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Editorial: Don’t be sentimental about sugar

Published:Monday | April 25, 2016 | 4:00 AM

We are glad for the assurances from Karl Samuda that the Government has no plan or wish to have a long-term place in Jamaica's sugar industry. But as the commerce and agriculture minister well knows, it is not infrequent that policy intent and outcomes are at odds and governments are often seduced - imperceptibly so at times - into unplanned undertakings they believe to be in the public's interest.

And if Donovan Stanberry, the permanent secretary in Mr Samuda's ministry, is someone to whom the minister looks for policy advice, what we fear might be a slow march by the Government back to the ownership of sugar entities could turn out to be a headlong rush, with dire consequences to the national accounts and the country's resolve. In that regard, Mr Samuda, but more importantly, Prime Minister Andrew Holness, must not have firm resolve, but draw thick, bright redlines which they will not cross in this sugar business.

Six years ago, for the third time in three decades, the Jamaican Government divested itself of its sugar interests. Twice already, the externally managed/leased/sold entities found their way back into government hands because their owners/operators found the businesses to be unprofitable. Those previous times, Jamaican sugar enjoyed preferential markets and high prices in the European Union (EU). Those preferences have dissipated.

 

Third go at privatisation

 

Since the third go at privatisation, bits of the sold-off facilities have edged their way back to some form of government management and/or control - which the administration says is short term.

Everglades Farms mothballed their Long Pond Sugar Factory in Trelawny because they were losing money. The Government says it will operate this crop to process the sugar cane grown in that area because of the closure, for unrelated legal reasons, of another factory that was supposed to process the cane.

Mr Samuda insists that he will not spend on this operation a dime more than the J$214 million that the previous administration has budgeted for transportation subsidies for the Trelawny farmers when Long Pond closed.

But the Government has another problem. COMPLANT, the Chinese company that purchased three sugar factories and leased their associated lands, has stopped farming sugar cane around the Monymusk factory and will not operate the factory next year. So the Government will step in and run it, while COMPLANT works with the Government "to find new partners to activate new revenue streams and resume operation of the factory in 2018".

 

Potential danger

 

What happens if no partner is found? Here is where Mr Stanberry is a potential danger.

He believes, as has been reported by this newspaper, "in my heart that the sugar industry can be turned around" and takes aims at "intellectuals" and others who "stay in boardrooms and classrooms" and prognosticate on sugar's demise, without paying attention to the social impact of such an outcome. Yet, Mr Stanberry has been a critical policymaker in agriculture for a long time, during which the industry's fortunes nosedived as taxpayers were called on to prop it up.

Sugar is an economic endeavour, which cost taxpayers nearly $5 billion a year in losses and accumulated debt of over $30 billion. If large-scale sugar cane farming and sugar manufacturing is unviable in Jamaica, we may just have to come to terms with that. It might, in the end, be cheaper to provide even unearned, enhanced state pensions to sugar workers rather than attempt to shore it up. It's time for a clinical look at the industry.