Blame lack of preparedness, not divestment - says Aubyn Hill …. government benefiting greatly from offloading sugar factories
Former banker Aubyn Hill, the man who successfully offloaded the loss-making government-run sugar factories to private owners in 2011, is defending the divestment exercise, saying the unpreparedness of the new owners is the cause of the uncertainty now facing the sector.
"Government is saving billions of dollars today, from the fact that the estates were divested," Hill told The Gleaner in a telephone interview on Tuesday. "Can you imagine if the Government had to fork out over $5 billion a year to pay as subsidies?"
"The fact that the Government is getting money for its asset, and most important, it does not have to shoulder the cost of divestment, those who are now criticising the divestment clearly do not understand finances, and whoever is managing the entities is clearly responsible," said Hill, who was speaking against the backdrop of the new global price regime, which has resulted in a significantly lower price for sugar on the international market.
"COMPLANT (the parent company of Pan Caribbean Sugar Company) has invested over US$300 million in Frome and Monymusk already. Seprod has also invested millions in Golden Grove and the Husseys have done the same with their rum and sugar production," continued Hill.
"The sugar price is on a downward trajectory presently, but for four or five years the sugar manufacturers have had very high prices. Now what they have done in terms of using those prices to prepare themselves for what they knew would be a downturn is their business."
While speaking at the recently held annual conference of Jamaica Association of Sugar Technologists, William McConnell, chairman of the Sugar Manufacturing Corporation of Jamaica, pointed to uncertainties in the future of the industry as a result of "the drastic reduction in the price, which the industry will receive for export sugar in 2016".
Jamaica Cane Product Sales (JCPS), the marketing arm of the Sugar Industry Authority, is currently in talks with several international sugar refineries in a bid to secure a supply deal for the 2016-2017 crop year.
For the 2014-2015 crop year, Jamaica completed the final year of a three-year deal with the British firm Tate & Lyle. In the three years of the deal, Jamaica sold sugar at the following preferential prices: first year - US$896 per ton; second year - US$786 per ton; and the third year - US$770. The price was for 54,000 tons each year with an additional 16,000 tons being optional.
For the upcoming 2015-2016 season, the Karl James-led JCPS has penned a one-crop deal with Tate & Lyle for 48,000 tons with an option for an additional 16,000 tons. This deal is offering payment which is 50.02 per cent less than the previous payment.