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”. 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.