Let’s talk frankly about sugar’s fu­ture

Jamaica Gleaner - - OPINION&COMMENTARY -

IT IS ur­gent that the Hol­ness ad­min­is­tra­tion be­gin a full and frank dis­cus­sion on the fu­ture of Ja­maica’s sugar in­dus­try, lest, as warned, the Gov­ern­ment find that it has been, im­per­cep­ti­bly, drawn back into own­er­ship of the busi­ness, or sub­stan­tial chunks thereof.

Our con­cern has been deep­ened in the face of last week’s dis­clo­sure by Karl Sa­muda, the agri­cul­ture and com­merce min­is­ter, that the own­ers of the Long Pond sugar fac­tory in Trelawny will again not op­er­ate it for the 2016-17 crop, to which the Gov­ern­ment’s re­sponse will be to sub­sidise the trans­porta­tion of sugar cane grown by farm­ers in that par­ish to the Wor­thy Park fac­tory in St Cather­ine. The pro­posed bill for that ven­ture is J$50 mil­lion, which, on the face of it, is a man­age­able sum. Ex­cept that the Gov­ern­ment could find it­self en­snared by a moral haz­ard of its own mak­ing.

In­deed, we would not be sur­prised to hear the old voices in the in­dus­try, the vested in­ter­ests who fear rad­i­cal dis­en­tan­gle­ment, urg­ing the ad­min­is­tra­tion to do as it did dur­ing the last crop and op­er­ate the fac­tory, which, if it ac­qui­esces, might well start on a course of mis­sion creep. Be­fore long, the Gov­ern­ment could find it­self back to where it was seven years ago.

Up to 2009, the Gov­ern­ment’s SCJ Hold­ings owned five old, in­ef­fi­cient sugar fac­to­ries and sev­eral thou­sand acres of land. The op­er­a­tion, whose sur­vival rested on the rapidly re­treat­ing pref­er­en­tial mar­ket of the Euro­pean Union (EU), was los­ing around J$5 bil­lion a year and had ac­cu­mu­lated deficits of about J$30 bil­lion. This fi­nan­cial bleed­ing was un­sus­tain­able, es­pe­cially in the con­text of Ja­maica’s fis­cal cri­sis and weighty na­tional debt.

Three of those fac­to­ries were di­vested to the Chi­nese-owned Pan Caribbean Sugar Com­pany and one each to the Hussey fam­ily-con­trolled Ever­glades Farms (Long Pond) and Se­prod Group (Golden Grove, St Thomas). These ac­qui­si­tions, thus far, have not been happy ven­tures. De­spite heavy in­vest­ments, they all lost sub­stan­tial sums.

Late in 2015, Ever­glades an­nounced that it would not op­er­ate its fac­tory for the 2015-16 crop, and the pre­vi­ous ad­min­is­tra­tion de­cided to sub­sidise the trans­porta­tion of sugar cane from Trelawny to the pri­vately owned Ap­ple­ton fac­tory in West­more­land. But when a le­gal case kept Ap­ple­ton closed, the Gov­ern­ment de­cided to run Long Pond for a sin­gle sea­son. In short or­der, Pan Caribbean an­nounced it was, with im­me­di­ate ef­fect, re­lin­quish­ing con­trol of sev­eral hun­dred acres of sugar-cane lands around its Mony­musk fac­tory in Claren­don and that it would not op­er­ate the fac­tory it­self in 2017. So, the Gov­ern­ment again jumped in. It would op­er­ate the fac­tory for a year and help Pan Caribbean find part­ners. It also found farm­ers to lease he for­mer Pan Caribbean lands.

NOT GOOD

Now fol­lows the new sit­u­a­tion, which Mr Sa­muda con­ceded is “not good”. The own­ers have not found the cap­i­tal to do so, or are not in­ter­ested in in­ject­ing any more money in the busi­ness. It is ques­tion­able, too, whether Pan Caribbean, whose own­ers, COMPLANT, have been edg­ing away from some of its sugar op­er­a­tions in Africa, will find its way back into Mony­musk.

Ja­maica’s sugar in­dus­try has lost money for more than a cen­tury. It has been kept go­ing be­cause of the for­eign ex­change it earns and the es­ti­mated 30,000 peo­ple it em­ploys. Walk­ing away from it is, for any gov­ern­ment, a dif­fi­cult po­lit­i­cal de­ci­sion. Yet, it is a dis­cus­sion worth hav­ing with great se­ri­ous­ness, in­clud­ing what can be done and grown apart from sugar. That di­a­logue must be ini­ti­ated by the Gov­ern­ment.

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