Edward SeagaD-DAY HAS now arrived for the Jamaican sugar industry. The European Union (EU), to which Jamaica sells practically all its sugar, is now ready to set a new and lower price for the commodity which is expected to be around U.S.15 cents per pound, down by 40 per cent from the current U.S.25 cents.
In any business a whopping 40 per cent reduction in price would be disastrous. In Jamaica, it would be even more disastrous, because only two, perhaps three, of the remaining seven sugar estates in Jamaica are able to produce sugar profitably at the current US25 cents per pound, much less a new price of US15 cents. It appears then that the future of most of the industry could be determined next week Thursday when the new pricing is announced by the EU.
Production of sugar this year is expected to decline to another low point, 140,000 tonnes due, in some part, to the ravages of Hurricane Ivan. But there is room to market much larger quantities of sugar depending, of course, on the cost of production.
The inability of the industry to produce at competitive costs is the cause of the dim prospects for sugar. But this need not be the case.
HUGE LOSSES
Of the seven sugar estates, five are publicly owned by government. Two are private operations. The five publicly owned estates are: Frome, Monymusk, Bernard Lodge, Long Pond and Duckenfield. They are all operating at huge losses, except possibly Duckenfield, which is producing electricity by cogeneration for sale to JPS. This helps its finances to break even. The two private estates are Appleton/New Yarmouth and Worthy Park. Their financial positions are much stronger.
The difference between these two groups is due to effective management, using high technology, providing feasible operations, in the case of the privately owned estates. A case in point is Appleton/New Yarmouth, owned by the Wray & Nephew conglomerate. The explorations done by the management of Appleton Estate who investigated the best industry practices in leading sugar-producing areas in Australia, reaped very promising dividends.
Using Australian production technology, management efficiencies, improved cultivation and reaping practices along with factory upgrading, phenomenal increases in cane production of over 50 per cent have been achieved. These yields were achieved mainly by the introduction of the centre pivot irrigation machine which can irrigate and fertilise some 200 acres of field with one overhead irrigation pivot system, delivering 80 per cent of the water and fertiliser to the root system, compared to 20 per cent from the canal system in use now. I visited New Yarmouth three years ago and saw 18 centre pivots positioned in the field, standing out like giant cranes on a construction site.
HAIR-PULLING
The Government estates meanwhile, after wading through three reports on the sugar industry and holding meetings with much pulling of hair; decided to order ONE centre pivot system for trial, as if the innovative machine had not been tried and proven here already. Since then, others have been imported, but, as is to be expected, they were the wrong versions.
Neither high technology, irrigation and fertilising, nor high level specialised management by themselves can make cane grow with better yields. The fields have to be fully planted. This is not the case with the publicly owned estates. The fields have too many empty spaces where cane should be in the ground. These spaces exist because new plantings are only 16 per cent of the field when the present circumstances warrant 25 per cent to 30 per cent.
As a result, Monymusk, which used to produce 75,000 tonnes of sugar, is now producing 10,000, and Bernard Lodge, another large factory, 12,000 tons. Even Frome, which was the largest, is now a mediocre producer.
There are two roads to travel from this point on :
Continue the lamentation on the present circumstances and beg the EU for more time again to adjust; or
Introduce the best practices which others have found
successful and watch production and yields soar.
It may appear strange in the present circumstances which seem to forecast a failure of the sugar industry, that not only can the industry rebound by adopting best practices, but by utilising the empty lands of St. Catherine and Clarendon, national output can double from the present 140,000 tonnes to 300,000 tonnes of sugar. All that is necessary is business acumen, political will and drive.
ETHANOL
There is talk that to supplement the earnings of the sugar industry, ethanol should be manufactured. This is quite possible. Ethanol manufacture commenced in the mid-1980s with an overseas firm, Tropicana, using imported feedstock. Later, the Petroleum Corporation of Jamaica commenced production of ethanol at the Bernard Lodge Estate using molasses and some imported wine alcohol as feedstock. The molasses was locally produced with some importation from Belize.
In the off-season when molasses was not available, Sorghum, planted on a pilot scale of 60 acres, was cultivated by Agro 21 and used to provide the syrup for feedstock.
When the PNP government took office in 1989, this operation was shut down. The intention, as I understand it, is to resume ethanol production now as diversification to provide alternative uses for sugar in the event that the production of sugar for export is no longer feasible.
Some years ago, I proposed that a study be done on diversification of crops for cultivation of sugar lands. So far as I know, nothing has been done. Well, not exactly nothing. I had Agro 21 produce such a study in the event that the sugar industry failed. I still have that study.
Edward Seaga is a former Prime Minister. He is now a Distinguished Fellow at the UWI. Email: veritasja@lycos.com.
