Typhoon Haiyan made landfall in the Philippines this morning, lashing the country’s central islands with gusts of up to 235 mph (378 kph). The storm is expected to impose $14 billion in losses on the Philippines’ economy, less than $2 billion of which is insured, reports Bloomberg.
Both flooding and strong winds can uproot sugarcane. Even plants that withstand the storm’s impact are likely to yield less sugar as a result of flooding, though. Water-logging can also destroy sugar stocks at mills and refineries, many of which are also in Haiyan’s path:
This has happened in the past. In 2012, Typhoon Bopha (aka Pablo) killed an estimated 2,000 people and damaged sugarcane crops in Mindanao, a province of the southern Philippines. The sugar authority received reports of 8-10 percent sugar loss in one of the key sugar-milling districts. Though it was at the time the strongest storm ever to hit the Philippines, Bopha’s winds were only 295 kph, with gusts of up to 314 kph.
The sugarcane industry’s structure means any crop destruction from Haiyan will hurt the livelihoods of relatively more people than in more industrialized sectors. Sugarcane farming is dominated by small and medium-sized enterprises (SMEs), with 90 percent of sugarcane farms grown on plantations of 10 hectares (25 acres) or fewer. Most of those 62,000 sugarcane farmers are unlikely to have insurance.
Destruction would also be bad for the Philippines government, which sees sugar as an increasingly critical export commodity. The US is the primary export customer of the 2.2 tonnes (2.4 tons) of sugar it produces each year; 70 percent is consumed domestically. The government wants to up productivity and expand planting, instituting sweeping reforms so that its sugar business can compete with the likes of Thailand and Brazil. Those improvements will also help tamp down on imports of bioethanol, into which sugar is converted, a fuel source the country beganshifting toward in 2007. The law now requires at least 10 percent bioethanol content in gasoline. A lack of distilleries, however—it only has three—means the Philippines has to import bioethanol to meet that goal. Damage to distilleries or to crops could mean it must buy even more bioethanol from abroad.