Wed | Oct 17, 2018

No to monopoly of refined sugar importation

Published:Sunday | November 9, 2014 | 12:00 AM

Below is a statement from the Jamaica Maunufacturers' Association released on November 6.

The Jamaica Manufacturers' Association (JMA) is extremely disturbed by Agriculture Minister Derrick Kellier's announcement that the Sugar Industry Authority (SIA) is to be Jamaica's sole importer of refined sugar. This announcement has very serious implications for the approximately 100 manufacturers registered as refined sugar users.

Given the significant improvement in collaboration between the Government and the private sector, the JMA is disappointed that such a major decision was made without any consultation with the sector. It is also unclear whether the government agency responsible for controlling the importation of refined sugar, the Trade Board Limited, was consulted. It is known that the Sugar Advisory Committee of the Trade Board was not.

The imposition of a monopolistic regime, in an open global economy, will impede the competitiveness of the manufacturing industry and will lead to higher pricing, quality inconsistency and an unreliable supply. Additionally, some manufacturers have to conform to certain specifications because of franchising agreements. We must also consider the negative impact that this will have on consumers in terms of the cost of goods. These were precisely the reasons for eliminating the monopoly process many years ago.

Long-term supply contracts of refined sugar for several businesses, distributors and manufacturers are already in place. If these businesses are forced to break contracts, not only will our relationship with suppliers be adversely affected, but there will be costs associated with breaching these contracts. These

breaches will be as a result of government action, and compensation will have to be sought, or is it the intention of the Government to pay the fines associated with these breaches?

We cannot validate any rationale for Minister Kellier's pronouncement, which could not have come at a more inappropriate time. Manufacturers are ramping up production for the Christmas season and are now uncertain of the supply of a major input into the food and beverage industry.

Reverse the decision

Further, the JMA strongly objects to this move. It is our position that this sudden and retrograde decision should be reversed as it is detrimental to the sustainability and growth of the manufacturing sector and Jamaica. We urge the Government to find a more favourable solution as some manufacturers may be forced by this action to curtail or close their operations in Jamaica and relocate to other countries. This will harm the Government's growth agenda.

The JMA is a member of the Sugar Advisory Committee and had submitted recommendations earlier this year to address the issue of leakages. Whereas leakages have been reported, no data have been presented to confirm a significant amount comparable to usage by legitimate manufacturers to warrant such action. At no point was there an agreement surrounding what was announced.

The recommendations made included significantly reduced duties on refined sugar, which now stands at 168 per cent; more stringent regulations; and changing the way sugar is packaged, encompassing weight, country of origin, brand and local supplier for the retail market.

A reporting mechanism is already in place, which involves Jamaica Customs, Trade Board and Tax Administration Jamaica (TAJ). Members of the JMA fully comply with these quota and reporting requirements. What we need is greater enforcement of existing policies, and the packaging change, to increase effectiveness.

We also believe that a monopolistic importation policy violates our international trade agreements as reflected in our membership with the World Trade Organization (WTO) and, by extension, Jamaican law. Such unilateral and unpredictable actions will also act as a disincentive for both local and foreign investment in this large economic subsector.

We have reached out to the prime minister and the agriculture and industry ministers to request an urgent meeting to resolve the matter.

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