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History

Important Milestones in the History of the Philippine Sugar Industry

1755 Sugar exportation to China started.
 
1775The Philippines emerged to be the largest sugar exporter in Asia.
 
1785The port of Manila was opened to non-Asian commerce. 
1788 Spain and India were added to Philippine sugar export markets.
 
1796 Sugar exportation to the US began when SS Astrea, the first North American cargo ship docked in the Philippine ports. 
1880s Early in this period the trend towards large sugarcane plantations began. 
1842 Sugar emerged to be the country’s leading export.
 
1855 The port of Iloilo was opened to vessels of all flags, hence an increased trade and promotion of the sugar industry in the area.
 
1856 Seeing the potential of sugarcane, Nicholas Loney, a British, established a credit system that eventually encouraged the modernization of the sugar industry. He convinced Russel & Sturgis, an American financing company, to open a branch in Iloilo.
 
1880 The country produced over 200,000 tons of sugar for the first time, making it the third largest producer in the world, next to Cuba and Java.
 
1899 The Phil-American war resulted in a dramatic reduction in sugar production and consequently to exports as well.
 
1909 Payne-Aldrich Law was enacted, allowing Philippine sugar to enter the US tariff free provided it would not exceed 300,000 tons. Any amount in excess of this was to be charged the full tariff rate.
 
1909 The US Congress enacted the Underwood-Simons Act removing the quota limitation of 300,000 tons on Philippine sugar exports and lifting tariffs on Philippine sugar.
 
1918 The country started producing centrifugal sugar and, in the following year, raw sugar for use by refineries. 
1928 Sugar production, bolstered by the introduction of centrifugal mills, further rose to 807,000 tons.
 
1914-27  820 hacienda mills in Negros were replaced by mostly American-owned centrals and their associated rail networks; these were the first mills to use the production sharing schemes.
 
1929 Stock market crash in the US marked the beginning of economic depression. Sugar consumption declined, prices slumped, and the best growers wanted the volume of imported sugar reduced.
 
1934 The Tydings-McDuffie Independence Law limited the importation of duty free sugar to the US, which continued during the Commonwealth period until 1946. The US sugar quota system was established under the Jones-Costigan Act of 1934. 
1937 The first International Sugar Agreement was established to control sugar prices.
 
1941-42 The WW II wrecked havoc on the sugar industry when the Japanese took over some of the mills that were not destroyed by the producers themselves. The Japanese operated two mills to produce sugar, not for food but for liquid fuel. 
1943 Sugar supply reached a critical level, forcing the Japanese to ration sugar. Towards the end of the war, the Japanese started destroying more mills, resulting in damages to the industry of more than P75 million. 
1946 The Philippine Rehabilitation Act and the Bell Trade Act, known as the Philippine Trade Act, were signed by President Truman. Under the Philippine Rehabilitation Act, war-damaged sugar mills were given monetary grants. The Bell Trade Act, provided for the continuance of sugar free trade between the Philippines and the US for eight years. After 1954, a gradual imposition of US tariff duties was to be placed in effect for a period of 20 years; thereafter beginning in 1974, full duties were to be assessed. It also set absolute quota of 980,000 short tons free of duty.
 
1954 The Laurel-Langley Agreement was inked, stipulating among others the delayed imposition of US duties until 1959.
 
1958 The industry’s performance turned out to be phenomenal – from 112,884 short tons after the war, production rose to 1.313 million tons.
 
1962 Amendments to the US Sugar Act of 1948 assured the Philippines of a basic export quota of 1.05 millions short tons raw value plus 10.86% of increased US consumption requirements or a total basic quota of 1.126 million short tons. 
1971 The country’s export to the US peaked at 1.593 million tons earning for the country around $210 million. 
1972 The Philippine share of US imports rose to 1.326 million tons, as Cuba under the embargo imposed by the US lost its share of the US market.
 
1974 The Laurel-Langley Agreement expired. Access to the US market, though continued, was limited to 13.5% of the total US sugar import requirement. 
1975-78  Worldwide glut of sugar forced prices to plummet. Surplus sugar was stored in swimming pools, schools, and churches in Negros.
 
