Beyond infrastructure, corruption takes root in agriculture
President Ferdinand “Bongbong” Marcos Jr.’s 2026 State of the Nation Address focused on alleged corruption in the Department of Public Works and Highways, particularly anomalous flood control projects. While the issue resonated with public frustration, it drew attention away from deeper systemic problems in food importation, agriculture and fiscal management.
This report argues that the over-importation of rice and sugar, cartel manipulation, smuggling networks and debt-related leakages exceed the scale and impact of the DPWH scandals. The 2022 sugar importation order controversy, the importation of 450,000 metric tons of refined sugar and the 2023-24 onion smuggling crisis illustrate how regulatory loopholes and weak enforcement can be exploited at the expense of farmers and consumers.
In crop year 2025-26, the over-importation of refined sugar and the increased use of artificial sweeteners depressed farmgate prices by 38%, resulting in ₱7.28 billion in direct losses and ₱19.78 billion in losses when indirect effects were included.
Inflated rice demand estimates, the unchecked entry of alternative sweeteners and systemic fiscal mismanagement have entrenched dependence on imports and undermined food sovereignty.
The 2026 Sona promised reforms in transparency, energy security, food production and farmer support. However, the report argues that implementation has lagged, leaving Filipino farmers disillusioned and consumers vulnerable to recurring food crises.
Unless structural reforms — including the adoption of minimum support prices, the empowerment of cooperatives and dietary diversification — are implemented, anti-corruption rhetoric will remain superficial, and the Philippines will continue to experience agricultural decline, consumer price shocks and fiscal instability.
Introduction
Corruption in the Philippines cuts across infrastructure, agriculture, trade and fiscal management.
In his 2026 Sona, Marcos highlighted ghost and substandard flood control projects under the DPWH as examples of government inefficiency and graft. He said investigations into anomalous flood control projects had preserved nearly ₱25 billion in assets and returned ₱800 million to the treasury. He also announced transparency reforms, civil society monitoring and measures against overpricing (Philippine Daily Inquirer, 2026c).
The Sona also emphasized broader governance and economic priorities, including the declaration of a state of national energy emergency, fuel supply subsidies, the suspension of excise taxes on liquefied petroleum gas and kerosene, and rice price caps intended to ease the cost of living.
Social welfare measures included the repatriation of more than 12,000 overseas Filipino workers, job fairs, loan moratoriums and expanded tax relief. Marcos also cited progress on the North-South Commuter Railway and MRT-7 and promised higher production of rice, corn and sugar, along with irrigation support (Philippine Daily Inquirer, 2026c).
The report argues, however, that the Sona failed to confront the breadth and depth of corruption in food importation and agricultural trade.
The Philippines became the world’s largest rice importer in 2024 after importing 4.8 million metric tons, an amount the report says far exceeded the country’s actual domestic deficit.
Analyses cited in this report found that the Supply Utilization Accounts (SUA) method placed per capita rice consumption at 148 kilograms, creating “phantom demand” that was used to justify chronic over-importation.
The report says this statistical distortion depressed farmgate palay prices to ₱10 to ₱12 per kilogram, below production costs of ₱18 to ₱20 per kilogram, prompting some farmers to skip planting seasons (“How overestimated rice demand distorted Philippine policy,” Philippine Daily Inquirer, 2026a).
Despite Marcos’ concurrent service as agriculture secretary, Filipino farmers received less than half the support provided to their counterparts in other Southeast Asian countries, the report says.
The Rice Tariffication Law of 2019 dismantled protections and exposed farmers to global competition without adequate safety nets. While importers and traders benefited, farmers struggled with declining incomes and rising production costs.
The report argues that the situation shows how corruption can involve not only illegal practices but also structural policy decisions that favor cartels over producers.
Sugar importation has been similarly troubled.
In crop year 2025-26, over-importation depressed farmgate prices by 38%, resulting in ₱7.28 billion in direct losses and ₱19.78 billion in losses when indirect effects were included.
Six systemic pressures — over-importation, El Niño, RSSI infestation, rising fertilizer and logistics costs, labor expenses and alternative sweeteners — converged to weaken the industry.
