New sugar deal
Mark Titus, Business Reporter
British sugar producers Tate & Lyle have entered into a US$46-million partial pre-financing agreement over two years with the Jamaican Government in exchange for the supply of 100,000 tonnes of raw sugar annually.
The deal will replace the current accord with Eridania Suisse SA, which saw the forward payment of US$15 million to fund the 2009-2010 crop in exchange for a government-guaranteed supply of 79,000 tonnes of sugar.
Sugar Company of Jamaica Holdings Limited, the vehicle through which Government owns and manages the factories yet to be divested, will receive US$26 million for the 2010 crop year, and US$20 million for the following year.
The deal provides for the termination of the agreement without penalty, after the first crop year, should there be a successful divestment before the agreement expires, but for the time being will facilitate the continued operation of the facilities for the 2010-2011 crop year.
"This is an indication that the industry is not dead, and that there are those who believe that there is value in growing sugar," Dr Christopher Tufton, minister of agriculture and fisheries, told The Gleaner yesterday.
"It allows us to continue the expansion of sugar-cane production and the improvement in factory efficiencies without any cost to the taxpayers, (as well as) retain some 2,300 jobs, even as we press towards divestment."
Eridania, which stakes a claim to 30 per cent of the European sugar market, initially wanted to buy the remaining three factories - Frome, Bernard Lodge and Monymusk - but backtracked after its due diligence on the entities.
Up to the 1960s, Tate & Lyle controlled large chunks of Jamaica's sugar industry, but left in the 1970s. The producers came back for a period in the 1980s to manage some factories on behalf of the Government and, in the 1990s, as partner with two Jamaican firms in a short-lived ownership of the divested industry.
Permanent secretary in the agriculture ministry, Donovan Stanberry, said there was a profit-sharing component to the new deal, similar to that with Eridania, but refused to give details.
Jamaica currently produces the sweetener for the local and United States market, as well as to fulfil its commitment to Eridania to which approximately 20,000 tonnes was delivered in February. A similar amount was due to leave the island's shores last week.