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Consulations on to avert sugar factory shutdown

Published:Wednesday | July 8, 2015 | 5:56 PMNeville Graham

Consultations are on in earnest between government officials and stakeholders in the sugarcane industry in the wake of a veiled threat by manufacturing conglomerate Seprod Limited to pull out of sugar production.

Permanent secretary in the Ministry of Agriculture, Donovan Stanberry, said they have started consultations with manufacturers and cane farmers islandwide since the decisions necessary to avert Seprod's pull-out have profound implications for the rest of the industry.

"What we've done is to start some stakeholder consultations today (Wednesday) with those in the industry because you know that it will have some ramifications for how the industry is now structured", Stanberry told the Financial Gleaner.

A source told the Financial Gleaner that the matter of the threatened pull-out was headed to Cabinet, but Stanberry stopped short of dismissing the claim, saying that the consultations were based on a request from Seprod.

"They (Seprod) have indicated that they want to market their own sugar. They have made an application which we are now considering," Stanberry said.

Seprod currently runs the former Duckenfield Sugar Estate and factory in St Thomas, having taken over the operation from the Government in 2009. The Golden Grove Sugar Company is the subsidiary through which Seprod runs the operation. The manufacturing conglomerate has reportedly invested $3 billion and has racked up $2 billion in losses over the last six years.

Chief Executive Officer of Seprod Richard Pandohie told shareholders at the company's annual general meeting on Monday, and reiterated in an interview with the Financial Gleaner, that it cannot be business as usual, even as he indicates that Seprod has a vested interest in keeping the factory open.

"We want to stay in the industry. We want to continue to provide economic activity and employment in St Thomas. We are essentially the major employer in eastern Jamaica. We want to stay in there, but we can't continue to sustain the level of losses that we are doing now," Pandohie insisted as he downplayed talk of a shutdown.

Ready to invest

He said Seprod is keen to see the sugar industry succeed in eastern Jamaica, but they need approval to take charge of their destiny as it relates to revenue.

"If or when we get approval to market and distribute our own products that we make, we're going to have to make investments in quality improvements (in order to) be competitive with imports that are coming in. So, essentially, we're asking for the decision to be made so that we can make the requisite investments," Pandohie said as he expressed the belief that the Government was sincere in making sure that the right framework exists.

Going forward, Seprod said it plans to let the agricultural operations rest with independent farmers while concentrating its efforts on a viable sugar manufacturing facility.

"We've restructured so that the farmers who are better at growing would be responsible for agriculture and we, who have a better ability to run a factory, would concentrate on (those) operations," Pandohie said.

Most of the locally made sugar is sold by Jamaica Cane Products Sales, but Seprod believes it can do a better job of marketing its own sugar by retaining more control of the revenue generated.