Artificial sweeteners displaced an estimated 770,000 to 1.144 million metric tons of cane sugar annually, equivalent to ₱20 billion to ₱130 billion in lost farmer revenue (“Imports, pests and alternative sweeteners threaten PH sugar industry,” Philippine Daily Inquirer, 2026b).
Between 2016 and 2025, corruption losses were estimated at ₱8.8 trillion. National debt rose to ₱18.55 trillion by May 2026, reducing the resources available for irrigation, classrooms and hospitals.
Despite nominal budget increases, Filipino farmers received less than half the support provided to their counterparts in Vietnam and Thailand. The Agriculture Orientation Index fell to 0.48 in 2025, indicating a decline in the fiscal priority given to agriculture (“Marcos’ agriculture, food security record marked by systemic failure,” Philippine Daily Inquirer, 2026c).
This report places DPWH corruption within a broader system of rent-seeking, smuggling and policy manipulation that has weakened Philippine agriculture and drained national resources.
By examining the rice, sugar and onion crises alongside the government’s Sona commitments, the report argues that political narratives have obscured structural failures.
Unless the government addresses these systemic issues, the Philippines will continue to experience agricultural decline, consumer price shocks and fiscal instability.
Rice importation and policy distortions
The Philippines imported 4.8 million metric tons of rice in 2024, making it the world’s largest rice importer.
By 2025, rice demand was estimated at 13.57 million metric tons, but imports reached 4.7 million metric tons — far exceeding the reported actual deficit of 1.17 million metric tons.
The SUA method placed per capita consumption at 148 kilograms, creating what the report describes as “phantom demand” that justified chronic over-importation.
The report says this statistical bias depressed farmgate palay prices to ₱10 to ₱12 per kilogram, below production costs of ₱18 to ₱20 per kilogram, prompting farmers to skip planting seasons (“How overestimated rice demand distorted Philippine policy,” Inquirer, July 17, 2026.
Republic Act No. 11203, or the Rice Tariffication Law, compounded the crisis by liberalizing imports without adequate safeguards.
Farmers faced rising fertilizer costs linked to global oil prices and increasing pressure from land conversion. At the same time, the National Food Authority lacked sufficient funds to procure palay at floor prices.
The report argues that this policy-induced deficit, rather than climate shocks alone, explains the erosion of the country’s rice self-sufficiency.
Sugar industry collapse
Sugar importation has been equally troubled.
In crop year 2025-26, over-importation depressed farmgate prices by 38%, resulting in ₱7.28 billion in direct losses and ₱19.78 billion in losses when indirect effects were included (“Imports, pests and alternative sweeteners threaten PH sugar industry,” Inquirer, July 21, 2026.
Six systemic pressures — over-importation, El Niño, RSSI infestation, rising fertilizer and logistics costs, labor expenses and alternative sweeteners — converged to weaken the industry.
Artificial sweeteners displaced an estimated 770,000 to 1.144 million metric tons of cane sugar annually, equivalent to ₱20 billion to ₱130 billion in lost farmer revenue.
The report says weak regulation under Association of Southeast Asian Nations tariff codes allowed the unchecked entry of substitutes, eroding demand for cane sugar and undermining cooperatives.
Smuggling and cartel manipulation
The report presents the 2022 Sugar Order No. 4 controversy as an example of how cartels can manipulate regulatory bodies and create artificial scarcity to justify excessive imports.
It also cites the 2023-24 onion smuggling crisis, during which prices rose to ₱700 per kilogram.
The report says syndicates colluded with Customs officials and repackaged imported onions as locally produced goods.
These cases, it argues, demonstrate institutional complicity and the human consequences of corruption, as consumers paid excessive prices while farmers were sidelined.
Fiscal mismanagement and debt trap
Between 2016 and 2025, corruption losses were estimated at ₱8.8 trillion.
National debt rose to ₱18.55 trillion by May 2026, reducing the resources available for irrigation, classrooms and hospitals (“Marcos’ agriculture, food security record marked by systemic failure,” Inquirer, July 27, 2026.
Despite nominal budget increases, Filipino farmers received less than half the support provided to their counterparts in Vietnam and Thailand.
The Agriculture Orientation Index fell to 0.48 in 2025, indicating that agriculture had become a lower fiscal priority.
