Editorial | What’s the deal with sugar?
As this newspaper reported yesterday, the European Union (EU) last weekend disbursed to Jamaica €6.5 million (J$910 million) under a programme whose name could have been thought of only by bureaucrats in Brussels - Jamaica Accompanying Measures for Sugar. Don't be bogged down by the weighty cumbersomeness of the title. For it's a good thing.
The idea is to help wean Jamaica - and other countries that enjoyed the privilege - off its preferential market for sugar in the EU, which everyone knew was inevitable, and to prepare the country for the decline in the price of the commodity when that happened. There is a similar programme for the banana industry.
So, over a decade, the Jamaican Government was expected to do things to transform the sugar sector to improve its viability, and, in the event it didn't survive, put the people who made a living from the industry in a position to earn alternative incomes. Things were also to be done, particularly the upgrading of social infrastructure, to enhance the quality of life of the people who live in the sugar-growing areas of Westmoreland, Clarendon, Trelawny, St Elizabeth, St Catherine, and St Thomas. In exchange, the Europeans would reimburse Jamaica €86 million (J$9 billion) in periodic tranches.
It is reasonable to assume that the verifiable targets under the project have been met, given that the EU, as it did last week, has made the reimbursements. The state-owned sugar companies were divested; homes have been built for sugar workers to replace the decrepit estate barracks in which many still lived; training has taken place; clinics have been upgraded; and centres have been established.
In the circumstances, it is not unreasonable to ask whether the project has achieved its objective or is well on its way to doing so. That is, transforming Jamaica's sugar cane industry into a viable business, or establishing a viable framework to it. In that regard, we believe that Prime Minister Andrew Holness should direct his agriculture minister, Karl Samuda, to conduct, and make public for serious debate, a full analysis of the state of the industry.
The point is, there are worrying signs about the health of the industry, whose determination should not await the expected period of consolidation of the EU-financed project, up to 2020, before hard decisions, if that is what is needed, are taken about sugar's future.
The Government's first task under the EU project was the divestment of its sugar factories and estates. Which was a good thing. The Government's sugar holding company had debt of around J$5 billion, and, at the time of the sale of the factories in 2009 and in 2010, was accumulating deficits of nearly that amount.
But the divestments have not gone well. Having made big losses on the business, one buyer, Everglades Ltd, suspended operations at its factory in Trelawny. The Government then decided to take over its management, ostensibly for a single crop. The future of that facility is now uncertain.
Further, Pan Caribbean Sugar Company, a subsidiary of the Chinese corporation COMPLANT, surrendered sugar lands it acquired in Clarendon, and, like Everglades, has suspended operations of one of its three factories. In the case of the latter, the Government has said it will run the factory for one season, while it has found new leases for the Clarendon lands.
Clearly, an unfiltered look needs to be taken of sugar.