URC acquires CADPI’s idle sugar assets

Universal Robina Corp. (URC) is acquiring the idle sugar milling machinery and equipment of Central Azucarera Don Pedro Inc. (CADPI), , a subsidiary of listed firm Roxas Holdings Inc., (RHI) to expand its Balayan mill’s capacity and help displaced farmers.

In a statement yesterday, URC said the assets would be used to expand the capacity and improve the sugar recovery process at its sugar mill in Balayan, Batangas.

The company said its decision to acquire CADPI’s machinery and equipment has cut the time needed to expand the Balayan mill from four to two years.

Likewise, raising the mill’s capacity will ensure ample sugar supply for consumers, URC said.

The new machinery and equipment from CADPI will bring up the Balayan mill’s capacity from about 5,000 tons to 8,000 tons a day.

And by acquiring the idle CADPI assets, URC—one of the Philippines’ largest food manufacturers—looks to accommodate more sugarcane farmers at its Balayan mill to help secure a source of livelihood for them.

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

That “negatively affects their profits and may drive some of them to either stop farming or shift to other low-value crops,” it said.

“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,” the company said.

In December last year, RHI decided to permanently close CADPI’s milling operations and to terminate its employees associated with the raw sugar operations.

RHI president and CEO Celso Dimarucut earlier cited the “inherent challenges in the industry with the significant decrease in cane supply in Batangas and increased fuel costs over the years.”

The move to close down the milling operations is part of de-risking the business “as it completed its pivot to sugar refinery as a standalone business model in Batangas,” he said.

This had caused the Sugar Regulatory Administration (SRA) and sugarcane planters great concern as farmers would be displaced and as this could affect sugar supply.

The SRA urged CADPI to temporarily run the milling plant and assist in facilitating the milling of canes of its sugarcane planters, as the two other millers in the province have expressed willingness to process the displaced sugarcane.

Meanwhile, URC Sugar and Renewables general manager Rene Cabati earlier said URC would mill as much sugarcane as possible from planters displaced by CADPI’s permanent shutdown.

Apart from acquiring CADPI’s machinery and equipment, URC’s Balayan mill is extending its milling season, which normally ends around April to June.

This is the second time RHI tried to sell its Batangas sugar mill and the second time URC tried to acquire the assets.

In 2019, the deal between RHI and URC did not push through after the Philippine Competition Commission thumbed down the transaction as it would result in a monopoly.