Economic Rationale / Business Model:
Sugar cane production and processing can be trace back in the earliest civilization, it is one of the oldest and biggest business industries that the world have. In most tropical countries, they produce much compared to those in cold countries because sugar cane plants grow better and sweeter in tropical countries, while other countries have to import their sugar cane base sweetener.
Kalinga Province of Cordillera Administrative Region (CAR) in the northern part of the Philippines is a producer of Sugar Cane since 1960’s up to the present. In one municipality alone, when consolidated, sugar cane farmers may have over 300 hectares of sugar cane plantation. They sell their produce to a sugar-cane manufacturing plant in the neighboring provinces for processing of sugar and ethanol. Kalinga province itself doesn’t have a processing plant for sugar and ethanol yet they have vast supplies of sugar cane plantation.
Due to the growing market demand on “Muscovado Sugar” from Sugar Cane plant, it is a strategic business and venue to set-up a Sugar Cane processing plant for Muscovado Sugar. The demand on Muscovado Sugar among the others such as “washed-sugars” or “synthetic” sweeteners became so high due to health issues and change of lifestyles. Muscovado sugar were found to be healthier than the other processed sugars or sweeteners, it is lower in sugars, cholesterol and richer in nutrients, while the other are opposite. Also, the growing coffee and beverages restaurants and milk tea stations integrates muscovado sugar in their drinks which attracts more health-conscious customers.
Kalinga Province can produce much Sugar Cane all-year-round and that supplies will not be a problem. Local farmers in the province will be encourage to plant more Sugar Cane among other in-demand high-valued crops, if a sugar cane “Muscovado” processing plant is present near them. And that their produce will be bought a little bit higher compared to the existing buyer in the neighboring province. Also, the local government will surely be happy and welcome such development in their localities.
The buying, processing and marketing of processed Sugar Cane into a “Muscovado” healthy sugar has big market for local and for export. The quality of Sugar Cane in Kalinga Province can compete with the other provinces planting Sugar Cane in terms of quality and quantity. Also, farmers in Kalinga, in general, started using organic fertilizers in the last five years in their plants, including sugar cane farmers. This also put value in their farming practices, getting rid of chemical-based fertilizers and pesticides, which ensures healthier food.
The farmgate price of Sugar Cane vary from P2.00-3.00 per kilo but when processed into Muscovado, it will be more than 10 times higher.
KOFAM is in direct contact of these Sugar Cane farmers and that some of them are member of KOFAM last 2-3 years ago. And that, they are committed to sell it to KOFAM their farm-harvest if a Sugar Cane Processing Plant be establish and operated near them.
KOFAM mechanized processing plant for Sugar Cane into Muscovado can mass produce with export quality, packaging and bigger markets overseas which motivates the farmers to produce more. Thus, investing in this Muscovado Sugar Processing Plant brings life to farmers in Kalinga Province and even to the neighboring provinces with sugar cane plantations.
Moreover, KOFAM teams has the capabilities to do so in terms of ground-level relationship with producers, technical know-how in business operations, market developments, and in generating income as a whole. Thus, investments assured with returns and income.
Project Potential Risks:
The potential bottlenecks in realizing this project will be the competition among small and medium buyers of sugar cane produce in those areas. Also, the farmers are limited in mass productions and cannot possibly buy necessary machines to mass produce including the poor support of the local government and agricultural agencies to further educate and mechanize sugar cane farmers. However, these issues can be address.
Muscovado Sugar is a growing industry in the Philippines with a great potential for local and international markets due to growing demand needed in businesses, cafeteria and restaurants and most especially to households due to growing consciousness on health. Muscovado sugar has lots of health benefits compared to the processed "washed" sugars. It only has 4 calories per gram but also provides trace amounts of minerals like magnesium, potassium, calcium, and iron due to its molasses content.
Muscovado business will be one of the best business in the present and future as it does in the past.