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Prime Minister P.J Patterson is to present the details of a strategic plan for the future development of the Jamaican Sugar Industry to the House of Representatives by month end.
In the meantime consultations have been ongoing with all critical stakeholders to assist in arriving at a consensus for the future direction of the industry, inclusive of the necessary reforms and changes to move it towards viability.
Finance and Planning Minister Dr. Omar Davies made the disclosure during yesterday’s (Tuesday, Oct.11) sitting of the House of Representatives while seeking approval for a government guarantee for a US$30 million loan from the National Commercial Bank to the Sugar Company of Jamaica to facilitate its operations in preparation for the 2005/06 sugar crop.
The Finance and Planning Minister said the loan was necessary to set the industry on even footing after the events of 2005 which was “a bad year for the industry.” He said this could be attributed to a variety of factors including inadequate preparation of the factories for the crop and various weather occurrences including Hurricane Ivan and an extensive period of drought.
“These impacted on the sugar crop making it one of the worst in recent history,” he told the House. Minister Davies said the loan would enable the necessary steps to be taken to have the factories equipped to start on schedule by the second week of January with the Frome facility beginning by the first week of December.
“We are convinced that this loan would put SCJ in a position to stage a recovery from last year and place it on the road to improved economic liability,” Dr. Davies told the House.
He further emphasized that the facility was a “loan guarantee” and “not a subsidy to the SCJ”, while pointing out that the SCJ has adhered to its debt repayment obligations in the past, a practice which has “been one of the major limiting factors in terms of its ability to undertake some of the capital expansion because its loan servicing has taken priority.”
Minister Davies said the credit would also enable the SCJ which has responsibility for managing the five government owned factories, to meet other outstanding obligations to the 3,000 cane farmers, the 6,700 direct employees as well as various other persons and industries whose survival is directly linked to the industry. He further pointed out that the industry impacted directly on 28 of the country’s 60 constituencies and was the major source of jobs in many rural towns.
Meanwhile Opposition Members while not disapproving of the provision expressed disappointment that a more detailed plan had not been provided as to how the money would be used, the plans for the restructuring of the industry, as well as the retooling of factories, and improvement of the lives of sugar workers.
Opposition Spokesman on Finance, Audley Shaw said the 43,000 acres of “arable but idle sugar cane lands” in Jamaica should be utilized to help halt the “steady decline of the industry”. Furthermore he said all factories must be retooled and proper scientific research undertaken to determine factors which deter optimal production.
In the meantime Agriculture Minister, Roger Clarke said the continuous decline of the industry over the years could be attributed to varying factors, one of them being the inability of factories to begin preparations on time. He however noted that the need to diversify was not being ignored and as such increased emphasis was being placed on ethanol and increased rum production in particular.
“We intend to do everything that is possible to save the rum industry and if we are going to make more rum we have to find a way to lift the productivity of the cane that we are putting in the ground,” Minister Clarke stated.
He also informed that several measures which were being put in place for the future development of the industry were to be announced shortly and disputed the ‘notion’ that the government was insensitive to the needs of cane farmers.
State owned factories account for an average 70 per cent of the total output of the industry.
The SCJ proposes to use the proceeds of the loan to refinance an existing loan from a British based financial institution to alleviate its current cash crunch and extend the repayment period thereby reducing the annual debt service burden of the company. The loan which is a six-year arrangement has a 12-month moratorium on principal payments to be followed by 18 months consecutive quarterly payments. Interest will be paid quarterly.