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Hopes soar with sugar handover

Published:Monday | August 15, 2011 | 12:00 AM
Frome Sugar Estate. - File Photos

Today's handover of the Frome, Monymusk and Bernard Lodge sugar estates to Chinese firm COMPLANT International comes 13 years since the local industry was last in private hands.

But, despite the ills of the previous attempt, stakeholders are quietly anticipating brighter days for the sector.

"From the experience with the Brazilians (Infinity Bio-Energy) we learnt that it is not over until it's over, so I am glad that this divestment will be completed," Allan Rickards, chairman of the All-Island Jamaica Cane Farmers' Association, told The Gleaner on Saturday.

"The Chinese have already declared that they are here to run a viable business and to be commercially successful and they will take decisions based on commercial exigencies, and we do understand that."

This will require a more businesslike approach for his members who, he admits, enjoyed some benefits with the factories in government hands.

"Government was able to understand the socio-economics of the industry because naturally at the end of the day, there are people who have to be elected in their various places," he said. "But now we have to look at a situation where we are returning to a totally privatised industry where business is going to be at the centre of decisions taken.

The assets were last in private hands under a deal in 1993 that gave 51 per cent control to a Wray & Nephew-led consortium. The other partners were Cliff Cameron's Manufacturers Investment Limited and Booker Tate Limited of the United Kingdom, with each holding a 17 per cent stake, while the Jamaican Government retained a minority 49 per cent.

The Government repurchased the Sugar Company of Jamaica (SCJ) properties in 1998 to avoid its collapse after the operators found themselves in a loss-making position which was blamed on the high inflation of 1994 and 1997, as well as the revaluation of the dollar in 1996.

However, the Bruce Golding administration, on taking office in 2007, determined that it would not continue to carry the loss-making entity, by then absorbing approximately $21 billion in debt on its books, mounting by $2 billion annually.

Successful bidder

By October 2008, Infinity Bio-Energy of Brazil was identified as the successful bidder, on a 25-year deal, for Bernard Lodge in St Catherine, Monymusk in Clarendon, Duckenfield in St Thomas, Frome in Westmoreland, and Long Pond/Hampden in Trelawny, but by January 30, 2009 Prime Minister Bruce Golding extended an invitation for new bids after Infinity failed to secure the US$125-million upfront payment by the given deadline.

Since then, the Hussey family-owned Everglades Farms has purchased Trelawny-based Long Pond and Hampden estates, while a Seprod-Fred M. Jones Estates partnership acquired the Duckenfield estate in St Thomas.

"One looks forward in anticipation for a new era in which investment to bring about the necessary changes which will take advantage of the tremendous potential at Frome, Monymusk and Bernard Lodge ... properly managed and capitalised, will be realised," said Ambassador Derrick Heaven, chairman of the Sugar Industry Authority. "It is my opinion that the three factories offer significant potential for the country to benefit from and that the investors will be satisfied that they made the correct business decision."

He added: "I am looking forward for a new era in which sugar is no longer seen as social welfare, but as a business that can benefit the country and the people who have invested. We have land, we have money, we have people, so with the new technologies and monies to be invested, I don't see why this should not be successful."

Anticipating modernisation

Dr Horace Cheroo, chairman of the Mid-Clarendon Cane Farmers' Association, says he is looking forward to the modernisation of the almost 70-year-old Monymusk factory, and is hopeful that the proposed 115 per cent increase in the price to be paid for sugar for the 2011-2012 crop year will be added incentive for the Chinese to keep their promises.

"It is also an opportune time for them because the price for sugar will mark an improvement on their returns, so we do hope they will live by their commitments," he said.

Francis He, senior administrator at COMPLANT, could not be reached for comment. However, speaking with The Gleaner a week ago, he had reiterated his company's commitment to the local market, while revealing that parts to begin factory repairs will arrive in September.

The new price is as a result of a deal struck with the UK-based ED&F Man Sugar Limited for the supply of some 80,000 tonnes of sugar at a price of US$936.98 per tonne. Tate and Lyle paid €370 for 100 tonnes of the sweetener under a forward sale supply deal in the just-concluded season.

Aubyn Hill, the Government's chief negotiator throughout the divestment process and CEO of SCJ Holdings Limited, is confident that the Chinese are into this for the long haul.

"Over the next three to five years, we expect COMPLANT to spend a minimum of US$150 million in the factories they own and in fields," he told The Gleaner on Saturday. "You also can expect a more streamlined, slimmed down operation at Frome, Monymusk and Bernard Lodge, as well as Golden Grove and Everglades."