Edward Seaga, Contributor
THE PREDICTABLE panic about the future of sugar is setting in now that the European Union (EU) has indicated that it expects to cut the price of sugar to African Caribbean and Pacific (ACP) countries by 39 per cent over a short period.
The logical argument is that any business that suffers a price cut of that level must go under. That is a realistic argument which might hold as the proposal goes through the process of approval in the Parliaments of EU countries and in the EU Parliament itself, eventually. One thing that is quite certain is that the final decision will not be too far off the 39 per cent figure proposed. This is because there is a real determination among European countries to reduce sugar prices to the much lower levels of the order available in Australia, Brazil and Thailand. Sugar, after all, is not just a sweetener. It is a widely-used raw material and the much higher cost now being paid by European producers puts their goods in a non-competitive position in the global market.
VIABLE AT LOWER PRICE
The ability of the sugar industry in Jamaica to be viable at a much lower price evokes negative responses, even from the most efficient producers. Are these fears real? They are indeed, because even if the final price to ACP countries set by the EU for sugar for the future is not as low as now proposed, most of Jamaica's industry is likely to fall out anyway because the cost of production in Jamaica is so much higher than the rest of the ACP countries. The report of the task force on the sugar industry in Jamaica, 2001, compares production costs:
Jamaica US$660/tonne;
ACP countries US$ 375/ tonne.
This is understandable given that production per man/day in Jamaica is less than 1.0 tonne (.87 tonne), in comparison with the international market which averages 3.0 tonnes per man/day, actually 3times greater.
Part of the reason is that the impact of labour rates in Jamaica on the cost of sugar has moved from 17 per cent in 1993 to 30% in 1999, which means not only that the sugar industry has lost much ground in Jamaica but is continuing to do so at an accelerating rate.
OTHERS MAY BENEFIT
In the final analysis, if the eventual price is finally settled at less than 39 per cent, other ACP countries may be able to benefit, but not Jamaica, where costs are so far out of line. Within Jamaica, the two private estates, Appleton and Worthy Park, would have a chance to survive if the final price cut is not too bad, but the five government-owned estates: Frome, Monymusk, Bernard Lodge, Long Pond and Duckenfield, would go under because they were not brought up to the international technical and management levels which the two private estates now enjoy. These were left to operate as horse and buggy shows while others seized the opportunity to drive fast cars.
In an article published by me in The Sunday Gleaner two weeks ago entitled, 'Sugar can still be sweet, if ...', I indicated that if the government estates took the necessary steps to introduce world-class technology and management as Appleton Estate did, it could revive the chances of these non-competitive estates and sugar could have a sweet future. But with the short time period now offered by the EU, that option no longer exists. The time line does not permit the introduction of the extensive field technology and equipment, factory rehabilitation and managerial upgrading required.
The best option now is for these non-competitive government estates to be diversified out of sugar into other products. This strategy would require emphasis to shift from the production of sugar to sugar cane. Sugar cane has prospects for converting cane juice to ethanol for use as an additive for gasoline to fuel motor vehicles, replacing some imported oil.
In the same article two weeks ago, I mentioned that the production of ethanol from sugar cane and imported grape juice was an ongoing industry introduced in the late 1980s, operating at Bernard Lodge Estate. Tropicana, an overseas company, was also a major ethanol producer at that time linked to the Duckenfield sugar estate. The production of ethanol ceased in the early 1990s after the change of government in 1989.
INDUSTRY NORMS
The success of ethanol production would depend on whether the cost of production of cane can be brought in line with industry norms. The best way to ensure this is for Government to divest the estates to experienced, successful operators.
To pick up where the industry left off in the 1980s, Bernard Lodge and Monymusk should be earmarked for divestment for ethanol production with the Monymusk factory to be converted into a modern ethanol refinery.
The need for continuous feedstock in the off-season after reaping the cane can be filled by imported sugar-based juices like grapes or citrus, or possibly by the growing of Sorghum which was tested in the 1980s by Agro 21 and, I believe, the Petroleum Corporation of Jamaica (PCJ), which was in charge of the ethanol project.
NON-COMPETITIVE FACTORIES
The other three estates owned by government which are non-competitive are: Frome, Long Pond/Hampden and Duckenfield. Here, there is a great opportunity to blaze a new trail that could light up the dying embers of agriculture. I am referring to what I call the miracle plant luecaena. No other plant has so many vital uses:
The limbs of the tree after being stripped of leaves, can be burnt as a high energy fuel;The leaves are rich in nitrogen and potassium. These can be processed to produce animal feed, saving on imports. This has already been successfully tried on poultry in Jamaica;The leaves can also be fermented to produce methane gas for household cooking or the production of electricity;The residue, after fermentation, is rich in nitrogen and potassium. This provides an ideal organic fertiliser perfect for launching, on a serious scale, the production of organic vegetables which now fetch premium prices in the export market;The roots are nitrogen-fixing, thereby enriching the soil;The plant grows 20 feet in one year and after it is harvested to use the trunk, limbs and leaves, it regenerates itself to 20 feet again in one year;Because it is hardy, fast growing and tolerant of soil which is not necessarily ideal, it can be planted widely on denuded hill sides to stop soil erosion;Absolutely nothing is wasted on the luecaena miracle plant.
In the late 1980s, my government provided 1,000 acres of land in St. Catherine for Dr. Dennis Minott, an expert on this plant, to grow luecaena and develop the many products for feasibility testing. Before the project reached the harvest stage, the government changed and Dr. Minott was not allowed to continue.
PCJ AT THE FOREFRONT
I was most pleased to learn, not too long ago, that PCJ has once again come to the forefront, planting a substantial acreage of luecaena at Font Hill, Westmoreland. This may or may not be sufficient to provide all the commercial feasibility tests.
But Roger Clarke, Minister of Agriculture, who is a practical farmer, should not waste time planting 2,000 acres to test the prospect for replacing cane on failing estates. There is no possibility of producing poor results. Luecaena is a low-tech cultivation. Even a government farm can't help but be successful.
If prompt attention is given to these two major substitute crops, it could be possible to be operating effectively before the production of sugar would no longer be feasible in Jamaica, based on the final decision on the reduced price to be paid by the EU for sugar.
OUTSTANDING PROSPECTS
Other proposals for alternative crops exist, as I have mentioned before, using the plan developed by Agro 21 for this purpose. But ethanol, using sugar cane, and luecaena with its many uses, are the outstanding prospects, subject to testing for commercial viability.
When all is considered, suffice it to say that because the EU has now taken the decision to drastically reduce the price of sugar, what has been a generation of indecision may now be a year of decision. Perhaps the EU decision is a blessing in disguise that could change the past uncertainty of the prospects of sugar for the greater certainty of new crops for a new future.
Edward Seaga is a former Prime Minister. He is now a Distinguished Fellow at the University of the West Indies Email: veritasja@lycos.com.