Comparative analysis: DPWH vs. agriculture
| Sector | Scale of corruption | Mechanism | Impact |
|---|---|---|---|
| DPWH flood projects | Billions of pesos | Ghost and substandard projects | Infrastructure waste |
| Food imports, including rice, sugar and meat | More than ₱1.8 trillion | Over-importation, smuggling and fake cooperatives | Farmer decline and consumer price shocks |
| Debt and fiscal policy | ₱8.8 trillion in estimated losses | Leakages and rent-seeking | Reduced social spending |
The comparison indicates that while alleged corruption involving DPWH projects is significant, the report considers food importation and fiscal mismanagement to be much larger drains on national resources.
Policy alternatives and missed opportunities
India’s Minimum Support Price (MSP) system offers possible lessons for the Philippines.
By guaranteeing the procurement of 25% to 30% of rice production, India stabilized farmer incomes and consumer access.
The report proposes that the Philippines adopt a similar MSP system. It calls for Marcos to prioritize an MSP law in 2026 that would institutionalize marketing support, reduce import dependence and strengthen cooperatives.
The report also calls for dietary diversification through the promotion of corn, root crops, legumes and fish.
Without diversification, it argues, the Filipino diet will remain vulnerable to disruptions in rice imports.
Conclusion
Marcos Jr.’s agricultural governance has been marked by systemic failure, the report argues.
His focus on alleged DPWH corruption obscured larger crises involving food importation, sugar cartel manipulation, smuggling and fiscal mismanagement.
The over-importation of rice and sugar, the unchecked entry of alternative sweeteners and debt-related leakages have devastated farmers and entrenched the country’s dependence on imports.
Unless structural reforms — including MSP adoption, dietary diversification, cooperative empowerment and stricter regulation of alternative sweeteners — are implemented, the Philippines will remain trapped in recurring food crises.
Marcos’ agricultural legacy, the report concludes, is one of missed opportunities and deepened vulnerabilities, leaving Filipino farmers disillusioned and consumers exposed to systemic shocks. /dm
The Philippine sugar industry faces six overlapping systemic stressors that threaten farmer livelihoods, cooperative strength and national food security.
Overimportation during crop year 2025-26 depressed farmgate prices by 38%, inflicting ₱7.28 billion in direct losses and ₱19.78 billion when indirect costs are included.
El Niño-related losses projected for 2026-27 range from ₱2 billion to ₱4 billion in direct yield reductions and from ₱7.1 billion to ₱11 billion when indirect effects are considered.
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An infestation of the red-striped soft scale insect (RSSI), Pulvinaria tenuivalvata, threatens up to 390,000 metric tons of sugar valued at ₱15.6 billion under a worst-case scenario.
Rising fertilizer and logistics costs, driven by global oil price increases linked to the U.S.-Iran war, add an estimated ₱3.5 billion to ₱5 billion in expenses. A recent wage increase has raised labor costs by an estimated ₱2 billion to ₱3 billion, further reducing farmers’ margins.
Alternative sweeteners now account for an estimated 35% to 52% of total sweetener consumption, displacing the equivalent of 770,000 to 1.144 million metric tons of cane sugar annually and translating into ₱20 billion to ₱30 billion in lost farmer revenue.
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This paper integrates the six stressors into a hexagonal framework. It identifies governance failures involving overimportation and unchecked sweetener imports as the most financially damaging pressures, compounded by escalating input costs, labor expenses, climate variability and pest infestations.
Its policy recommendations emphasize climate-sensitive trade governance, stronger cooperatives, input-cost stabilization, labor protection, integrated pest management and the regulation of alternative sweeteners to protect farmer livelihoods and promote the industry’s long-term resilience.
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Introduction
The Philippine sugar industry is at a critical juncture as it faces overlapping pressures from governance failures, climate variability, rising input costs, invasive pests and market displacement by alternative sweeteners.
Economic shocks such as currency depreciation, rising debt-service costs and stagflation combine with geopolitical crises, including the U.S.-Iran conflict’s effect on fuel prices, and climate risks such as El Niño and typhoons to undermine agricultural productivity.
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RELATED STORY: Cash aid, not aerial spraying needed to fight Negros sugarcane pest
The industry’s fragility stems from six interacting stressors: El Niño-related climate variability, RSSI infestation, high fertilizer and logistics costs, high labor costs, overimportation of refined sugar and the unchecked rise of alternative sweeteners.
