PHOTOS BY RICARDO MAKYN/STAFF PHOTOGRAPHER
Karl James, left, and Dr. Ken Jones
Last week, The Gleaner's Editors' Forum hosted the top brass of the sugar
industry to examine the way forward for this vital sector. The forum was
held as part of the newspaper's year-long focus on agriculture. Below
are excerpts from the discussion.
PETER MCCONNELL managing director, Worthy Park Sugar Estate
WORTHY US$10 MILLION INVESTMENT
"Let me say this, I'm going to go on a slightly different route. I'm going tell you what we at Worthy Park are proposing to do.
"To enable us to survive in this new regime, we are in the process of negotiating with the Government and have been promised that we will get the land at Innswood. At present, Innswood is averaging somewhere around 48 tonnes of
cane per hectare. With proper management, that can be moved to over 90 tonnes per hectare. We should be able to produce from it an additional 150,000 tonnes of cane. I don't think that there is any problem in reaching that target.
"The problem that we see is how do we then move this cane from Innswood to Worthy Park, and this requires roads.
"Now, whether it is in the form of a new highway which can't come quickly enough, but anyhow it may lead to improvement to the existing road. Quite frankly, it's only a short piece of roadway of about a mile between Innswood and Worthy Park which needs to be widened.
"We have looked at this investment and it is going to require somewhere in the region of US$10 million and we would certainly hope that we can lock into a low-interest rate regime, lower than what is now available, because agriculture, quite frankly, cannot afford the current interest rate system. It's about 11 per cent if you go through Development Bank of Jamaica."
POOR SMALL FARMERS,
GOV'T HELP NEEDED
"Let me just go on to say that 150,000 tonnes of cane would produce 15,000 tonnes of sugar and if you add that to our present production which is about 23,000 tonnes, that would put you up to 38,000 tonnes.
"Let me say this: We get close to 100,000 tonnes of cane from farmers that we buy. We have some 2,500 farmers who supply us with cane, many of them very small farmers and I guarantee you that they will be going out of business. I don't think that in five years' time you're going to have a job for Mr. (Allan) Rickards at All-Island Cane Farmers, because there will be no farmers left if we are going to have to survive on the price reduction from the EEC.
"Unless the Government is going to come in and guarantee
a price, where a reasonably
efficient farmer can make a
reasonable return on his investment, then you can write off the small farmers. Those of us who will survive are those who
can highly mechanise, have
efficient factories and grow cane efficiently.
"And the future in my opinion for the small cane farmer
of Jamaica is non-existent in three years' time. Unless the Government is going to come in and make some form of guarantee for them to stay in business. I haven't got the figure now, but I think the SCJ's losses last year were about $1.8 billion. The tax payers are picking that up. But were they reasonably efficient as are Appleton and Worthy Park and you only had to put up five cents per pound on 200,000 tonnes of sugar. That's not a lot of money, but if you don't bring the Government factories up to efficient levels of production, not only are we subsidising their losses, but you're having to find a price to maintain the industry in business and the pressures it will bring if it closes down.
"I really don't know, I feel that I have a future, but I have to get land and if I get roads we can produce enough sugar, put our volumes up where our overhead
costs can come down and we feel we can survive if we net US$0.20 per pound for sugar in our hand.
"The reduction that we are looking at is somewhere around $700 per tonne of cane. We don't make that.
ON MANAGEMENT OF SUGAR FACTORIES
"I'm of the view that we don't have the management in Jamaica that know-how to efficiently run a sugar industry. We have lost that management, but it is certainly available overseas and we need to bring in top experts in sugar manufacturing and in planting and put them in charge and give them the necessary capital to be able to do it properly."
DR. RICHARD JONES manager, Fred M. Jones Estate
"Agriculture is in decline and in dire straits. Rural Jamaica is in decay and is totally neglected.
"In 1968, there were 24 medium to large farms privately owned and operated in eastern St. Thomas and east Portland. Today, six of these farms operate.
"The saying that "Jamaica is Kingston and Kingston is Jamaica" is now a national paradigm.
"This is demonstrated by our presence in Kingston today rather than in the country.
"Successive governments have allowed the Ministry of Finance to override the Ministry of Agriculture by finance pursuing pet projects, e.g. Spring Plains and now sugar, rather than allowing the Cabinet through the Ministry of Agriculture to develop broad-based policies that would address rural Jamaica, its infrastructure, its poverty and the
prevention of "urban migration".
"Agriculture needs at least eight per cent of the National Budget to keep rural Jamaica alive.
"Specially, today the sugar industry is facing its greatest challenge with a 36 per cent reduction in the export price of sugar previously secured from the European Union about to be executed.
"How can we survive?
"The island's farmers have
been told repeatedly, and in no uncertain terms, as recently as the annual general meeting of the Cane Farmers' Association that they must be cost efficient, reduce their production costs and increase yield.
"This should, therefore, and must, apply across the board.
"However, the industry is governed by the following bodies the majority of them based in Kingston:
Sugar Industry Authority
Sugar Industry Research Institute
Jamaica Cane Products Sales
Sugar Producers' Federation
Sugar Company of Jamaica
Sugar Manufacturers'
Corporation of Jamaica
National Rums
Spirit Pools
Sugar Housing Corporation
All-Island Jamaica Cane Farmers' Association
Caribbean Molasses
Sugar Association of the Caribbean.
