Tue | Nov 13, 2018

Seprod sugar deal threat to UK contract - Rickards

Published:Tuesday | December 15, 2015 | 12:00 AMMark Titus

Western Bureau:

The decision by the Sugar Industry Authority (SIA) to award the Seprod Group market-agency status could threaten Jamaica's ability to meet its obligation to British sugar refiner Tate & Lyle under a new one-year supply deal signed with the firm for the 2015-2016 crop year.

"The SIA signed a contract with Seprod when they (already) had an existing contract in place with Jamaica Cane Products Sales (JCPS) Limited for the marketing of sugar, including Golden Grove, which is owned by Seprod," Allan Rickards, chairman of the All Island Jamaica Cane Farmers Association (AIJCFA), told The Gleaner last Friday.

"... The sudden absence of Golden Grove from the marketing operations of JCPS can cause a problem in terms of the payment to the industry in the coming crop."

Rickards added: "There is currently a signed contract with Tate & Lyle for the supply of a certain amount of sugar, and suddenly the only facility that bags sugar for export is assigned another contract. That could spell trouble.

"The Sugar Industry Authority did not consult their board, because I sit on the SIA board and the matter of granting Golden Grove market-agency status was never brought to the board for discussion."

"We got a circular the Wednesday, with a draft of the agreement, giving us a deadline for the following Monday to respond."

"I responded stating my reservations, but by the following Tuesday, while in a JCPS board meeting, we were told that the deal was being signed upstairs," added Rickards.

Seprod racked up approximately $2 billion in losses since it took over the operations of Golden Grove Sugar Company from government in the 2010 divestment of several local sugar factories. In its annual general meeting last July, Seprod's CEO Richard Pandohie suggested that the company walk away from a $3-billion investment if it did not get control of selling its own sugar.

Efforts to contact SIA head George Callaghan for comment were not successful, while Pandohie was said to be unavailable.

JCPS was appointed the marketing agent for the SIA in 1986, when all facilities were operated by the State and was previously the only conduit through which Jamaican sugar could be sold. This situation changed after the Chinese, who operate the Pan Caribbean Sugar Company estates, were granted permission to find their own sugar markets as part of their divestment deal.

Discussions under way

Karl James, the general manager of JCPS, yesterday confirmed that there was a "situation" now facing the industry that could affect the current supply deal with the British refiner but said that discussions were being held between the parties involved.

"I have a contract issued to me by the SIA to market sugar for four factories - Everglades, Golden Grove, Appleton and Worthy Park - until October 2017," said James. "It is the same SIA who gave us the contract that has now turned around in August to grant a licence to one of the participants in the arrangement with JCPS to market their own sugar with immediate effect.

"If there is anything illegal, that must be it. I don't care who gave the authority, or it could be that the one who gave the authority was misled, but I am yet to understand why such a decision would be made without consultation with JCPS ... . This is what is up for discussion and is now being discussed," said James.