Huge losses force Luzon sugar mill to close shop

MANILA, Philippines  — Central Azucarera Don Pedro Inc. (Cadpi) totally ceased the operations of its sugar mill, including its refinery, in Batangas province on Thursday as it incurred “serious business losses,” its parent firm, Roxas Holdings Inc. (RHI), said.

Consequently, Cadpi terminated all its employees following the cessation of business operations effective March 29, RHI said in a stock exchange filing.

Cadpi notified both the Department of Labor and Employment and affected employees at least 30 days before the permanent closure of the sugar mill in compliance with Article 298 of the Labor Code.

Layoffs

The Sugar Regulatory Administration (SRA) has not received any formal information about the permanent closure of Cadpi’s sugar mill but SRA Administrator Pablo Luis Azcona said this would result in “the loss of employment” and Luzon losing its refining capacity.

READ: Roxas Holdings selling Batangas mill following shutdown

“So now, premium refined [sugar] will come from four mills in Negros and one in Bukidnon,” Azcona said in a statement.

RHI first halted Cadpi’s sugar milling operations in December 2022 and focused on sugar refining operations as it anticipated opportunities to expand the business.

Cadpi had been suffering from operational and financial challenges affecting the sugar industry in Batangas due to dwindling sugarcane supply, aggravated by its aging and oversized mill equipment.

RHI subsequently sold the idle sugar mill, pegging the value of Cadpi’s equipment and machinery at P897.3 million.

RHI net loss

As a result of the closure, coupled with high production costs and the influx of sugar imports, RHI reported a wider net loss of P589.9 million in the six months ending March last year from P495.5 million earlier.

READ: URC to buy Don Pedro’s mothballed sugar mill assets

Gokongwei-led food and beverage giant Universal Robina Corp. (URC) acquired Cadpi’s sugar milling machinery and equipment in May last year, which the former said would fast-track the recovery process of its sugar mill in Balayan town.

URC said earlier the deal would cut the time needed to expand the Balayan mill from four to two years and expand the said mill’s capacity to 8,000 tons per day from about 5,000 tons a day previously.

It also said the transaction would ensure enough sugar supply for consumers and help secure a source of livelihood for more sugarcane farmers at the Balayan mill.

Low sugar recovery

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

This is URC’s second attempt to acquire sugar assets of Cadpi. To recall, in 2019, the Philippine Competition Commission (PCC) blocked the proposed merger between the two sugar millers, saying it would lead to a monopoly that could affect the welfare of sugarcane planters.

Cadpi’s sugar facility in Nasugbu town supplies the refined sugar to businesses in Luzon, including multinational food and beverage companies and pharmaceutical organizations, according to RHI’s website.

In crop year 2021-2022, Cadpi produced 41,682 metric tons of raw sugar, a decline of 31.31 percent, based on data from the SRA. The volume is equivalent to 31.24 percent of raw sugar produced in Luzon.