Sugar gone sour. Economic crisis in the Philippines

Until a few years ago, about 1 in 18 people in the Philippines lived off the sugar industry. Then that industry turned sour. The impact is seen on the hungry faces of thousands of unemployed cane cutters, sugar farmers, and mill workers, most of whom live on the island of Negros, where two-thirds of the nation's sugar is grown. They are prime victims of political and economic forces besetting this nation of 54 million, which is to hold a pivotal presidential election on Feb. 7.

Effects of the sugar slump are almost everywhere on Negros. Many children of the unemployed sugar workers have become malnourished. Some are fed only three times a week in church food lines. In many families, rat meat has become a regular staple. Village men, made unemployed either by decreased harvests or because they joined a union, have left their families to find work in the cities.

Political protests have increased, including one in September that resulted in a massacre of at least 21 protesters in the city of Escalante. And many residents report a rapid enrollment in the commmunist insurgency. The New People's Army, armed wing of the Communist Party, has been expanding into northern Negros, which until this year has been virtually immune to insurgency. All of this has deep, complex causes. For one, world sugar prices are low, due to protectionism, increased production, and dev elopment of sugar substitutes in many nations. But in the Philippines, many observers say the two-decade rule of Ferdinand Marcos has made mismanagement and corruption commonplace in the sugar business.

In the early 1970s, there was a world commodity boom, and sugar became the Philippines' biggest source of foreign exchange. At that time sugar was getting almost 30 cents a pound, and the amount of land allocated for its production multiplied. The industry became a monopoly after President Marcos declared martial law in 1972.

But the sugar boom ended in 1974. A preferential trade agreement the Philippines had with the United States expired, and exports to the US dropped from 1.5 million tons to about 340,000 tons a year. Production costs rose to 13 cents a pound, and a world sugar glut caused prices to plummet to a mere 4 cents a pound.

Since 1977, the monopoly has been controlled by Marcos's close friends, who own many of the sugar plantations that dominate the market and hire the workers.

When an economic and debt crisis hit the nation after the 1983 assassination of opposition leader Benigno Aquino, the International Monetary Fund promised to reschedule the country's $25.6 billion foreign debt in return for, among other things, elimination of the sugar monopoly. But such a power shift is being resisted by many sugar barons. At IMF and World Bank bidding, the sugar monopoly has been overhauled several times in the past two years, but the same people have remained at the monopoly's contro ls.

In the meantime, some unemployed sugar farmers are trying to grow substitute crops, such as rice, but with little success.