Hugh MartinYOU KNOW that things are getting very serious for the sugar industry when the trade unions, the manufacturers and the farmers are in accord on the same issue. The joint demonstrations against the EU proposals to reduce sugar prices signal an alliance born out of desperation.
It wasn't too long ago that the unions would wait until the start of the crop before entering into wage negotiations. These would drag until mid-crop when the highest sugar yields were attainable and you could bet your last dollar that a strike would occur. In the two to three weeks it took to force a settlement factories would lie idle, cane would rot on the roadsides and production targets would be shot to pieces. Those were the good days weren't they, because the cane would still be reaped, no matter that the sugar quality would be reduced, and the price and market would still be there - guaranteed "in perpetuity".
NEVER-ENDING PATRONAGE.
Well, the advent of the World Trade Organisation (WTO) has successfully put paid to that notion of never-ending patronage. With its gospel of free trade the WTO has made a sin of such preferential arrangements and has set a timeframe within which they are to be reformed wherever they exist. The local banana industry has already had the experience. Now it's Sugar's turn. The challenge to the EU's Sugar regime by Australia, Brazil and Thailand is obviously what triggered the EU's latest proposals to bring forward its plans to reduce the price it pays for sugar from the ACP suppliers which is fixed to the subsidised price it pays to its own producers. The proposal before the European Commissioners is for a reduction of 37 per cent over two years starting July 1, 2005 with 20 per cent. Everyone knew that this was inevitable but a timeframe of another two years before implementation was what was understood from the last treaty.
An oft repeated criticism is, "Why are we as an independent nation going hat in hand to beg these people to buy our sugar at a price higher than world market prices". Another is, "We knew for some time that this was coming, why didn't we take the necessary steps to improve our efficiency or failing that to get out of this non-viable industry?"
FAIR PLAY
The lobbyists' response to these criticisms is based on the principle of fair play. They point out that the price was a negotiated one agreed to by all the parties concerned. When the first treaty (LOME) was signed back in 1975 the price was lower than that on the world market. The proposal to reduce the price by 37 per cent with an implementation date of July 1, 2005 was made without discussion with the suppliers and flies in the face of agreements made at the last round of talks. Their demonstration was therefore not a matter of going with hat in hand but a protest against the reneging on valid treaties with a unilateral decision.
They admit to being aware of the impending reduction in price but they had been assured previously of a longer period to make the necessary improvements in efficiency. They point out that the improvements are in fact taking place industry-wide but that more time is needed and that is what they are insisting on. There is no denying that Appleton Estates, having retooled in both field and factory with state-of-the-art equipment, is now on par with some of the world's top producers. Worthy Park has long proven its efficiency and is unceasing in its efforts to optimise its operations. But one criticism the lobbyists cannot dispute is the tardiness of the industry in equipping itself for the impending changes so long signalled.
DIVERSIFICATION
The question of product diversification has been discussed, accepted, discussed, analysed and 'file-thirteened'. Ethanol both for export and as a local fuel supplement has been shown to be a viable second product but all we hear is just talk whenever the price of oil goes up. It is the same for co-generation and for refined sugar. Except for the two privately owned factories the industry cannot avoid the criticism that it has failed to position itself to cope with the long-signalled changes in world trade. It is very instructive though and perhaps encouraging that that the publicly owned Sugar Company of Jamaica (SCJ) that controls 80 per cent of the industry has stated that it will be in a position to work with the proposed price reductions whenever they are implemented. With a cost of production of 29 US cents per pound sugar at present it will take a minor miracle to get down to the required 15 to 18 cents by next year. However, the SCJ has been, though belatedly, doing the necessary retooling and may just pull it off. It would seem to me though that the additional year the lobby is demanding would take the pressure off this beleaguered industry.
Hugh Martin is a communication specialist and farm broadcaster who may be reached at humar@cwjamaica.com.