1976 President Marcos created PHILSUCOM and its trading arm, NASUTRA, to control domestic pricing, local distribution and marketing, and all the export functions.
 
1980s High-fructose corn syrup started to make inroads, displacing cane and beet sugar in the US soft drinks industry.
 
1984 NASUTRA closed operations.
 
1986 PHILSUCOM was dismantled and the Sugar Regulatory Administration (SRA) was created to promote the growth and development of the sugar industry through greater participation of the private sector and to improve the working condition of the laborers.
 
1987 The Comprehensive Agrarian Reform Law (CARL) was implemented resulting in further fragmentation of farms and a decline in the average hectarage.
 
1992 Sugar mills were included in the Investment Priorities Plan of the Board of Investment to encourage rehabilitation and modernization of the milling sector.
 
1995 The Philippine Sugar Research Institute Foundation (Philsurin) was organized to fast track the sugar industry’s development towards world-class competitiveness. 
1996 Executive Order 313 took effect modifying the tariff rate for sugar to 100% for out-quota imports to be gradually reduced to 65% by 2000. In-quota tariff rate was pegged at 50%.
 
1999 World market prices dropped to their lowest in 500 years in real terms, or 4.5 cents a pound, and the industry was saved by President Erap Estrada issuing an Executive Order mandating tariff bidding (Conversion Fee that became the Sugar ACEF) for importation as a Safeguard Measure under the WTO Rules. 
2000 The industry formulated a "Master Plan for the Sugar Industry" which addresses priority concerns deemed important to increase the productivity and sustain the viability of the industry.  Two years later, the Sugar Master Plan Foundation was established to implement the various components of the Master Plan. The Philippines was awarded a grant of USD 1.4M for a Sugarcane Variety Improvement Program in Southeast Asia and the Pacific, with PHILSURIN as the executing agency. 
 
2001 The Philippine government negotiated the transfer of raw and refined sugar from its CEPT Temporary Exclusion List to its Sensitive list, which was approved by the ASEAN Ministers during the 33rd ASEAN Economic Ministers Meeting held in Vietnam in September 2001. In July 2003, EO 230 was issued to this effect imposing 48% tariff concession on imports of raw and refined sugar from ASEAN Members. 
 
2003 President Gloria Macapagal-Arroyo issued EO 164 to implement the Article XXVIII modifications on raw and refined sugar increasing the bound rate from 50% to 80%.  The EO set the applied MFN tariffs at 65%.  And on 30 December of the same year, she issued EO 264 to continue the implementation of Article XXVIII modifications by establishing applicable tariff rates of 65% for 2004 and 2005. The industry has regained self sufficiency status.  It also began exporting to the world market aside form its quota to the US.  
2004 President Arroyo signed EO 295 which imposed additional tariffs on "premixes" by classifying HS 1701.91 and 1701.99 as sugar containing products (containing more than 65% sugar). To further strengthen EO 295, she also issued MO No. 164 which provides the SRA with the authority to assist the Bureau of Customs (BOC) in the monitoring and classification of imported sugar containing products and the subsequent application of appropriate duties on the same.  The MO also instructs the BOC to notify the SRA in case of any importation, exportation or withdrawal from Customs Bonded Warehouses (CBW) of sugar, and all forms thereof, prior to their release and allow the SRA to inspect the shipments or the warehouses.     
 
2005 The Philippine Quota to the US was increased from 137,000 mt to 216,438 mt in order to cover the shortage caused by Hurricane Katrina. 
2006 World Market price increased up to 18 cents/lb.  The industry was able to enjoy the higher world market prices and enjoyed a much awaited banner year. 
2007 The Biofuels Act of 2006 was signed into law.  The Act provides for the mandatory blending of biofuels with petroleum-based fuels.  In the case of ethanol for blending with gasoline, the most promising feedstocks are sugarcane juice and molasses.    

   
Source:  1755 to 1996: Food and Agribusiness Monitor (University of Asia and the Pacific Publication, May 1998)
             1999 to latest: Sugar Alliance of the Philippines