PHILIPPINE President Ferdinand Marcos Jr.’s  recent visit to Malaysia should serve to remind us about our own sugar industry.

Of late, there has been debate over the price and supply of sugar in Malaysia, particularly the shortage of the commodity some months back. May I contribute to the discussion by pointing to the experiences of our Asean neighbour, the Philippines?

Like Malaysia, the Philippines was one of the world’s exporters of sugar but has now turned into an importer.

The prices of sugar, onions, eggs, vegetables, and chicken have skyrocketed since Marcos came into power. This is mainly attributed to the higher costs of fuel and transport effected by the Ukraine-Russia war.

Marcos, in an unusual move, appointed himself the agriculture secretary in June 2022. This gives the president direct involvement in the country’s food production output as inflationary pressures challenge his administration.

But it’s not all been smooth sailing. One of his ideas to tackle the price crisis has generated huge controversy, namely, to revive the Philippine Sugar Corporation (PhilSuCor) – a financial institution established in 1983 to boost sugar production.

The proposal has triggered flashbacks of the dark years of martial law under Marco’s late father, president Ferdinand E. Marcos.

Monopoly that crashed the Philippine sugar industry

Marcos Sr.’s government had intervened in the sugar industry by creating a monopoly in trading in the 1970s. Sugar at one point in time was seen as “white gold”. Global trade in the crop was reported to be worth US$737.7 million (RM3.35 billion) in 1974.

The then-government had earlier set up the Philippine Exchange Company (Philex), a subsidiary of Philippine National Bank (PNB) to stabilise domestic sugar prices and to manage all sugar exports.

Marcos Sr. had tasked his classmate Roberto Benedicto to lead Philex and the subsequent agencies such as the PhilSuCor and National Sugar Trading Corporation (Nasutra).

Dubbed the country’s “sugar czar”, Benedicto was originally a media baron who owned the Banahaw Broadcasting Corporation, which took over ABS-CBN. He had also served as an ambassador to Japan as well as the PNB chair.

Philex was stockpiling its sugar supply in warehouses, betting on global prices to increase further. The move backfired when they plunged instead, saddling the exchange with a debt of one billion pesos and causing it to go defunct.

This was a blow to the industry because Philex had also acted as a “single agency” for the government, which controlled the sugar supply, marketing as well as external interactions with countries and companies.

Marcos Sr. then established the Philsucom and Nasutra, with the latter acting as the trading arm of the former. However, none of the agencies headed by Benedicto managed to address the country’s sugar problems, which led to the collapse of the sugar industry. Undeterred, the government expanded the functions of Philuscom and Nastura to acquire transport enterprises and storage to facilitate sugar exports.  

However, Benedicto was alleged to have been involved in sugar smuggling and price manipulation by buying sugar cheap from local farmers and selling at a higher price to foreign buyers.

It has been alleged that only certain businesses were favoured for the government programmes and this malaise spread to other sectors. It was also claimed that sugar players were forced to give away five hectares each for so-called “land reform” programmes under Marcos Sr.

Sugar: A sunset industry for the Philippines?

All of this was needless drama and pain for the Philippine sugar industry. It has arguably never fully recovered from the Marcos years.

Even after the fall of Marcos Sr. in 1986, the centralised but clearly wrong approach to sugar continued.

Low farm productivity and rising local consumption resulted in a drop in sugar exports. Moreover, Philippine protectionist measures have kept sugar prices elevated, while agricultural practices have seen limited enhancements.

Sugar imports in the republic are tightly controlled by the Sugar Regulatory Administration (SRA). The increasing domestic demand for sugar and low production have caused prices in the Philippines to soar to among the highest in the region—which is perverse when you consider they actually grow the stuff.

This has forced Marcos Jr. to consider sugar imports to offset the rising domestic demand and prices.

Is it any wonder therefore that industry players have, at best, been hesitant about Marcos Jr.‘s idea of reviving PhilSuCor?

When it comes to agriculture and business; centralisation – and this includes the creation of monopolies, no matter how noble the intention or fastidious the government oversight is – is rarely a good idea.

Malaysia should take note of the Philippines’ travails. Yes, more needs to be done to help our sugar industry regain its glory days as a producer and exporter. But monopolies are simply not the way. – August 1, 2023.

* Selvamuthu Manimaran reads The Malaysian Insight.
 

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.