Academic journal article Journal of Southeast Asian Studies

"Syrup in the Wheels of Progress": The Inefficient Organization of the Philippine Sugar Industry

Academic journal article Journal of Southeast Asian Studies

"Syrup in the Wheels of Progress": The Inefficient Organization of the Philippine Sugar Industry

Article excerpt

Entrepreneurs who hoard their wealth or seek government protection from rivals or revel in vain consumption or retreat to selfish isolation betray the very essence of their role and responsibility in the world. To that degree, they are no longer entrepreneurs or capitalists but relics of the feudal and static societies of the precapitalist era.(1)

While the organization of the Philippine sugar industry evolved to promote and balance the short-term interests of planters, millers and traders, it now undermines the industry and threatens the economic fortunes of those who depend upon it. By perpetuating inefficiency and fostering a frenzy of trading that affords inordinate profits for the least productive sector, this structure has become the major obstacle to restoring the Philippines to its former status as one of the world's most efficient and technologically advanced producers of cane sugar. As efficiency falls further behind that of other sugar producing countries, and as industrial consumers become more disgruntled with paying high prices for sugar, the nation risks the collapse of an industry that has already proven vulnerable to intermittent crises. The last time a crisis occurred -- in the mid-1980s -- planters faced foreclosure, mills stood idle, and workers and their families suffered malnutrition and dislocation, leading commentators to refer to Negros, the nation's premier sugar-growing island, as "Asia's Ethiopia" and a "social volcano".(2) While conditions have improved since the EDSA Revolution, the structure that has emerged does little to encourage productivity, efficiency and fairness. Since the industry continues to employ 500,000 workers, with as many as three million dependents, a collapse would lead to mass displacement, hunger, and political upheaval.

This paper will outline the history of the Philippine sugar industry, examine its current structure, and describe the political and economic forces that sustain it. My first contention is that the institutional organization, rather than government policy, cultural attitudes, or neo-colonial dependency, is fundamentally responsible for the poor performance of the industry in recent decades and, unless major changes are forthcoming, will be mainly responsible for its ultimate demise. My second contention is that the Philippines is now recapitulating a pattern typical of nations as they evolve toward mature capitalism: the power of landed, rural elites is eroding and being supplanted by that of urban industry, commerce, and finance. While the organization of the industry is well-suited to advancing the interests of the sugar elites, those interests are increasingly opposed to the interests of newly-powerful urban industries, especially food processors. As these urban interests gain influence, they will be less likely to tolerate higher costs imposed upon them by the inefficient sugar industry whose structure serves only to protect the fortunes of competing elites who are associated with the increasingly discredited old order of society. As long as sugar was a major Philippine export, its producers retained their influence. But nowadays, sugar exports are small relative to textiles, processed foods, and manufactured goods. As industrial production gains in importance, protectionist policies such as those which allow the sugar industry to survive will be less sustainable, and the once-mighty Sugar Barons will no longer have the power to keep those policies in place.

Some Historical Background(3)

The cultivation of sugar cane was already widespread in the Philippines by the time Magellan arrived in 1521. It was not until the late eighteenth century, however, that sugar became anything more than a luxury crop.(4) In 1793, only one cargo, totaling 5,000 piculs,(5) was exported from the Philippines. By 1795, only ten years after Manila was opened to non-Asian commerce, a British merchant was able to procure 40,000 piculs.(6)

When the galleon trade between Mexico and Manila ceased in the early nineteenth century, the Spanish authorities searched for potential exports to replace the lost revenues. …

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