Fri | Aug 18, 2017

US$1m sugar dispute heads to mediation - SCJ and Everglades looking to Dispute Resolution Foundation to settle impasse

Published:Sunday | June 4, 2017 | 6:00 AMMark Titus
Cane lands adjoining the Long Pond Sugar Factory might have to be returned if the Dispute Resolution Foundation fails to settle the stand-off between Everglades Farms Limited and the Sugar Company of Jamaica (SCJ) Holdings.
Workmen install a roller at the Everglades Farms operated Long Pond Sugar Factory.
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The multimillion-dollar impasse between Everglades Farms Limited and the Sugar Company of Jamaica (SCJ) Holdings seems headed to the Dispute Resolution Foundation (DRF) instead of the minister with responsibility for agriculture, Karl Samuda.

Under the terms of the agreement between SCJ Holdings and Everglades, the dispute should have been referred to Samuda, who would have 30 days to attempt to broker an agreement.

If that failed, then the next port of call would be the DRF. If there is no amicable solution at that stage, then it will be sent to a single arbiter.

 

SOURCE OF THE DISPUTE

 

The dispute surrounds a demand by SCJ Holdings for the payment of US$1.045 million by Everglades, the owner of the Long Pond and Hampden sugar estates in Trelawny.

SCJ Holdings argues that this represents outstanding payment for lands leased under the divestment deal with the Government in 2009.

Everglades has made a counterclaim on SCJ for J$4 million, which it says was incurred while operating the Clark's Town-based factory when the company shuttered its operation for the 2016 crop year.

Other items of contention between the parties include security costs post-October 2012, housing costs post-February 2014, modification of grease trap and technical consultancy conducted by Outram Hussey for an environmental study.

"A date is yet to be agreed, but I can confirm that this is being taken to dispute resolution, which is an option in the agreement," a source close to the situation told The Sunday Gleaner.

"Discussions will be held with the Dispute Resolution Foundation for the earliest possible time," added the source in response to questions as to when the mediation will begin.

The Hussey family acquired Long Pond in a package that included Hampden Estates, which is also located in Trelawny, for $135.5 million in 2009.

The deal covered the two factories and 40 hectares of land surrounding them, plus an additional 7,100 hectares, leased for US$40 per hectare per annum for the first 10 years of the agreement.

If the parties fail to arrive at an amicable solution, Everglades could have to hand back the leased lands to SCJ Holdings.

This would negatively impact the recently announced $38-million deal between Everglades Farms and the US firm, Arrakis Development, which is expected to see the Long Pond Factory transformed into a 14.20mw biomass-to-energy cogeneration plant.

Everglades has said the cogeneration plant would have the potential to employ more than 900 workers.

The company has indicated that it would require a lot more cane from local farmers, at a potentially higher price.