700,000 Filipinos were directly employed in sugar production, and around 6 million more were indirectly employed, representing close to 7% of the country’s population.
If low sugar yields continue and exportation is directed by major production companies, a workforce shortage could impact the country’s overall economy, especially in areas dominated by sugar production.
The NEDA estimates that fully liberalizing the sugar trade could hurt planters and millers, whose profits are already projected to dip by 57% over the next year. Declining prices could also result in a drop of 16% of sugar industry employees, while domestic output would drop by 6.8%.
By 2050, it’s estimated the population of the Philippines will increase to 182 million as well, meaning sugar consumption will be roughly 4 million tons, or double what it is currently.
Relying on additional imports could not only diminish one of the largest industries in the Philippines, but it could also compound the poor working conditions already experienced by farmers throughout the nation, especially those in Negros, the third most populous island in the Philippines nicknamed “Sugar Island” for to its high production yield.
Ongoing violence has already erupted in Negros, in part, due to these harsh working conditions. Armed and bloody conflicts between the Philippines military and resistance groups have resulted in the death of 14 farmers and activists in March of 2019, with the deaths attributed (with uncertainty) to land owners. Just five months before in Sagay City, nine other farmers from the Philippines National Federation of Sugarcane Workers were killed in an event known as the ‘Sugar Plantation Massacre,’ resulting in the death of three women and two teenage children.
These conflicts are often between the Philippines Armed Forces, landowners, farm workers, and the New People’s Army (NPA), which has started to form alliances with farm workers as the group pushes for an agricultural revolution throughout the country.
Part of the conflicts on Negros and Sagay City stem from disagreements between sugar plantation owners and their workers. Reports of farmers ‘squatting’ in the cane fields during post-harvest season and planting their own crops have caused plantation owners to fight back against their workers. But the workers insist on post-harvest planting to make up for what they consider to be insufficient working conditions that have only worsened over the recent decades, resulting in decreased pay due to lower overall production.
The farmers frequently cite unfair labor practices, calling the island of Negros a feudal system they hope to reform. This includes addressing the minimum wage of agricultural workers on Negros, which is supposed to be 224 pesos (or $5 in U.S.). But instead, many claim they are receiving only 100 pesos a day, and outside of harvest season, they report earning even less. Enforcement of the minimum wage law has been stymied by pakyawan, or ‘by the job’ contract agreements, a practice that several administrations have agreed to address and reform, although no actions have yet been taken.
Reform is needed, and reform is being advocated by the NPA.
The NPA was formed in 1969 and serves as a military wing of the Communist Party of the Philippines. Founder of the group, Jose Maria Sison, lives in exile in the Netherlands but continues to direct orders throughout the Philippines. The numbers of active militia are estimated to be around 10,000 individuals, and they have proven they’re willing to target and fight against politicians, judges, police, soldiers and informants.
As for the sugar crisis, the NPA hopes to seize the opportunity to initiate plans for agrarian reform while increasing the quality of life for plantation workers, gaining their support in the process.
Both the Philippines and the U.S. consider the NPA a radical, rebellious group, with former President Rodrigo Duterte declaring the NPA, along with the CPP, a ‘terrorist organization’ in December 2017. Since the declaration, the NPA has also been designated as a ‘Foreign Terrorist Organization’ by the U.S. State Department, The European Union and New Zealand, often citing violent outbursts and guerrilla warfare.
The group was emboldened during the reign of Bongbong’s father, Ferdinand Marcos, when he declared martial law in the Philippines in 1972 as his second presidential term was set to expire.
The declaration meant parliament was suspended, opposition politicians were arrested, and total censorship from the media was imposed. Marcos took full control of the courts while the army and police tortured and killed his opponents, something that continued throughout his presidency. The widespread human rights abuses and corruption made the period one of the darkest in the country’s history, as millions descended into poverty amid growing national debt.
But one miscalculated assassination led to an outpouring of support for a pro-democracy era, and the aftershocks of the reign from Marcos have cast a wide shadow on his son’s election, making the ongoing feud a generational conflict between the new president and the NPA.
Tensions rose again between the government and the NPA in 1989 when the group assassinated U.S. Army Colonel James Rowe, whom they said was part of a military assistance program for the Philippine’s Army.
A right-wing party-list group of the Philippines government filed a bill in September this year to suppress and ultimately outlaw the Communist Party of the Philippines and the NPA. But the push is a rehash of the previously-appealed Anti-Subversion Act, which established the CPP-NPA-NDF as “an organized conspiracy to overthrow” the Philippines government.
The original Anti-Subversion Act was originally appealed, according to then-Senate Minority Leader Granklin Drilon, because of its infringement on the constitutional rights of an individual.
“The anti-subversion law was ‘buried’ a long time ago, for it was proven that such policy, aside from being prone to abuse and a tool to harass, undermined some of our basic constitutional rights,” said Drilon.
While the NPA has participated in armed conflict and maintains the belief that an armed struggle is central to waging a revolution, many of the groups ideas consist of liberal positions that serve to attract not only farmworkers but the younger generation as well.
For example, in 2005, the NPA conduced the first recorded gay marriage in the history of the Philippines, contrasting the deeply religious nature of traditional Filipino society. The rebellion openly accepts gay and lesbian individuals into their ranks which drew further criticism from then-president Duterte.
The group is also known for receiving additional support from the Gaddafi government in Libya. The NPA reportedly received roughly $7 million from the group in addition to arms and logistical support, according to memos released by WikiLeaks.
The government and NPA continue to engage in guerrilla warfare against one another, but support from the sugar farmers throughout the Philippines could be a powerful factor in who remains in control, something that Marcos Jr. is certainly aware of and continues to watch carefully.
Potential solutions outside of increasing exports while minimizing the chances of fueling a national rebellion and civil war could include improving conditions for sugar farmers, as well as increasing recovery rates of mills, which would require a revamping of facilities and landscaping farms throughout the country. This would be a difficult and expensive task, with 17 sugar producing provinces and roughly 399,100 hectares of land involved in production.
“We’ll reorganize the SRA and then we will come to an arrangement with the industrial consumers, with the planters, the millers, suppliers of the sugar to coordinate and determine the supply and release what’s available to the market,” said Marcos Jr. on Aug. 17, although plans on reorganizing the SRA remain vague, as do any agreements between the different factions involved in production and distribution.
Since the early 1900s, sugar has been a key export and product for the country, and its economy is dependent on its sustainability. If exportation is left to manufacturers, a loss of jobs and falling GDP for the country could plunge the Philippines into economic turmoil, leaving it vulnerable to growing revolutionary forces and a potential armed conflict.
The handling of the crisis will be the greatest initial test for President Marcos Jr., and could determine the future of the Philippines well beyond its agricultural industry.