Mark Titus, Business Writer
Relations between Pan Caribbean Sugar Company (PCSC) and others in the sector have been somewhat turbulent since the Chinese company's market entrance, but the new chief executive officer says he's ready for a reset.
His outreach, however, will not extend to a redefinition of the company's business model.
That, according to CEO Dr Wu Huaixiang, is above his pay grade.
PCSC, which is now Jamaica's largest sugar producer, eschewed the traditional pooling of supplies for distribution to foreign buyers. Instead, it applied for and was granted 'agency status', which allows the company to market its own sugar.
"The decision was approved by the board of directors at COMPLANT," said Dr Wu.
"I am just an employee, just going by these guidelines; so that decision will not be reversed," he said in an exclusive interview with the Financial Gleaner.
PCSC is a subsidiary of the COMPLANT group and is the operating company for the Frome, Monymusk and Bernard Lodge sugar factories acquired from the Jamaican Government. Wu replaced He Francis as head of the Jamaican operations in June.
"I believe we can revitalise sugar production in Jamaica, but there needs to be a greater understanding by all that this is a business, and as such must be operated in a manner so that everyone involved benefit," Wu said.
In the three years that PCSC has been involved in local sugar production, the Chinese company's non-traditional approach to business in a sector steeped in tradition has grated on farming groups and others with which the company does business.
Since takeover, the PCSC factories have underperformed. Frome, the largest sugar estate in Jamaica, churned out just over 34,000 tonnes of sugar in the 2011-12 crop year - its worst performance since the early 1900s. Frome and Monymusk combined churned just 55,201 tonnes for the 2012-13 crop.
The company's journey as a marketing agent started off quietly. It has landed a one-year supply deal with European firm Sucres & Denrées (SUCDEN) at a lower price per tonne than the three-year arrangement negotiated by marketing competitor, Jamaica Cane Product Sales (JCPS) with British buyer, Tate & Lyle..
PCSC's deal covers 20 tonnes at US$844 per tonne, with a window for an additional 15 tonnes.
Jamaica Cane Product, which sells the pooled output of Jamaica's other private sugar estates, has an arrangement for 50 tonnes per year at US$894 per tonne with the option of an additional 20 tonnes, if production is favourable. The buyer is responsible for shipping.
The new PCSC boss, whose résumé is packed with managerial experience in the food industry throughout Europe and Asia, says he is not worried about getting the sugar sold as the company sees alucrative market waiting in his homeland, China, and the continent of Africa.
Frome begins production for the 2013-14 crop year on November 1, but Wu suggests there is unlikely to be a turnaround in performance at the factory before 2014-15, when state-of-the-art equipment being manufactured in China arrives for installation.
The retooling is part of a four-year plan to improve capacity utilisation, a programme that will require substantial hike in working capital.
"Naturally, our investment will increase; I don't have the exact number to provide you with presently, but this, I can say, will be by a large percentage," Wu said, when pressed for the projected costing.
"We have to improve the agriculture so that by 2017-18 we can have 1.2 million tonnes of cane to process at the two factories," he said.
Wu is hoping that the company's farmlands will produce the majority of the cane required, but is not disregarding contribution from the farmers.
PCSC currently purchases approximately 300,000 tonnes of cane from private farmers and cultivates another 470,000 tonnes on its own lands.
With a new factory slated for Monymusk at a projected cost of US$150 million and an upgraded Frome Estate, that amount of cane is expected to produce a combined total of 150,000 tonnes of sugar in the first year.
According to market disclosures on the Hong Kong Stock Exchange, PCSC is projecting a 70,000-tonne output for the upcoming season.
However, plans for a sugar refinery on the Clarendon plains of Vere, that was to be completed by 2016, are now on hold.
"The project is still alive, but is postponed because of the bad performance of agriculture so far, but we are working to improve that aspect of our operation; then the issue of the refinery could be up for discussion again," Wu said.
In the filing by COMPLANT subsidiary HUA Lien International to the Hong Kong Stock Exchange, the company said that on completion of the plant restorations, the group may, subject to the results of the feasibility studies, move to build a dehydration factory at one of the sugar estates to produce fuel ethanol.
Having now dealt with some pressing industrial matters that greeted him on his arrival - including a dispute arising from the company's failure to adhere to a pre-divestment agreement to provide farmers with fertilisers, and herbicides for replanting that led to protests at Frome - Wu says he is now focused on a rebalancing of relations with all the groups with which PCSC's operations intersect.
"Jamaica's sugar industry can reach great heights, but this will require a process. I can't say how long it will take, but this will need the cooperation of everyone," Wu said.
"If we can achieve this then great things are in store."