Supply Chain Analysis of Sugarcane Based Bioethanol in San Carlos City, Negros Occidental

Date

10-2013

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Jeanette Angeline B. Madamba

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Abstract

Sugar is commonly consumed as food. However since ethanol can be extracted from sugar as an energy source, it can also be used as an alternative fuel. The ethanol can be extracted directly from the sugarcane or the sugarcane can be converted into molasses and ethanol can be extracted from it. This study will deal with the supply chain analysis of sugarcane based bioethanol in San Carlos City, Negros Occidental. In general, this study aimed to analyze the sugar feedstock as biofuel supply chain. Specifically, the objectives of the study were (1) to identify and characterize the key participants in the sugar feedstock supply chain, (2) to determine the forms of integration among the participants in the chain, (3) to determine the possible problems in each level of the supply chain which may affect the further growth of the said product and (4) to provide possible courses of action for the problems identified and formulated recommendations to address the problems.

Primary data were obtained through interviews with the selected participants in the different supply chain nodes such as input node which was the local market DC Cruz Trading, production node which is composed of the sugarcane farmers, processing node which was the processing plant, San Carlos Bio Energy Inc. and marketing which was the oil company involved in the supply chain of sugarcane feedstocks as biofuel in Negros Occidental. In addition to these, interviews with other key informants were also conducted among support agencies such as Biofuels Board, Department of Energy (DOE), Department of Agriculture (DA), Department of Science and Technology and people who have technical knowledge on biofuel. Secondary sources of data were obtained from published and unpublished materials and the internet. Published materials such as Special Problems and Thesis, magazine and newspaper articles, journals and books came from libraries like the University of the Philippines Los Banos (UPLB) Main Library and the College of Economics and Management (CEM) library and other libraries. Other sources included concerned organizations and institutions such as the Local Government Unit (LGU) of Negros Occidental, Department of Agriculture (DA), Department of Energy (DOE), Philippine Council for Agriculture, Forestry and Natural Resources Research Development (PCARRD).

The number of respondents interviewed totaled to 55. Respondents included are 53 farmers, a processor and an oil company. The farmers and processor were located in San Carlos City while the oil company’s oil refinery is located in Limay, Bataan.

Farmers have a sure market for the produce. The processor absorbs all the raw materials supplied to them by the farmers. They are even provided incentives in the form of fertilizer and fertigation for the nearby farmers. In return, they should meet the standards set by the processor such as fresh, mature and clean canes.

The major problem of the whole supply chain is the low volume of ethanol. The problem is due to the low switching cost for the use of sugarcane stalk such as utilization of sugar for food consumption instead of using it as biofuel feedstock. Because of this, there is not enough sugarcane stalks for the processing node resulting to low production of ethanol and meeting only ten percent of the total demand.

To increase the volume of the sugarcane stalk the farmers should have additional land for farming. Majority of the farmers interviewed are of small scale operation. Even though there are many farmers that supply the processor, they still cannot meet the demand needed by the processor because of their small operation. In order for them to produce more sugarcane, they may opt to rent, lease or buy additional land for their sugarcane production. This may help in additional supply of sugarcane for the processor. In addition, planting a cane variety that can produce higher yielding and quality sugarcane would be recommended for the farmers. Production of ethanol is very dependent on the quality and quantity of sugarcane stalks. Ethanol production needs heavier, sweeter and thicker sugarcane. Most of the farmers are operating small scale, they may opt to substitute their previous variety of sugarcane into a more quality sugarcane stalk. Despite the fact that they have very limited land, this may compensate for this small scale operation.

To increase the processor‘s production of ethanol, they may opt to increase the number of their farmer-suppliers. This is to meet the demand that the oil company set. Increasing the number of their farmer-suppliers would lead to additional raw materials for their ethanol production. Since currently they are obtaining their supply not only from local farmers but also neighboring towns and provinces, they may opt to extend it to those provinces which also produce sugarcane. In addition, the processor may use other crop that produces ethanol. Ethanol can be derived not only from sugarcane but from other feedstocks. The processor may opt to use alternative crops that can produce ethanol.

Lastly for the industry, one of the recommendations is expansion in the bioethanol industry. The major problem of the industry is that it could not meet the demand of the market. Out of the total demand, only ten percent is met by the industry which is too little. To meet this demand, additional processing firms may be established in order to meet the demand. To encourage the younger generation to be engaged in farming, the government may opt to give incentives to farmers. This may help in increasing the number of farmers which would eventually give additional production of sugarcane. Lastly the industry may opt to research other crops that would produce ethanol. Sugar as a primary source of ethanol in the country is not enough to meet the demand for ethanol. This would help in increasing the supply of ethanol of the industry.

Language

English

LC Subject

Sugarcane industry, Supply chain management, Sugar--Analysis

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2013 M17 C47

Notes

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Document Type

Thesis

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