THE Central Azucarera Don Pedro Inc. (CADPI), a subsidiary of Roxas Holdings Inc. (RHI), has permanently shut down its milling operations, raising concerns from sugar planters on where to mill their cane, documents showed.
Documents posted on the Sugar Regulatory Administration (SRA) website showed that CADPI President and CEO Celso T. Dimarucut informed the agency of its plan to “permanently close” milling operations beginning Crop Year 2022-2023.
Dimarucut said CADPI has been “experiencing operational and financial challenges within the current conditions affecting the sugar industry in the Batangas area.”
In particular, Dimarucut cited the dwindling sugarcane supply being brought to CADPI’s mill, which was caused by a “host of external factors.” The CADPI executive also noted the mill’s “aging” and “over-sized” mill equipment.
“Thus, after careful deliberation, the shareholders and management of CADPI have decided to permanently close its milling operations starting this crop year 2022-2023 and shall be immediately informing all of its stakeholders of this decision,” Dimarucut said in his letter to Alba dated December 15.
Dimarucut said CADPI would now focus on its sugar refining operations “where it is more optimistic” and “foresees opportunities to sustainably grow” its business.
The documents posted on SRA’s website showed that Alba replied to Dimarucut through a letter on December 16. Alba’s letter was received by RHI Vice President and Head for Legal and Human Resources Ma. Hazel L. Rabara-Retardo last December 23 at 12:01 p.m.
In his letter, Alba told Dimarucut that sugarcane planters, who have been regularly milling with CADPI, are concerned about the mill’s shutdown.
“In connection with your decision to close your mill, and nothing that it is already mid-milling season, the sugarcane planters regularly milling with you have raised their concern on how they will be able to have their canes milled considering the closure of your mill,” Alba said in his letter, which was also copy furnished to CADPI’s Senior Vice President Commercial Operations George Cheung.
“In their behalf, may we therefore know if your company has any plans on helping your regular sugarcane planters regarding their plight,” Alba asked.
Alba told Dimarucut the SRA is willing to assist CADPI “in facilitating the milling of canes” of its sugarcane planters.
The BusinessMirror sought comment from high-ranking officials of RHI and CADPI but they did not respond to requests at press time. An industry insider told the BusinessMirror that the closure of CADPI’s milling operations would be a “bane” to sugarcane planters in Batangas.
With it, the only operating sugar mill in Batangas would be the one operated in Balayan by the Sugar and Renewables Group of Universal Robina Corp. (URC-SURE Balayan).
Public SRA documents showed that URC-SURE Balayan started milling operations last November 5, with a cumulative raw sugar output already of about 13,829 metric tons (MT) as of January 1. The same documents indicated that CADPI has not operated in the current crop year, which started last September 1.
In the previous crop year 2021-2022, CADPI operated for 13 weeks producing 41,682 MT of raw sugar, based on SRA data. CADPI’s raw sugar output in the previous crop year was 31.31 percent lower than the 60,679 MT it produced in crop year 2020-2021.
CADPI was the second largest raw sugar producer in Luzon, accounting for 31 percent of the total 133,403 MT produced last crop year. CADPI milled 477,487 MT of sugarcanes in the previous crop year.
In its annual report for fiscal year ending September 30, 2022, RHI said CADPI “still managed to be the leading mill of choice in the Batangas area because of continuous thrust to improve quality of sugar production” despite an 11-percent reduction in market share in the previous crop year.
“The main factors which slowed down the milling operation this crop year were low farm productivity, dwindling number of manual cane cutters & challenges in factory equipment,” the company said.
RHI said CADPI primarily sources its sugarcane requirements from planters and traders in Batangas.
RHI added that CADPI mainly sells its sugar to the domestic market, which include those in the pharmaceutical, food, and beverage businesses, but also cater to foreign buyers “when opportunity arises.” CADPI also sells raw sugar to households small and medium-sized enterprises through wholesalers and retailers.
Publicly available online SRA documents showed that the Don Pedro Mill District had 4,835 sugarcane farmers in crop year 2017-2018, bulk of which or about 4,194 were tilling below 5 hectares of land.
In a disclosure to the Philippine Stock Exchange last month, RHI said CADPI’s sugar milling operations are “more susceptible” to the challenges that the sugarcane industry is than Western Visayas “because of more agricultural land conversions and the lack of an established irrigation systems.”
No less than RHI’s Chairman Pedro O. Roxas had said the local sugar industry has been “vulnerable” to “severe” climate change that has “negatively impacted sugarcane production, resulting in a general decline in cane supply, as well as, lower sugar recovery.”
“These unfavorable weather conditions, including La Niña, have been adversely affecting cane supply in recent years,” Roxas was quoted as saying in a press release last December 14.
Given the challenges faced by raw sugar production in the country, Roxas said RHI’s “pivot” to focus on its sugar refinery is “proving” to be a “just-in-time” project.