Wed | Dec 7, 2016

Sweet victory for manufacturers - Sugar Industry Authority revamps refined-sugar policy

Published:Wednesday | February 4, 2015 | 12:00 AM

Tameka Gordon, Business Reporter

The refined-sugar regime proposed last year by Agriculture Minister Derrick Kellier will go ahead with the Sugar Industry Authority (SIA) as sole importer, but only for the retail trade, as major manufacturers will continue to source and import their own sweetener.

The decision is a win for the Jamaica Manufacturers' Asso-ciation (JMA), which has lobbied aggressively against an import monopoly, saying it would lead to increased production costs.

The parties are finalising the policy that will govern the new arrangement.

"Manufacturers would still source their sugar in the same manner, but when the manufacturers source it and bring it in, it comes in under the authority of the SIA," said chairman of Jamaica Cane Products Sales (JCPS), Allan Rickards, on Monday.

For sugar supplied to the retail trade, JCPS will operate as sole distributor under contract to the SIA.

Last November, the agri-culture minister reinstated the SIA as sole importer of refined sugar, a move deemed by the JMA to have "very serious implications for the approximately 100 manufacturers registered as refined-sugar users" and a function that the manufacturers felt the SIA did not possess the resources to execute efficiently.

Rickards' comment on how manufacturers would operate under the new system appeared to imply that businesses sourcing their own sugar would do so under oversight by the SIA, and is at odds with the JMA's take on the negotiated compromise.

JMA President Brian Pengelley countered the notion that the SIA would oversee imports by manufacturers.

"I don't know what that means; we would not sign off to that," he said. "I thought the issue had been dealt with already when it first came up in November and we met the minister."

Pengelley said manufacturers negotiate "very long-term contracts on sugar" which would incur penalties if disturbed. He added that JMA members are not averse to a structured refined-sugar policy "as long as there is no impact on the manufacturing sector and there is no cess or tax duties applied".

Asked to clarify the policy, the new head of the SIA, George Callaghan, said he would not comment, as the issue was now in the hands of the minister.

Jamaica does not produce refined sugar and is entirely reliant on imports.

Under current policy, manufacturers who use the product as input are allowed to import it duty-free. As an end product distributed through the retail trade, refined sugar attracts 128 per cent duty.

Last year, the Ministry of Agriculture charged that manufacturers have been reselling the product to retailers at a profit to them but at a loss for Customs, and announced a restructuring of the import regime.

Rickards said Monday that the SIA will be the sole importer "on paper", while the restructured regime will "cauterise any effort to get uncustomed refined sugar on to the shelves."

"Some people will be able, by dint of their special dispensation, to source it themselves, (and) be able to take it to their warehouse, which will be under the very close scrutiny of the SIA," said the JCPS chairman.

Under the new policy, the SIA will closely monitor importations by all parties, and may conduct checks at the warehouses of manufacturers from time to time, he added.

Shops and supermarkets will be supplied by JCPS, which will act as distribution agent for SIA, according to Rickards. JCPS will be both source and distribute the commodity, he said.

"My understanding is that all the refined sugar that is going to be supplied to consumers through the retail shelves will come through JCPS, and that JCPS, in the same way in that they import brown sugar, will source it from the least expensive source," he told Wednesday Business.

The SIA will have a major say in those persons who are approved as manufacturers under the refined-sugar import policy, Rickards said. And the agency will employ "aggressive surveillance" to ensure that the loopholes through which manufacturers sold to retailers are plugged, he added.

tameka.gordon@gleanerjm.com