A detailed analysis of the special problems affecting the trade between the two countries in the more important commodities is presented on subsequent pages. 4. PHILIPPINE EXPORTS TO THE UNITED STATES SUGAR The Sugar Industry in Philippine Economy The culture of sugarcane was known in the Philippines long before Magellan discovered the islands in 1521. Improved methods of cultivating and milling, however, were slow in developing; it was not until 1910 that the first modern sugar central was established on the island of Mindoro. During the period 1920-34, the production of sugar increased steadily, rising from 465,000 to 1,650,000 short tons, raw value. This increase was the result of the profitability of producing sugar in the Philippines for the United States market, coupled with the encouragement given to the industry by American Governors General and other American and Philippine officials. The area devoted to sugarcane culture was increased also, but the rise in production occurred principally because of the use of better varieties of cane, improved methods of cultivation, and the general installation of modern centrifugal mills. In recent years the production of sugar in the Philippines has been appreciably below that of 1934 because of quota restrictions placed upon exports to the United States. The two principal elements in the Philippine sugar industry are the individual planters who produce the cane and the centrals which mill it. The individual planters operate under a milling contract with the central. Contracts are usually drawn for a period of 30 years and usually provide for an equal division of the sugar between planters and central, or a 55-45 or a 60-40 division, with the larger shares going to the planter. Under the contract the planters are obligated to have their cane milled by the contracting central, and the central is obligated to furnish transportation for the cane and to convert it into sugar. The share of the planter is frequently further divided between tenant and landowner, the latter receiving from 10 to 20 percent of the total crop as rent. The Philippine sugar industry is located in three principal producing regions: (1) The islands of Negros and Panay; (2) the Provinces of Pampanga, Bataan, and Tarlac, in the central plain of Luzon, north of Manila; and (3) the Provinces of Batangas and Laguna, south of Manila. These districts regularly produce over 90 percent of the total sugar crop. The Province of Occidental Negros alone accounts for approximately 50 percent of the total production. On the basis of information supplied by the Philippine Sugar Association, it would appear that approximately 10 percent of the total Philippine population is entirely or substantially dependent upon the sugar industry. The government-owned Manila Railroad, which traverses the sugar regions in Luzon, receives about 40 percent of its freight revenue from sugar; and the Philippine Railway in Panay and Cebu, about 45 percent. The provincial governments in five of the leading provinces are supported principally by the taxes collected from the sugar industry, which also makes substantial contributions in the form of taxes to the central government. The island of Negros probably depends more on the production of sugar than does any other corresponding area in the Philippines. The sugar industry is the only important industry on the island, except lumbering, which is confined principally to a small district. Sugar-producers on the island of Negros have lower costs of production than those in other regions, principally because of favorable soil and climatic conditions. They also enjoy comparatively low transportation costs through their ability to ship directly by water, avoiding the rail, lighterage, and terminal storage charges which are paid by producers in Luzon. In 1937 there were nearly 20,000 sugar-planters in the Philippines; sugar centrals numbered 46 and had an annual milling capacity of about 12,000,000 tons of cane or 1,500,000 tons of sugar, based on a normal grinding season of 150 days. In addition to the centrals which produce raw sugar, four sugar refineries are in operation in the Philippines. Three of these are located on the island of Luzon and one on the island of Negros. These refineries, however, absorb only a small part of the Philippine production of raw sugar. They manufacture primarily for export to the United States, but supply a part of local sugar-consumption. Investments in sugar centrals were valued in 1935 at $84,000,000 and investments in land and improvements, $181,000,000.** Of the total capital invested in centrals, approximately 45 percent was owned by Filipinos, 30 percent by Americans, and 25 percent by Spaniards. Most of the investments in canelands and in improvements have been made by Filipinos; the remainder has been provided principally by Americans and Spaniards. "Philippine Statistical Review, 1935, vol. 2, p. 310. Estimates by the Philippine Sugar Association place the investments in centrals at $93,250,000 and investments in land and improvements at $105,000,000. It has been estimated that the sugar-planters and centrals provide full or part-time employment for over 300,000 persons whose aggregate annual wages amount to $12,000,000.45 Employees in many centrals are provided with houses, water, fuel, garden space, and, in many cases, light, as part of their remuneration. Plantation laborers also are usually provided with housing facilities in addition to money wages. Efforts have recently been made to establish throughout the industry an 8-hour day with a minimum wage of 50 cents (1 peso). In as much as sugar culture is seasonal in character, many of the laborers are employed only during the planting and harvesting periods. Since 1923 the value of Philippine exports of sugar has been greater than that of the exports of any other Philippine product. In 1932 exports of sugar exceeded 1,000,000 short tons for the first time in Philippine history. Exports rose in 1934 to a peak of 1,275,000 short tons valued at $65,450,000. In the 3 years, 1932, 1933, 1934, sugar accounted for 63, 61, and 59 percent, respectively, of total Philippine exports. Philippine shipments in 1934 exceeded United States marketing quotas (the excess being stored in bonded warehouses during that year); and consequently, Philippine exports declined in 1935 to 573,500 short tons, valued at $32,990,000, and equaled only 35 percent of total exports. In 1936 and 1937, Philippine exports were larger than those in 1935, in as much as quotas governing imports of Philippine sugar into the United States for the 2 former years were not curtailed by previous excess shipments; in 1937, exports amounted to about 960,000 short tons valued at $57,700,000 and accounted for 38 percent of total Philippine exports. Practically all of the sugar exported from the Philippines in recent years has been destined for the United States market. The proportion has been over 99 percent since 1930 (see table 5). Restrictions upon the Movement of Philippine Sugar to the United RECENT UNITED STATES LEGISLATION AFFECTING SUGAR The Tariff Act of 1922 fixed the rate on full-duty 96° sugar entering the United States at 2.206 cents per pound; this rate was increased by the Tariff Act of 1930 to 2.5 cents per pound. On May 9, 1934, the President issued a proclamation lowering the duty on sugar to 1.875 cents per pound, effective June 8, 1934. In each of the above instances. the rate on Cuban sugar was 20 percent lower than the full duty because of the convention of commercial reciprocity signed by Cuba 45 Estimates made by the Philippine Sugar Association. |