"The Sugar Industry Association (SIA) and Sugar Industry Research Institute (SIRI) alone have a combined annual budget of $258 million. While research is absolutely essential for the way forward, large savings could and must be made between the two bodies.
"For the other 10 entities,
surely, there must be rationalisation to reduce the amount of organisations effectively and to produce large savings in administration.
HOW DO WE STABILISE THE SUGAR PRICE?
"Firstly, Jamaica Cane Products must be given sole control of the importation of sugar, the authority to set the price for resale and to collect the proceeds. This must apply to both refined and raw sugar. This principle has been repeatedly put forward by reviews authorised for the sugar industry but never enacted.
"Secondly, assuming that Government agrees to the US$0.5/lb. sugar support, what would be the most equitable way to pass this on to the private farmers?
"Three of the largest costs in production to the farmers are:
Wages and salaries
Fuel
Fertiliser.
"It would be cumbersome and inadequate to try and refund the charges of wages and salaries to the small farmers similarly with fuel. But a way must be found that any rebate is used productively and not taken directly to the supermarket or bars. The All-Island Jamaica Cane Farmers supplies fertiliser to individuals and the cost is collected by Jamaica Cane Products at second payment.
"I put forward that the private farmer be allowed to claim a fertiliser rebate against the total sugar he or she produces in a crop. This rebate would be up to the value of US$0.5/lb. sugar provided and only if proof of purchase of fertiliser for the use on his cane be substantiated.
"Should there be surplus in the fund, it would be added to the Sugar Price Pool. The plight of rural Jamaica is now further depressed because since January 2005, the daily rate has been linked to the national minimum wage. How can cane farmers afford a 16.6 per cent increase in rates for 2006, facing a 36 per cent decline in price, a doubling of the fuel prices and, therefore, by extension, increase in fertiliser prices.
"It is time for action to reclaim agriculture, the largest employer of labour in the country."
AMBASSADOR DERRICK HEAVEN executive chairman of the Sugar Industry Authority
ON ADMINISTRATIVE COSTS
"Whenever the production of sugar is high, the percentage cost is almost not noticed. But the SIRI and the SIA largely have some fixed costs and whenever the production of sugar dips below a certain level, then these stand out like a sore thumb.
"Then you need to ask the question: If you are producing at a certain level, can you afford these costs and therefore, what you going to do about it? ... It doesn't mean that there should be complacency and I think that it is something that is being looked at with a view to making some recommendations as to how we can go forward."
KARL JAMES general manager, Jamaica Cane Products Sales
"Forty offshore (sugar) suppliers have permanent quota to the United States. Our quota has been down to just a little under 12,000 tonnes for the last
five years, annually (11,791). However, early last year, the American USDA discovered that they are going to have a short supply of sugar because of the effect of the hurricanes on Louisiana and Florida and so increased the quota. This went up to just a little under 13,000 and since January they have given us another 3,018 tonnes to take us pretty close to 16,000 tonnes. But there is a strong debate going on now that there is need for more sugar in the United States and it's anywhere between 250,000 and 400,000 tonnes. If they went according to the portion that
is your quota we would get another 4000 tonnes. ... We will be supplying our quota this year and we have confirmed that between March 1-10, the first 5,000 tonnes of the American quota will be dispatched."
ON THE DECLINE IN SUGAR
"You have to listen and read between the lines. We have a target this year of about 177,000 tonnes. If we make 160,000 tonnes we will be able to deliver the U.S. quota and the EU commitment.
"There is this whole thing in the WTO called a 'sensitive product'. Between the EU and the ACP, is sugar going to be declared a sensitive product?
Yes, you are allowed to do what is necessary for yourself nationally. One of the things that they have provided for is that there are some products in some countries that are essential to the economic advancement of those countries, so you are able to negotiate that these products are declared sensitive and treated differently. And if sugar is going to be a sensitive product, that will protect it from outside, wide open competition. The principle is if you want to have an industry, you then do the principled thing and do what is needed to protect it."
DERRICK HEAVEN
ON DECLARING SUGAR A
SENSITIVE PRODUCT
"I don't believe the declaration is going to be a unilateral decision, where you merely declare this as a sensitive product, and the WTO accepts it. I agree it is an issue that can be negotiated to get acceptance. You don't just declare that this is sensitive and therefore, I will henceforth be operating along certain lines. I can understand the benefits of declaring it a sensitive product, but it has to be negotiated within the context of the WTO and to the extent that you can get it done, it could be an advantage."
KARL JAMES
ON DECLARING SUGAR
A SENSITIVE PRODUCT
"We are fighting for the best price for sugar that you ship to the European Union. The view is once you flood the European market even with the 36 per cent price reduction, you can find yourself in trouble after 2015 because you are opening up (your local market). If say, sugar is a sensitive product, your local market gets some amount of protection from similar imports. Sugar qualifies for such a declaration on what the European Union would call multifunctional industry. It's not just a commercial activity; it's a whole social, cultural, environmental activity with a whole range of benefits from it. We want time to make sure we can establish a viable profitable sugar cane industry.
"If you want a sugar industry, you are going to have to put in place what is necessary to provide your sugar industry."
