Jamaica: Is this the calm before the storm?

The Sugar Industry Authority (SIA) early September awarded the Seprod Group, which runs the Golden Grove Company in St Thomas, a market-agency status. While some stakeholders are concerned with the potential negative impact to the island’s ability to meet obligations with Tate and Lyle Sugar, under a 2015-2016 crop year supply deal, the move underlines the continued change in Jamaica’s sugar sector. (According to local media, the SIA had a contract with the Jamaica Cane Products Sales Limited (JCPS) for the marketing of sugar, including Golden Grove’s, until October 2017. Sin embargo, it has authorised one partner to independently market their own sugar.)

It had been made known earlier in the year that Seprod Jamaica Ltd. had accumulated losses for JMD 2 billón (USD 1.00 = JMD 118.50) since taking over the operations of Golden Grove Sugar Company in 2010. Al mismo tiempo, the company suggested they would abandoned their JMD 3 billion investment, if it did not get control over the selling of its sugar both to the domestic and to Caricom markets.

Although the JCPS has been the only marketing agent for the SIA since 1986, when all facilities were state-owned and managed, marketing changes were introduced when the Pan Caribbean Sugar Company (PCSC) was allowed to sell their own sugar in 2009-2010 (agreement signed in 2014), a condition included in the divestment agreement by which the Chinese company Complant, PCSC’s mother company, acquired three sugar estates (Frome, Monymusk y Bernard Hotel rústico) and became the island’s largest sugar producer.

The crumbling of the JCPS single-desk marketing, also under pressure by over eighty entities allowed to import refined sugar, is only the latest episode of a sugar restructuring in the island.

The Labour Scenario

En junio pasado, al final de la 2014-2015 cosecha, Seprod announced that some 500 workers would be paid redundancy because their farming operations were being outsourced. Some workers might be rehired by the Sankar Group, which is also cited as the group that Pan Caribbean Sugar Company outsourced the farming operations of Frome estate, in Westmoreland.

En noviembre, the Agriculture Minister was quoted as saying that it was expected that some 1,000 workers in Trelawny (Long Pond and Hampden factories) may not have jobs in the about-to-start 2015-2016 cosecha. Everglades Farms confirmed that the Long Pond factory will produce no sugar, although it also said that most of the workers would be retained because farm operations, rum production and distillery tours will continue. A statement by the company said that revenues average JMD 23 per pound but production costs are close to JMD 40/lb – notwithstanding that production increased to 11,000 toneladas de azúcar este año. Everglades Farms operates the Hampden and the Long Pond sugar estates, and the Hampden Distillery.

After Privatisation

The Jamaican sugar sector went through a major restructuring exercise in 2008-2010 that included the privatisation of eight estates, the proposal of encouraging (with the aim to achieve!) a diversified sugar cane-based industry, and successfully readjusting to new marketing arrangements. Al mismo tiempo, the country benefitted from an European Union multimillion-dollar package under the “Accompanying Measures for the Sugar Protocol Countries” (AMSPC) in place to support ACP countries to adjust to the new market conditions, as a result of the changes in the EU sugar market.

Sin embargo, “contrary to the expectations at the time of divestment of the factories, it is not looking so promising,” said the University and Allied Workers Union (UAWU) First Vice-President Clifton Grant when assessing the situation in the three estates run by PCSC: Bernard Lodge, Monymusk and Frome.

En Diciembre 2014, algunos 200 jobs were lost at Bernard Lodge (in St Catherine), while PCSC temporarily laid-off more than 400 workers at Monymusk (in Clarendon), but their contract situation remained uncertain. In the latter, there has been no preparation for the 2015-2016 cosecha, and it seems that the company would divert the cane to other factories including Frome, Appleton and Worthy Park.

Sugar unions also said that the Campari Group let them know that the 2014-2015 crop ended with losses close to JMD 1.5 billion and projections are for a further JMD 1.8 billion loss in the 2015-2016 cosecha. Campari runs the estates formerly owned by Wray and Nephew Limited: Appleton (en St Elizabeth) and New Yarmouth (Letras gruesas a la media), which combined with Holland Estate (St Elizabeth), are responsible for 63 per cent of all spirits produced in Jamaica.

Local media reported that government sources were “disappointed” with the performance by the privatised enterprises because, albeit investments have been made, the companies are still “hanging on to the European raw sugar market,” have been slow in diversifying production, and do not pay enough attention to the Caricom sugar-deficit market and the potential of ethanol production – notwithstanding the E-10 mandate (mix of ethanol and gasoline at 10 por ciento).

The Immediate Future

La 2015-2016 harvest is about to start and perspectives are not encouraging. En 2014/2015, la producción fue de alrededor 150,000 de toneladas, but such level is not expected to be reached in the coming harvest. Además, with the announced ending of the EU domestic sugar production quotas in 2017, the global sector would go through another restructuring, with similar features of the 2015 process when the preferential price paid to the ACP countries was reduced by one third.

Sugar Estates in Jamaica

Inmuebles (Parish) Owner
Long Pond (Trelawny) Everglades Farms (Hussy Family)
Hampden (Trelawny) Everglades Farms (Hussy Family)
Monymusk (Letras gruesas a la media) Pan Caribbean (complant)
Appleton (St. Elizabeth) Campari (formerly Wray & Nephew– Lascelles deMercado)
Golden Grove (St Thomas) Seprod Jamaica Ltd.
Bernard Lodge (St. Catherine) Pan Caribbean (complant)
Frome (Westmoreland) Pan Caribbean (complant)
Worthy Park (St. Catherine) Clarke Family

(With information from Internet editions of Jamaican papers: The Gleaner and The Jamaica Observer)

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