URC to buy Don Pedro’s mothballed sugar mill assets

MANILA  -Gokongwei-led food and beverage giant Universal Robina Corp. (URC) is acquiring the mothballed assets of Central Azucarera Don Pedro Inc. (Cadpi) that will accelerate the expansion of its sugar mill in Batangas province.

URC, in a statement on Tuesday, said acquiring sugar milling machinery and equipment of Cadpi, a subsidiary of listed sugar and ethanol producer Roxas Holdings Inc. (RHI), will expand and improve the recovery process of its sugar mill in Balayan town.

The transaction, it added, “has cut the time needed to expand the Balayan mill from four to two years.”

URC also announced the Balayan mill’s plan to extend its milling season to June from the usual schedule of April.

This would be the second time that URC attempted to purchase Cadpi assets. In 2019, the Philippine Competition Commission (PCC) blocked the proposed merger between the two sugar millers as this would lead to a monopoly that could affect the welfare of sugarcane planters.

Sugar industry woes

Worsening conditions affecting the sugar industry in the province forced RHI to sell the idle sugar mill which the company classified as an “asset for sale.”RHI previously disclosed the assets for sale represent Cadpi’s assets from its milling operations, including machinery and equipment amounting to P897.3 million.

In a letter to the Sugar Regulatory Administration (SRA) back in December, RHI said it made the decision to permanently cease Cadpi’s operations in Nasugbu due to the financial challenges it experienced.

Various factors, according to RHI, caused the significant decline of sugarcane supply along with Cadpi’s aging and oversized mill equipment.

URC said the latest move will ensure ample sugar supply for consumers and help secure a source of livelihood for more sugarcane farmers at its Balayan mill.

Cadpi’s sugar assets, it noted, will raise the Balayan mill’s capacity to 8,000 tons per day from about 5,000 tons a day previously.

“The farmers are currently suffering from low sugar recovery on their sugarcane deliveries due to long waiting time in the truck yard,” URC said.

According to the company, this negatively affects the sugarcane farmers’ profits and might drive some of them to either stop producing sugar or shift to other low-value crops.

Solution needed

“The situation, if not immediately addressed, poses a grave threat to the livelihood of the farmers, as well as the entire sugarcane industry in Batangas, and will aggravate the current sugar shortage in the country,” it added.

URC Sugar and Renewables general manager Rene Cabati had said they would mill as much sugarcane as possible from planters displaced by Cadpi’s permanent shutdown.

Cadpi produced 41,682 metric tons of raw sugar in crop year 2021-2022, down by 31.31 percent, data from the SRA showed. It represents 31.24 percent of raw sugar produced in Luzon. INQ