China eyes 'bumper' sugar season

WESTERN BUREAU:NEW owner of the Frome, Monymusk and Bernard Lodge estates, the Pan Caribbean Sugar Company (PCSC), is aiming to become the top sugar producer in the region by 2015, but is lamenting the high cost of electricity and wages in Jamaica.

In an exclusive interview with The Sunday Gleaner, Chief Executive Officer Francis He shared some of the Chinese government-owned entity's plans.

"We are ready for the start of the crop season; we have acquired all our equipment for Frome, Monymusk and Bernard Lodge," he said during the All-Island Jamaica Cane Farmers' Association (AIJCFA) regional pre-crop sugar retreat in Savanna-la-Mar on Wednesday.

"So far, over US$20 million (J$1.6 billion) has been spent," the CEO shared.

In a move to maximise efficiency, He has begun to phase out the equipment obtained under the deal with the Jamaican Government.

"The state of these equipment is very poor and it costs too much money to repair them. In two years time, all our equipment will be made in China ... we will be able to lower production cost by at least 15 per cent," he said.

PCSC is the Jamaican subsidiary of Complant International which purchased the three factories for US$9 million or J$774 million in 2010, and signed a memorandum which will give the new operators ownership of 25 to 50 acres of the land immediately surrounding each facility.

The company also leased some 30,000 hectares of cane lands for US$35 (J$3,010) per hectare per annum for a period of 50 years, renewable for another 25 years.

Fell short of target

Frome Sugar Estate in Westmoreland closed last season with 687 tonnes more than the 41,000 tonnes it produced in 2009-2010, falling short of the 55,000 tonnes it sought to achieve.

But He says incentives will be offered to farmers to grow more cane.

" … Because we don't have enough land, we will provide cheaper fertiliser and herbicide, and provide a lower rate for harvesting, reaping and transportation that in three years' time the total output of cane will be 700,000 tonnes," he stated.

"Our fertiliser and herbicides are far cheaper than the present market price, so altogether, by this reform … (to source equipment, herbicide and fertiliser from China) will reduce our production cost on the agricultural side by 30 per cent."

Frome currently has a staff complement of some 300 workers on its books, but this number could be reduced, with plans to introduce an automated system for the historic facility, over time.

"The problem (is that) workers in Jamaica are not easy to be found and the labour cost is very high. So I have to reduce the amount of labourers to keep their high salaries and introduce more automation of equipment to lower my labour cost."

He described Monymusk in Clarendon as the key operation for his company, and revealed that design work for a new automated factory will be completed within six months.

"Monymusk will be the most modern factory in this region, fully computerised, and will require some 50 persons for each shift."

However, this will not affect the almost 300 workers on staff at the Clarendon facility, as almost half of this amount will be used in the company's drive to maximise the 88,000 hectares of cane land at its disposal, while training will be provided for those selected to use the new computerised system.

Monymusk fell 20,000 tonnes short of the 37,000 tonnes projected for the 2009-2010 crop, with an output of 17,000 tonnes of sugar from the 247,000 tonnes of cane delivered.

The factory did not realise the 45,000 tonnes needed as its contribution to Jamaica's obligation under the pre-financing arrangement to British refiner Tate and Lyle during the last crop, but still managed an impressive 25,479 tonnes.

"Only one third of the cane lands at Monymusk is being utilised presently. But we aim to offer incentives to the farmers to increase their production and, along with cane from Bernard Lodge, realise one million tonnes in the next three years to produce 90,000 tonnes of cane."

PCSC will seek to improve the yield per hectare at Bernard Lodge, but will not grow more hectares of cane on the St Catherine-based lands, unless the transportation issue is solved.

"The transportation cost is too high and to add those costs is meaningless. We will be spending our resources on people and technology at Monymusk," was all the sugar boss was willing to say.

Refinery coming

Monymusk will also be home to the firm's refinery, to be established on completion of the new factory.

"In this region is a good price for a refinery, but a refinery utilises a lot more electricity, and we cannot continue with the high cost of electricity in Jamaica," He lamented.

"We are now doing the study to improve efficiency of the boiler and the generator, so that we can have enough electricity to process the brown sugar into refined sugar … we will definitely not use JPS (Jamaica Public Service) electricity in the future. This is presently a large chunk of our operation cost."

The company has now applied for a licence to market its own sugar, and has made no secret of the fact that it is not a fan of the current pooling system through which Jamaica Cane Product Sales (JCPS) sells locally produced sugar.

"If you look at the budget of JCPS you find that expenses are very high. If we do the promotion of the market, we would not consume such a big load of money," He declared. "We don't like pooling system; I don't want to pool my sugar with anyone's sugar."

To avoiding those disputes, the PCSC head wants to sell their sugar independently.

"But if Worthy Park, Appleton, Long Pond and St Thomas want to pool sugar into us, we will do it through commercial terms … it means they have to pay my expenses, because it is all about making money."

The company has six factories in Africa, and He believes that combined with the locally produced sweetener, this provides a big advantage for his company, with a lucrative market waiting in China.

The CEO is of the view that the concept of absolute equality, despite quality being practised by local sugar producers, is not good for business, and instead wants a competitive environment among all players.

"The best cane should get best payment, the best worker should get best salary and the best factory should earn the best profit, and that is how we will operate, (because) we have made an investment, (and) the purpose of an investment is to earn money. If we don't earn money it makes no sense we keep these operations, it makes no sense," said He.

China's recipe for success

We will definitely not use JPS electricity in the future; this is presently a large chunk of our operation cost.

All our equipment will be made in China.

We will provide cheaper fertiliser and herbicide.

We will provide a lower rate for harvesting, reaping and transportation.

We will sell our sugar independently.

Full Caption

Then Prime Minister Bruce Golding (left) and chief executive officer of Complant Group of Companies,Tang Jianguo, symbolically exchange a local sugar-cane plant at the handover ceremony of the Jamaican Government sugar assets to Pan Caribbean Sugar Company, Complant's Jamaican subsidiary, at The Jamaica Pegasus hotel, New Kingston, on Tuesday, August 16. The Chinese company has acquired three factories - Frome in Westmoreland, Bernard Lodge in St Catherine and Monymusk in Clarendon - for US$9 million and has committed investments of at least US$156 million to renovate the factories and sugar-cane lands over the next four years.- JIS

mark.titus@gleanerjm.com