Tue | Oct 16, 2018

Producers seek CET protection to launch white sugar market

Published:Wednesday | September 26, 2018 | 12:00 AMAvia Collinder/ Business Reporter
A cane harvester in operation at Monymusk Sugar Estate, in Lionel Town, Clarendon. Regional sugar producers are lobbying for CET protection as a precursor to plans to begin manufacturing plantation white sugar.

The sugar sector in the Caribbean is protected from outside competition by a 40 per cent tariff on brown sugar imports, and producers want that protection extended to refined sugar as a predicate to developing a market internally.

In a new position paper issued this month, the Sugar Association of the Caribbean (SAC) said the region was missing out on the white sugar market and needed new regulations that reward investment in that sector.

Up to September 2017, the Caribbean exported around 85 per cent of its sugar production to the European Union. But given the changing market dynamics brought on by the end of preferential market access to the EU, producers are looking to develop new revenue lines.

"We recognise the need to develop value-added products to meet demand," said Director of the Guyana Sugar Company Paul Bhim in a statement issued by SAC with the release of the position paper. "For that reason, Guysuco will be investing in production of plantation white sugars," Bhim added.

Caricom is estimated to consume around 270,000 to 290,000 tonnes of food grade sugars per year.

Belize is already a producer of plantain white sugar, but Jamaica and Guyana are seeking the right incentives to invest in the segment, even as all regional producers grapple with market dynamics on the world stage.

The SAC notes that manufacturers across the region face great uncertainty over the future price of sugar due to the myriad of influences on world prices, ranging from the value of the Brazilian real, speculation on the futures market by traders, natural disasters which affect prices, and dumping of sugar from large producer countries whose protected domestic markets are in surplus.

"They currently pay margins to brokers and other intermediaries to secure sugar on the world market and considerable freight and handling charges. They are vulnerable to poor quality of supply, serious price variation from year to year, delayed deliveries and high freight and logistics costs," the SAC said.

Within the region, said SAC, brown sugar is fully protected by the Common External Tariff, and that "it can easily do so for all sugar needs as producers adapt their production to produce white and brown sugar to a high quality".

Asked to weigh in on the paper, CEO of the Sugar Industry Authority George Callaghan pointed to a recent study that concluded that plantation white sugar was a good substitute in 98 per cent of the manufactured products which now use refined sugars.

Callaghan said SAC was coordinating the effort to extend the CET arrangement to refined sugar, but gave no indication as to how supportive the Jamaican Government was of the initiative.

SAC said Caricom should continue to use a standard for plantation white sugar which is in keeping with international best practice, but noted that the majority of its members had limited or no capacity to carry out such testing, and rarely requested such from their national standards bodies.

However, the Standards Committee of the Caricom Regional Organisation for Standards and Quality will be making recommendations on a standardised system for sampling and testing in the future.

SAC, whose members include Jamaica, Barbados, Belize and Guyana, began consulting with manufacturers and industrial users on a regional refined or white sugar market from last November. The position paper was produced 10 months later on September 7 of this year.

"We see an exciting future for the region's sugar market - where Caribbean sugar meets the majority of Caribbean demand," said SAC Chairman Karl James. "It is time in the true spirit of the single market for Caribbean products to contain Caribbean ingredients, especially sugar, which has been the backbone of many Caricom agro-industries for centuries," he said.

avia.collinder@gleanerjm.com