Business in Philippines' sugar capital sours, leaving communists to prosper

The signs of a boom are still visible here: elegant houses obviously built in the last decade, big pre-oil-crisis American cars, new faades on churches. But the boom has gone. The price of sugar, the single crop on the island of Negros, has plummeted. Many people here -- planters, businessmen, researchers -- think the sugar industry will never fully recover.

Instead, the same people say, the old fabric of Negros society is disintegrating. There are probably about 300,000 sugar workers out of work in the province of Negros Occidental (the province's population is almost 2 million), though nobody knows for certain. There are reports of malnutrition, even starvation in more remote areas. Such reports are hotly denied by the government of President Ferdinand Marcos.

And communist guerrillas, thriving on the economic collapse, are spreading northward from their old strongholds in the south of the island. Recently they have been sighted moving in plantations on the Bacolod City limits.

Life for the sugar workers has always been miserable. Wages are rock bottom: The official minimum wage is 32 pesos ($1.60) a day. Most receive a fraction of this.

Inflation ran at about 50 percent last year. The workers have full-time employment only during the milling season, from October to April.

The rest of the year -- the dead season, people call it -- they eke out a living as best they can. The fortunate ones get odd jobs on the plantations, or the planters sell them rice on credit. Others work as subsistence farmers.

This year, because of the crisis in sugar, the dead season will last at least a month longer than usual. Many sugar planters are leaving. Those who remain say they can no longer afford to give their workers rice on credit.

Leonardo Gallardo, a local businessman and director of the privately funded Negros Economic and Development Foundation, notes that, according to government figures, by the end of last year some 36,542 children in Negros were suffering from second- or third-degree malnutrition.

Life is expected to become even harder for the sugar workers. Sugar production is declining fast. Between August 1983 and August 1984, Negros produced 1.2 million tons. This year as of mid-June, output had declined to 825,000 tons: The economic and development foundation expects it to drop another 30 percent next year.

Some planters are trying to switch to other crops. But it is hard to do this during a financial crisis. And none of the replacement crops will need as much labor as sugar.

The 1970s saw both the boom and collapse of sugar prices. The planters did well, but they say the government did even better.

After the declaration of martial law in September 1972, the sugar industry became a monopoly. First a military supervisor was appointed -- Gen. Prospero Olivas, who is currently on trial as an accessory to the murder of opposition leader Benigno Aquino Jr.

Then in 1974 the government established the Philippines Exchange to handle sugar exports. The exchange was abolished in 1977 after incurring debts of more than 1 billion pesos (then $143 million). It was replaced by the National Sugar Trading Corporation. The corporation, like its parent body, the Philippines Sugar Commission, is headed by Roberto Benedicto, one of President Marcos's oldest and closest friends.

The effect of the monopoly has been disastrous: A 1984 study by the University of the Philippines claims that it resulted in the loss to sugar producers of ``anywhere from 11.6 billion pesos to 14.4 billion pesos,'' ($580 million to $720 million).

The sugar monopoly and its sister the coconut monopoly -- controlled by another of Marcos's closest friends, Eduardo Cojuangco Jr. -- have been criticized by the International Monetary Fund (IMF). Some planters, like Hortensia Starke, the outspoken head of the New Alliance of Sugar Planters, say Mr. Benedicto was ``ripping off'' the planters on behalf of himself and the President.

To defuse growing criticism at home and abroad, the government recently announced that the sugar trading monopoly would be abolished. Planters are skeptical.

One, Fred Pfleider, dismisses the sugar trading corporation's successor as ``same dog, different name.'' And government critics recently presented what they claimed was documentation of the illegal import into the Philippines of 237,000 tons of sugar to dump on the local market, depress prices, and make planters more amenable to working with the new trading body.

A new power is emerging in sugar -- and thus in Negros Occidental. Armando Gustilo, a longtime associate of Mr. Benedicto, seems to have become the dominant force in the industry. Some planters feel he has shouldered Benedicto aside.

``Benedicto is not as comfortable as Gustilo with the use of raw power,'' says Mr. Pfleider. Others feel Mr. Gustilo is simply ``fronting'' for Benedicto.

Gustilo reportedly controls the whole of northern Negros -- he is in fact said to be behind a bill in the National Assembly to create a new province of Negros del Norte. He is a very retiring person.

He lives near the northern town of Cadiz, in a large walled estate bounded on one side by the sea and located at the end of a long dirt road. When this writer asked for directions to the Gustilo estate at Cadiz police headquarters, the police tried to discourage the visit. There are a lot of armed men in the area, a policeman warned. And when we arrived, the Gustilo security men seemed to be expecting visitors.

A well-built, uneffusive man carrying an Uzi submachine gun, 45-caliber pistol, and a radio stopped this writer at the front gate. He said Gustilo was unavailable and advised against waiting. Several other well-armed men inside the gate emphasized this message.

Meanwhile the New People's Army, the armed wing of the Communist Party of the Philippines, has been spreading fast into northern Negros, which until this year had been virtually immune from insurgency.

In March it made its biggest arms seizure ever, taking some 520 guns from the arsenal of the Visayas Maritime Academy, said to be run by Benedicto and located about six miles from downtown Bacolod City. In late May communists inflicted heavy casualties on a detachment of the government's crack Scout Rangers in a daylight attack on a town south of Bacolod City.

``We don't know where they [the communist forces] are or who they are,'' said a military officer. ``People don't tell us who they are, which means they have a lot of local support.''

The communist army says it has been swamped with recruits recently. ``Our Negros recruitment target for the last three months has been exceeded by 50,'' says a communist cadre.

A headline in the April edition of Ang Bayan, the Communist Party's clandestine monthly, summed up the underground's view of the situation here: ``Social conditions in Negros are the best for revolution.''