Together, these pressures intensify one another, creating conditions in which governance failures, climate shocks, rising costs, biological invasions and market substitution erode farmer livelihoods, cooperative strength and national food security.
Methodology
This paper distinguishes observed data from estimates and scenario-based projections to promote clarity and credibility.
Observed data include historical records such as farmgate prices during crop year 2025-26, which fell from ₱65 per kilogram to ₱40 per kilogram, and confirmed infestation coverage of 61,000 hectares in Negros Occidental.
Estimates are based on current economic calculations, including a projected ₱3.5 billion to ₱5 billion increase in fertilizer and logistics costs based on prevailing oil-linked price increases.
Projections are scenario-based forecasts, such as the expected ₱2 billion to ₱4 billion in direct yield losses associated with El Niño in 2026-27.
Overlapping effects were distinguished to avoid double counting. For example, losses attributed to alternative sweeteners were calculated separately from price declines caused by imports, with adjustments intended to prevent displacement volumes from inflating farmgate-loss estimates.
Key stressors
Overimportation
Overimportation has been the most financially damaging stressor identified in the paper.
During crop year 2025-26, an influx of imported refined sugar depressed domestic farmgate prices by 38%, reducing them from ₱65 per kilogram to ₱40 per kilogram.
The decline translated into ₱7.28 billion in direct losses. When indirect effects such as weaker cooperatives, deferred mill investments, labor displacement and supply-chain contraction are considered, the total impact rises to ₱19.78 billion.
Mismanaged imports destabilized farm incomes and weakened the industry’s structural foundations, underscoring the need for climate-sensitive, evidence-based trade governance, according to GMA Integrated News and Mendoza.
El Niño
El Niño remains a recurring climate stressor that undermines sugar cane productivity.
The 2026-27 episode is projected to cause ₱2 billion to ₱4 billion in direct yield losses, primarily through reduced cane tonnage and sucrose content. Indirect costs are projected to increase total losses to between ₱7.1 billion and ₱11 billion.
Luzon is expected to bear the brunt of the losses, while the Visayas and Mindanao are expected to be buffered by Type III and Type IV rainfall regimes.
The projected regional differences highlight the importance of incorporating El Niño-Southern Oscillation rainfall data into production forecasts and trade decisions, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration.
RSSI infestation
The RSSI infestation has emerged as one of the most serious biological crises in the modern history of the Philippine sugar industry.
First detected in Pampanga in 2022, the pest spread to Negros Occidental by 2025 and developed into a provincewide calamity by mid-2026.
Infestations covered 61,000 hectares, reduced yields by 20% to 30% and threatened losses of up to 390,000 metric tons of sugar valued at ₱15.6 billion.
RSSI thrives under hot, dry conditions, with El Niño-related droughts creating favorable environments for population growth. Its parthenogenetic reproduction allows it to multiply rapidly, while its honeydew excretions encourage the growth of sooty mold, further impairing photosynthesis, according to El-Serwy.
The paper presents biological control using endemic parasitoid Hymenoptera species as a more sustainable approach to managing RSSI in Philippine sugar cane.
Unlike chemical drone spraying, which can leave residues in soil and water, harm pollinators and beneficial predators, and expose nearby communities to health risks, parasitoid-based control works through natural ecological processes.
The parasitoid wasps deposit eggs inside scale insects. Their larvae then consume the pests from within, gradually suppressing the population without chemical inputs.
Because the parasitoids are endemic to the Philippines, the paper says they are adapted to local conditions and could support long-term pest management.
Chemical spraying in the Philippines has been about 50% effective and requires repeated applications, according to the paper. Biological control, by comparison, could develop into a self-sustaining form of population suppression that reduces costs and ecological damage over time.
The paper recommends directing funding and research toward mass-rearing, release programs and farmer cooperative-led implementation of parasitoid control. It argues that these measures could strengthen biodiversity, reduce community exposure to chemicals and support climate-resilient agriculture.
Fertilizer and logistics
Rising fertilizer and logistics costs represent another systemic burden.
Fertilizer prices increased by 40% to 60% because of global oil-price escalation linked to the U.S.-Iran war, while logistics costs rose by 25% to 30%.
