Thu | Sep 21, 2017

'Fire on Frome' - Pan Caribbean warns that its sweet plans could turn sour if illicit cane burning continues

Published:Sunday | January 8, 2017 | 1:04 AMMark Titus
Liu Chaoy, chief executive officer of Pan Caribbean Sugar Company.
Burnt cane being transported to the Frome Sugar Factory.
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New chief executive officer of Pan Caribbean Sugar Company (PCSC), Liu Chaoy, is confident that the company will turn around its financial fortunes, but has warned that this will depend on the level of cooperation from the residents along the sugar belt and support from the Government to combat illicit cane fires.

Pan Caribbean has bled billions of dollars since starting operations in Jamaica 2010, but Liu Chaoy said that can change in quick time.

“When Pan Caribbean came to Jamaica, we had a lot of plans (and) we still have confidence in those plans,” said Liu Chaoy through an interpreter at her office last Thursday.

“We see a very big future for sugar in Jamaica, and that is one of the reasons why we decided to invest in Jamaica and develop sugar factories here.

“My concern is that Pan Caribbean will not survive if the numerous incidents of illicit fires are not eliminated. If it is (being caused by) social problems, it cannot be solved just by Pan Caribbean, we need the Government to help us, to protect overseas investors.

“People must be caught and brought to justice. All these years, yet there is not a single incident, not a single record of a man who sets the fire being prosecuted,” added Liu Chaoy.

“So I am appealing to the residents in the area to join us in combating illicit fires and save our industry, (because) if Frome closes, this will not only be a loss to us, it will also be a big loss to the Government and the people of Jamaica ... if Frome should die it will be a local calamity on a wide margin.”

LOSSES

 PCSC purchased the Frome, Monymusk, and Bernard Lodge sugar estates in a divestment deal with the Government, which earned US$9 million for Jamaica. The company then invested more than US$260 million to renovate the factories and fields, while enduring a rather turbulent relationship with other sector players, mainly due to differences in culture and labour practices.

The company took a $7.3-billion hit to its bottom line in 2015, mainly because of a $5.5-billion impairment loss at Monymusk, and then decided to focus its attention on the Frome facility.

Liu Chaoy, who comes with more than 20 years’ experience in management of sugar operations, particularly in Africa, is focused on a rebalancing of relations with all the groups with which PCSC’s operations intersect, and agreed that Jamaican and Chinese workers need to appreciate the differences in cultures, and establish a workable relationship.

“The culture barrier does exist, including our language, and this is making the communication between our people difficult at times, but we believe it is important to combat this,” she said. “Our management styles and legal framework are also different, which has been a major challenge in some instances.”

Liu Chaoy took charge of the Jamaican operation one month ago, and immediately began putting together a comprehensive outreach programme to benefit the communities.

She has also been meeting with interest groups and told our news team she intends to strengthen communication and cooperation with the All-Island Jamaica Cane Farmers Association and the local cane farmers group.

Admitting that the company’s social programme was “not enough”, the CEO said that her intention is to set aside a budget for outreach programmes, starting 2017, and create a special incentive programme to prompt the farmers to grow more cane. This will be a part of her five-year plan to be presented to her board of directors in July.

ILLICIT FIRES

“However, despite all our efforts or intention to improve the production of the farmers, illicit fires are becoming more and more serious and will discourage our efforts to improve the production,” said Liu Chaoy,

“This not only affects our estate, but it also affects the farmers because when the cane burns illicitly, then cane quality deteriorates, and then the payments to farmers decrease, and because of these fires, we are producing two to three tonnes less than we want to, and every year the fires exceed 300 times, and 2015 showed illicit fires occurred 458 times more than the year before.”

Frome, once the largest sugar factory in the region, is now down to a 60,000-tonne capacity after a US$100-million refurbishing exercise two years ago, but churned out only 27,507 tonnes of sugar from 396,077 tonnes of cane last crop year. This was the worst performance of Frome since the early 1900s.

The CEO believes 40,000 tonnes of the sweetener from a combined cane supply of 500,000 tonnes over the next five years is sustainable, but she would be satisfied with 28,000 tonnes for the current season.

Pan Caribbean, which has been marketing its sugar since 2014, will supply 10,000 tonnes to the lucrative domestic market, while the remainder is destined for the United States and Europe. The company says it will also move to penetrate the untapped regional market.

The company also produces energy to run its operations, with the surplus intended for sale to the national grid, but the deal is still being discussed after almost two years.

“It is strange, because in China, we are accustomed to speed, we do things quickly. The delay has affected some of our plans, it’s taking far longer than we expected.

“What I can assure you is that, as an enterprise, we will no longer close our doors and not talk. We will remain open to the community people and to the media. This does not mean that we won’t apply our rules strictly, but at the same time, we want them to feel our kindness and our hospitality,” said Liu Chaoy.