Editorial | Again, clarity on sugar

Unless he is being a fantasist, or there are highly compelling reasons for holding the information close to his chest, Floyd Green, the agriculture minister, must urgently disclose the basis upon which he has been suggesting an imminent rejuvenation of Jamaica’s limping sugar industry.

In other words, he must provide a full, clear and credible strategic plan, and be clear that taxpayers, in the end, will not be presented with a bill for a new bailout of the sector.

In Mr Green’s latest pitch about sugar’s bright future last week, he was quoted by the Government’s Jamaica Information Service as telling farmers in Clarendon that ground will be broken in that south-central parish in July for the construction of a new sugar factory. This factory, apparently, is being built by private investors.

If it happens, it will probably be the first greenfield construction of a sugar factory in Jamaica for over a century, allowing it to be a state-of-the-art facility, comparable to any in Brazil, India, China, Thailand or any of the other major sugar producers.

However, Minister Green did not disclose the investors in this project, the production capacity of the plant, the level of throughput that will be required for it to be feasible, when it will come into production, and what is being done to ensure that sugar cane will be available for its mills and boilers.

STRATEGIC VISION

To be fair to Mr Green, in January, during a tour of the Chinese-owned Frome sugar factory in Westmoreland, he exhorted sugar cane farmers to increase production. His argument was that the Frome factory was undergoing a US$30-million upgrade to enhance its efficiency, and that farmers were receiving higher prices for their crops.

“I am now saying to farmers, invest in farming and go back into sugar cane production, because Pan Caribbean (the subsidiary of the Chinese state company that owns Frome) has raised their efficiency,” Mr Green said. “They have looked at the price of cane and now it is profitable.”

That, however, is hardly a strategic vision or plan, especially in the context of the decades-long downward trajectory of Jamaica’s industry.

Six decades ago, the island’s sugar production hovered at around half a million tonnes. By 1970 it had fallen to 374,000 tonnes – a decline of 25 per cent.

In 2023 output had tumbled to under 34,000 tonnes, and was projected to be in the same range last year.

Analysed another way, Jamaica’s sugar production today is 10 per cent of what it was 55 years ago.

The problem is that the industry, most of which had fallen to government ownership by the 1970s, could not compete with other major producers of cane sugar. It also struggled against the manufacturers of beet sugar.

The factories were mostly old and inefficient, the sucrose content of the sugar cane was low, and their farms produced fewer tonnes per acre when compared to its competitors. This was compounded by the small sizes of the sugar cane farms, which did not readily lend to mechanisation.

These issues were exacerbated by the European Union (EU), beginning in the 1990s, removing preferences from Jamaican and Caribbean sugar imported into the EU.

But even then, the Government, through divestments in the 2010s, made an effort to resuscitate the industry. Three factories, including one in Clarendon, were sold to Pan Caribbean, the Chinese-owned outfit, and two others went to domestic companies.

The Government, in the process, embraced J$30 billion in accumulated losses by its sugar company, which was bleeding an average J$5 billion a year.

Yet, since then, Pan Caribbean has shuttered two of its factories, including the one in Clarendon. The company has also given back thousands of acres of land.

The two other purchasers, too, also shuttered their factories. A third company, Italian drinks firm Campari Group, has also closed its own, which was acquired when it bought the Jamaican rum producer J. Wray and Nephew.

So, there are only two active sugar factories in Jamaica today – Pan Caribbean’s Frome and the historically most efficient producer, Worthy Park Estate in St Catherine.

BROADER INDUSTRIAL POLICY

Against this backdrop, the prognosis does not seem especially promising for the Jamaica sugar industry, except if it were honed to meet the domestic demand of around 90,000 tonnes a year, plus any quotas provided by the United States under its tariff rate quota arrangement.

Notably, approximately 70 per cent of Jamaica’s sugar requirement is for the refined product, including highly refined white sugar, for which there is no refinery in the island.

For several years, Caribbean Community countries have talked about establishing such a refinery to meet the region’s estimated demand of 300,000 tonnes. This has failed to materialise.

It may be that a new sugar factory may be feasible in Jamaica, especially in the context of a broader industrial policy. Which would bring to naught these observations.

If there is such a scenario, and government support is necessary, that process must be fully transparent.

Or perhaps, private sector investors see opportunities and are willing to take risks with their own money. That is quite OK. In which event, they do not need Minister Green as their spokesman.