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Prime Minister P.J Patterson has outlined the steps to be taken by the government to resuscitate and transform the sugar industry.
This as part of the efforts to survive the changes, which will accompany the proposed 39 per cent cut in the price of sugar imports from African Caribbean and Pacific (ACP) states that was announced by the European Union (EU) last July.
Addressing the House of Representatives yesterday (Oct. 25) Prime Minister Patterson said the policy options so far accepted would see the industry centering around three products. These he said included raw sugar for the export and domestic markets, molasses for rum manufacture, and ethanol as a substitute for Methyl tert-butyl ether (MTBE) for the local transportation sector in the first instance.
Mr. Patterson said it was also proposed to produce some 200,000 tonnes of raw sugar per annum, a level of production, which he said, would enable the country to meet the 126,000 tonnes per annum quota in the EU market. Prime Minister Patterson said three of the state-owned sugar companies and two private owned plants would undertake the production.
Prime Minister Patterson said this would necessitate the eventual closure of the state-run Long Pond and Bernard Lodge factories as far as sugar production was concerned. He however emphasized that while it was not intended to immediately close any factories, the government would be forced to do so in light of the agreed phasing out period and the introduction of suitable alternatives.
He also said that while EU consultants had recommended the closure of the Monymusk factory in a draft report, the government was not contemplating any such action.
In the meantime Prime Minister said while the report was less than positive about the country’s capacity to produce ethanol from sugar cane economically, studies done internally indicated that a locally based ethanol industry was viable.
Mr. Patterson in noting that the success of the plans would be based on an adequate supply of cane said it was intended to work closely with the farmers to achieve the targeted volume and production levels. He informed that it was also proposed to identify business partners with the requisite experience in sugar cane growing and sugar production, capital and technology to enable the SCJ to achieve the targeted production levels of sugar, molasses, and ethanol. In this regard he disclosed that a reputable Brazilian firm had already indicated serious interest while other enquiries had been received.
In the meantime he said it was proposed to develop alternative agricultural activities for sugar lands to be taken out of cane production to meet domestic, tourism and export market needs. Already the Agriculture Ministry has identified crop items and livestock, as suitable alternatives. Prime Minister Patterson said it was also proposed to return to a managed import regime of refined sugar.
While noting that the proposed rationalization measures would have implications for human resource management Prime Minister Patterson assured that the necessary steps were underway to: establish the needed training programmes for the transformation to a modernized sugar cane based industry, restructure worker involvement and relations and undertake interventions at the community and household levels in vulnerable sugar producing areas.
This he said was as the “protection of the welfare of those directly and indirectly dependent on the industry was of the utmost importance.” Prime Minister Patterson informed that social and economic impact assessments were to be undertaken to develop intervention measures. On the international front the Government is engaged in developing a country plan for the industry for submission to the EU.
In response to questions from Opposition Leader Bruce Golding on funding sources for the restructuring of the sector, Prime Minister Patterson said it was obvious that substantial investments would have to be made within public and private owned entities.
Where public owned factories were concerned he said instructions had been given to the SCJ to submit, “what would be required for the modernization of the three factories to be included in the continuity programme specifically, Frome, Moneymusk and Duckenfield”. Prime Minister Patterson however said he was not in a position to state the exact requirements for each factory. He said it was anticipated that financing would “have to be obtained from many quarters” inclusive of EU compensation and soft loan funding sources available from EU institutions,” among others.
The EU has suggested 40 million euros for all 18 ACP states for compensation in the first year. This has however been deemed inadequate. Prime Minister Patterson pointed out that Jamaica alone required some 160 million Euros to undertake the readjustment, modernization and diversification, which would be required over the period for the transformation of the industry.