Government Divests 2 Sugar Factories for $180 Million

Cabinet has approved divestment of two factories owned by the Sugar Company of Jamaica (SCJ) – St. Thomas Sugar Company (formerly Duckenfield) and the Trelawny Sugar Company – to private interests.
St. Thomas Sugar Company will be divested to a consortium comprising Fred M. Jones Estate Limited and Seprod Limited, while the Trelawny Sugar Company will be divested to Everglades Farm, which is owned by the Hussey family.
Minister of Agriculture and Fisheries, Hon. Dr. Christopher Tufton, made the disclosure today (June 23) during a statement to the House of Representatives.
The proposed purchase price for the Trelawny Sugar Company factory lands, comprising 33.8 hectares with factory and other buildings, is US$1.5 million (approximately J$135 million), while the price for St. Thomas Sugar Company’s factory and 10.5 hectares of surrounding lands is US$500,000 (approximately J$45 million).
Lease payment for approximately 7,100 hectares of cane lands owned by the Trelawny factory is US$40 per hectare (approximately J$3,600 per hectare) per annum for the first 10 years, subject to review. The St. Thomas factory’s 1,127 hectares of cane lands will be leased for US$53 per hectare per annum (approximately J$4,860 per hectare).
“In both instances the sugar factories and the attendant facilities are being sold and the sugar cane lands are being leased for a period of 50 years, renewable for another 25 years,” Dr. Tufton said.
The Agriculture Minister added that both entities will undertake critical capital expenditure to modernise and expand/improve the factory facilities.
“In the case of Trelawny, the commitment is for a US$6.2 million expansion and modernisation programme over the next five years. For St. Thomas, the entity proposes to invest US$2.74 million over the next 2 years,” the Minister said.
He added that both entities will have to commit to maintain at least 60 per cent of the leased lands suitable for sugar cane cultivation, in the production of sugar cane or sugar related products for at least 15 years. The two entities will be entitled to a number of tax incentives commensurate with investments of the magnitude, as well.
Meanwhile, negotiations with the other listed entities, in respect to the Frome, Monymusk and Bernard Lodge packages, are continuing and Cabinet, within the next two weeks, will consider the recommendations.
Dr. Tufton said that the Government remains committed to a sustainable private sector led and multi-product based sugar cane industry.
The divestment process, though protracted, is absolutely critical, he added, as there is no way that the Government can continue to shoulder a SCJ debt burden which exceeds $16 billion, growing by approximately $2 billion per annum, and still find capital to invest in improving factories that have been in place for over 50 years.
He pointed out that the local market consumes 60,000 tonnes of raw sugar and 70,000 tonnes of refined sugar, and can sustain a viable sugar industry. This is in addition to the regional market for refined and raw sugar, as well as, the prospects for continued export to the European Union, where the pricing scenario is rapidly changing in favour of local sugar exports.
“At the end of the divestment process, we expect a robust industry with exciting prospects not only for private sector players, but for cane farmers, sugar workers and their communities,” Dr. Tufton said.