The increases imposed an estimated additional burden of ₱3.5 billion to ₱5 billion nationwide.
Farmers reduced fertilizer use and ratooning, contributing to yield declines and increasing long-term risks to soil fertility. Cooperatives struggled to procure inputs collectively, while mills faced higher operating costs, according to the U.S. Department of Agriculture.
Labor costs
Labor costs have also placed additional financial pressure on the industry.
A recent wage increase raised the costs of cane cutting, hauling and milling labor by 15% to 20%, translating into an estimated additional burden of ₱2 billion to ₱3 billion nationwide.
Although wage increases are essential to protecting workers’ welfare, they can reduce farm-level profitability when they are not accompanied by productivity gains or support for mechanization.
The imbalance has created tension between protecting labor rights and maintaining farm viability, according to BusinessMirror.
Alternative sweeteners
Alternative sweeteners account for an estimated 35% to 52% of total sweetener consumption in the Philippines.
The estimate is based on beverage-industry market-share reports from 2025 and 2026 and Association of Southeast Asian Nations import-clearance data under Chapter 17.02.
Displacement volumes were calculated by converting nonsugar sweetener consumption into equivalent cane-sugar tonnage using sweetness-equivalence ratios. For example, 1 kilogram of sucralose is considered equivalent to the sweetness of about 600 kilograms of sugar.
The substitution effect represents the annual displacement of the equivalent of 770,000 to 1.144 million metric tons of cane sugar and an estimated ₱20 billion to ₱30 billion in lost farmer revenue.
The paper identifies regulation as the primary concern. Weak tariff and labeling oversight allows duty-free entry of nonsugar sweetener products that reduce domestic demand for cane sugar.
Although health risks are discussed in global literature, the paper focuses primarily on governance. It recommends measures such as tariffs, import-clearance requirements and front-of-package labeling to balance consumer choice with farmer protection and industry resilience.
Table 1: Sweetener displacement and health risks
| Sweetener | Common use in the Philippines | Economic displacement | Key health risks cited in the paper | Policy requirement |
|---|---|---|---|---|
| Aspartame | Sugar-free juices and tabletop packets | Contributes to the displacement of the equivalent of 770,000 to 1.144 million metric tons of cane sugar and an estimated ₱20 billion to ₱30 billion in lost revenue | The International Agency for Research on Cancer classified it in 2023 as possibly carcinogenic, or Group 2B. The paper also cites a 22% increase in breast-cancer risk and a 15% increase in obesity-related cancer risk, as well as links to Type 2 diabetes, cardiovascular disease, mortality, gut dysbiosis, reduced insulin sensitivity and liver toxicity. | High regulatory risk; may face bans or labeling warnings and may not be viable for health-related branding |
| Sucralose | Zero-calorie sodas, instant 3-in-1 coffee and “no sugar” milk tea | Has the same displacement effect under duty-free ASEAN imports | The paper cites associations with cardiovascular-disease risk, impaired memory and executive function, gut-microbiome disruption and glucose intolerance. | Transparency in labeling is needed because of cited risks to brain and gut health and the possibility of consumer resistance |
| Acesulfame potassium | Blended into diet sodas and energy drinks | Adds to displacement volume but is difficult to track because it is commonly blended with other sweeteners | The paper cites French studies linking it to cancer and cardiovascular-disease risks and reduced insulin sensitivity. It is also included on the World Health Organization’s nonsugar sweetener list. | Blends should be disclosed through mandatory labeling |
| Stevia and steviol glycosides | “Natural” zero-calorie drinks and monk-fruit blends | Marketed as safer substitutes but still displace cane sugar | The paper says they are included on the WHO’s nonsugar sweetener list. It cites no hepatotoxicity or tumors and notes increased insulin sensitivity, although effects on gut microbiota remain uncertain. | May serve as a transitional option because of a safer cited profile, although the WHO advises reducing overall sweetness |
| Erythritol | Keto drinks, monk-fruit blends and bulking agents for stevia | A major contributor to displacement that may be undisclosed in “sugar-free” products | The paper cites a 2024 Nature Medicine report associating it with a twofold higher risk of heart attack and stroke and a mechanism involving platelet clotting. | Front-of-package cardiovascular-risk warnings are urgently needed |
Combined impact
Taken together, the six stressors show that the Philippine sugar industry is not facing isolated challenges but a convergence of governance failures, climate shocks, rising input costs, biological invasions, labor pressures and market displacement.
