Fri | Feb 28, 2020

Caricom silent while refined sugar quarrel rages

Published:Friday | September 13, 2019 | 12:26 AMHuntley Medley - Senior Business Writer
The Caricom Secretariat in Guyana.
File The Caricom Secretariat in Guyana.

It might be working feverishly behind the scenes to cool tempers and iron out differences as it normally does in these matters, but the secretariat for regional trade bloc Caricom is not saying anything publicly about the running battle between regional sugar producers on the one hand, and manufacturers and national governments.

The long-standing quarrel involves Jamaica and Trinidad & Tobago constantly seeking suspension of the community rules requiring the imposition of a 40 per cent per cent common external tariff, the CET, on the importation of refined or white sugar from outside the region mainly for use in food- and drink, manufacturing processes.

The next showdown over the efficacy of plantation white versus refined sugar is set for Guyana next week, home of the secretariat.

“We have been having quite a bit of correspondence back and forth on this issue. I am not so sure what the position of Caricom is,” Karl James, chairman of the Sugar Association of the Caribbean, SAC, told the Financial Gleaner this week.

“There seems to be a sort of indifference. Joseph Cox will not agree with me on that,” he adds, referring to Caricom’s assistant secretary general for trade and economic integration.

Questions emailed to Cox by the Financial Gleaner in June, as well as several attempts at follow-up, though acknowledged, are still unanswered. Efforts at comment from Shaun Baugh, Caricom’s programme manager for agriculture and industrial development and a former technical officer in Jamaica’s agriculture ministry; as well as from Richard Brown, the director of the Caricom Single Market and Economy unit, have also been unsuccessful.

The SAC insists that enough white sugar is produced each year by sugar producers in its member countries of Jamaica, Guyana, Belize and Barbados to meet the regional demand, believed to be about 290,000 metric tonnes.

The availability of supply is not usually in question in sessions of Caricom’s Council for Trade and Economic Development, COTED, which meets periodically to discuss routine as well as thorny trade issues. The issue over which Jamaica’s and Trinidad’s manufacturing sectors, in particular, are butting heads is the argument that the plantation white sugar available from SAC members is not refined sugar, but is a less refined sweetener that is unsuitable for use in the making of sweets, cakes, biscuits and the large sweetened drinks operations in the region.

The SAC has responded by utilising top-notch international technical experts to vouch for the interchangeability of the Caribbean’s plantation white with refined sugar in the manufacturing process.

James says in most food manufacturing processes the suitability of the Caribbean product has been proven – the exceptions being in the making of some pharmaceuticals, where a more granular sweetener with a higher level of molecular polarity is required.

And while plantation white sugar was previously considered unsuitable for making clear soft drinks, including 7Up and Sprite, in Belize, through a process of decolourisation, James says the 7Up soft drink is now being manufactured using the sugar produced there.

A study on whether plantation white can be substituted for refined sugar was commissioned by Caricom in April and funded in the amount of just under US$100,000 by the Caribbean Development Bank. At the time, the Caricom Secretariat said in a statement that the study “aims to improve the availability of data to guide evidence-based decisions about the future of sugar in Caricom”.

In-depth discussions

James says the results of the study are in and there will be a preliminary review of the findings at a meeting in Guyana next week. More in-depth discussions are expected to be held on the matter FROM October 2-3, when Caribbean sugar sector representatives meet in Belize. From there, recommendations are intended to be sent to Caricom agriculture ministers and then to the next meeting of COTED later that week.

“These meetings in Belize will hopefully make some progress about where we are going. What we are hoping is that when we finish Belize, we will have some specific agreement between users and manufacturers of sugar in the region,” said James, striking an optimistic note.

However, substitutability of plantation white sugar for refined sugar is not the only sticking point fuelling the regional sugar fuss. There remains the not-so-small matter of price. James says the world market sugar imported from outside the region into the Caricom market is the excess commodity that is not used up in the home markets of the producers.

The world market price available to Caribbean sugar importers is said to be between US$4.50 and US$4.80 per tonne. “That is always at a cheaper price than anything we can supply them with. Basically, what it comes down to is a matter or price. We are trying to see what kind of accommodation we can make,” the SAC chairman said.

The parties will also have to get past the SAC’s accusation that sugar – refined, plantation white and brown – is being dumped on the regional market, that is, sold at a price lower than that which obtains in the exporter’s domestic market. James says the Caricom secretariat has been furnished with evidence of this.

Byron Blake, a former assistant secretary general for trade and economic development at the Caricom Secretariat, is suggesting that the regional coordinating body is not be entirely vilified in its public silence on the long-standing sugar quarrel.

“The secretariat is last in the chain in relation to this dispute. They administer the law and are clearly going by the old definition for refined sugar,” Blake told the Financial Gleaner this week.

Blake thinks a point yet to be introduced into the sugar debate is that plantation white sugar, although bleached, goes through less processing than the traditional refined sugar and is therefore healthier than its refined counterpart.

If the position of contrasting positions of some manufacturers in Jamaica is anything to go by, the Belize talks next month might still not put the lid on the sugar quarrel.

“We cannot dictate to manufacturers what raw materials they must and must not use,” Metry Seaga, the immediate past president of the Jamaica Manufacturers and Exporters’ Association, JMEA, declared to told the Financial Gleaner a few months ago.

Big Jamaican manufacturer Wisynco Group straddles the positions of sugar user and supplier. The company is a beverage manufacturer utilising sugar as an input in its drinks, and an investor in the sugar market as part-owner and distributor for sugar cane producer Worthy Park Estates.

“I see the need to protect the regional sugar producers and to ensure that we don’t put at a disadvantage, local and regional manufacturers,” Wisynco Chairman William Mahfood said commenting on the matter in April.

Mahfood’s position is supported by current JMEA President Richard Pandohie, who also heads Jamaican manufacturer Seprod, which makes sweetened juices, drinks, condensed milk, porridge mixes and biscuits, among its extensive range of products.

Seprod also recently exited sugar production, having pulled the plug on billions of dollars in losses at its Golden Grove sugar factory in St Thomas, although it continues growing sugar cane and distributes both brown and refined sugar on the retail market. The company also shelved plans to produce plantation white sugar after it concluded that the move could not be justified without protection against the importation of extra-regional sugar.

“The idea of utilising Caricom for regional food supply is a must. That is why Caricom was set up. I think, as best as possible, if we can source something in the region, it is beneficial to our people,” Pandohie told the Financial Gleaner when asked in April about the running Caricom sugar battle.

The regional sugar producers want the enforcing of the CET provisions for the white sugar market as it does for the trade in brown sugar. The Revised Treaty of Chaguaramas, the rule book which governs the operations of the community and the Caricom Single Market and Economy, the CSME, notes that “any alternation or suspension of the Common External Tariff on any item shall be decided by COTED where: (a) a product is not being produced in the Community (b) the quantity of the product being produced in the Community does not satisfy the demand of the Community; or (c) the quality of the product being produced in the Community is below the Community Standard or a standard in use which is authorised by COTED.”

In statements issued earlier this year, the SAC pointed out that the regionally produced white sugar is unfairly displaced by the variable customs and tariff treatment of extra-regional white sugar.

Among its recommendations, the SAC wants the differential national treatment of white sugar for import duty across the CSME be discontinued by COTED by removing sugar from ‘List A’ commodities, to ensure that all countries have the 40 per cent CET applied.