Overimportation and alternative sweeteners exert nationwide pressure. El Niño is expected to affect Luzon disproportionately, while RSSI has caused extensive damage in Negros Occidental. Fertilizer, logistics and labor costs are reducing margins across all regions.
The findings show that mismanaged imports can devastate livelihoods and that regional differences must be considered to avoid excessive responses to projected supply deficits.
Pest outbreaks can intensify the effects of climate stress. The paper says a large-scale release of parasitoids could help control infestations that reduce cane and sucrose yields, demonstrating the need for integrated pest and climate governance.
Input costs continue to reduce margins, requiring stabilization mechanisms. Wage increases must be balanced with labor rights and farm viability.
Alternative sweeteners are not a marginal concern but a systemic stressor comparable in scale to the overimportation of refined sugar. The paper estimates that they displace ₱20 billion to ₱30 billion in farmer revenue while contributing to health risks involving cancer, cardiovascular disease, diabetes and neurological effects.
The products enter duty-free under ASEAN rules even as they contribute to economic and health vulnerabilities, according to the paper.
It recommends integrating trade, health and agricultural policy through tariffs, labeling requirements and the promotion of food-based alternatives such as mung beans, string beans, sweet potatoes, coconut sugar and fruit.
Policy priorities
The paper recommends the following actions:
1. Climate-sensitive trade
Prevent overimportation by aligning import volumes with production forecasts based on El Niño-Southern Oscillation conditions.
Strengthen Sugar Regulatory Administration clearance protocols for refined sugar and products classified as “other sugars.”
2. Buffer stocks and input costs
Establish national buffer-stock systems to stabilize supply during El Niño and typhoon-related shocks.
Implement fertilizer and logistics cost-stabilization mechanisms to protect farmers from oil-driven price increases.
3. Labor and mechanization
Balance wage increases with farm viability by supporting mechanization and cooperative-based labor pooling.
Provide subsidies or credit lines to help smallholders adopt mechanized harvesting.
4. Pest management
Fund programs for the mass rearing and release of endemic parasitoids to control RSSI infestations sustainably.
Strengthen biosecurity measures to prevent future outbreaks of invasive pests.
5. Sweetener regulation
Require tariffs, quotas and mandatory labeling for nonsugar sweeteners.
Introduce front-of-package warnings for sweeteners identified as high-risk in the paper, including erythritol and aspartame.
Promote food-based alternatives such as mung beans, string beans, sweet potatoes, coconut sugar and fruit to reduce dependence on nonsugar sweeteners.
6. Cooperatives and mill upgrades
Support cooperative financing for collective input procurement and mill upgrades.
Provide incentives for modernization to improve the industry’s competitiveness against imports and substitute products.
Conclusion
The resilience of the Philippine sugar industry depends on transparent trade governance, climate-adaptive strategies, input-cost stabilization, labor protection, integrated pest management and regulation of alternative sweeteners.
Observed data show that overimportation caused an estimated ₱19.78 billion in direct and indirect losses.
El Niño is projected to cause ₱7.1 billion to ₱11 billion in direct and indirect losses, while the RSSI infestation threatens up to ₱15.6 billion in sugar production.
Higher fertilizer and logistics costs imposed an estimated ₱3.5 billion to ₱5 billion in additional expenses, while labor costs added an estimated ₱2 billion to ₱3 billion.
Alternative sweeteners displaced an estimated ₱20 billion to ₱30 billion in farmer revenue.
Although the figures distinguish among observed, estimated and projected effects, the convergence of the six stressors shows that governance failures — particularly mismanaged imports and unchecked substitution by alternative sweeteners — remain the most financially damaging.
Integrated strategies combining economic safeguards with climate and pest resilience could stabilize rural economies and support the long-term sustainability of the sugar industry without overstating the possibility of collapse. /dm
[Teodoro C. Mendoza, Ph.D., is a retired professor and UP scientist at the Institute of Crop Sciences, College of Agriculture and Food Science, University of the Philippines Los Baños.]
