In January 2014, the Pan Caribbean Sugar Company (PCSC) announced plans to invest US$180 million and US$200 million respectively in the Monymusk and Frome sugar factories in Jamaica to upgrade equipment and enhance plant efficiency. In addition, in early January the PCSC Board “approved the agricultural investment plan at Monymusk”, and work has started on these investments and plans.
The restructuring of the Jamaican Sugar Industry Authority is still in progress, following the government approval of restructuring plans in mid January. Extensive service provision “will now come under the aegis of the All-Island Jamaica Cane Farmers’ Association, working in tandem with the estates”, while the Sugar Industry Research Institute will focus on research and development of “cutting-edge technology to be in sync with the times”.
In the wider Caribbean region, press reports suggest that there could be interest from the Chinese-owned PCSC in taking a stake in the Guyana Sugar Corporation (GuySuco), if the state-run company is opened up for privatisation. The President of the Guyana Agricultural and General Workers Union (GAWU), Komal Chand, acknowledged that privatisation was something which needed to be discussed, but stressed that “the most important thing is saving the industry and getting it back to make a big contribution to the development of the country.”
During the latest season, “GuySuco recorded its lowest ever sugar production in 22 years – 186,807 tonnes,” attributing this to “rainy weather, industrial unrest and technical difficulties”. Local reports note that GuySuco has “racked up huge debts to local and foreign banks”, in a context where wages and salaries consume more than 60% of the company’s revenue.
In response to unconfirmed reports, Guysuco’s Director of Industrial Relations stated that “neither a Jamaican nor Chinese company [had] approached the local sugar corporation for a buy-out.” Guyana’s President Ramotar, for his part, maintained that “while GuySuco’s privatisation was not on [the] government’s immediate agenda, steps were being taken to provide more lands to ‘very good’ private cane farmers” and to implement the strategic plan for the Skeldon estate and factory.
GuySuco is one of a decreasing number of ACP sugar exporters which continue to trade exclusively with traditional EU raw cane sugar refiners. Since 2011/12, Jamaica has diversified away from trading with such sugar refiners in the UK and Portugal, exporting since 2011/12 to five EU member states (Italy, Poland, Netherlands, Bulgaria and to a tiny extent Portugal). For the 2012/13 season, PCSC concluded a contract with the French company Sucden to supply approximately 40,000 tonnes of raw sugar, while in March 2013 it started the export of small volumes of bagged raw sugar to the Italian market. This constitutes a distinct shift in marketing arrangements for Jamaican sugar, moving away from Tate & Lyle Sugars (TLS) and the more recent arrangement with Eridania.
Traditional raw cane sugar refiners, such as TLS and the Portuguese refiner RAR, have in recent years faced increased competition from “co-refiners” in securing preferential ACP/LDC sugars and have experienced difficulties in maintaining full capacity utilisation.
This has seen TLS launch the “Save our Sugar” campaign, a central element of which is demand for increased access to sugar at world market prices. The ending of EU sugar production quotas in 2017 is seen as a crossroads for traditional raw cane sugar refiners, with shrinking demand and increased supplies of beet sugar and isoglucose on the EU market likely to reduce demand for raw cane sugar dramatically (see Agritrade article ‘ More limited market prospects projected for sugar imports beyond 2017’, 3 March 2014).
This poses important challenges in terms of the future market positioning of Caribbean sugar producers, both on the EU market and beyond (including on the domestic and regional markets). In this context it is unclear what role the Chinese-owned PCSC will play in developing exports to non-traditional markets.
More broadly, with Chinese investment potentially playing a growing role in ACP sugar sectors, reviewing the experience to date in Jamaica and other ACP countries where Chinese companies have such investments (e.g. Complant in Ethiopia and Sinolight in Niger) could well prove of value to sugar sector planning in countries as diverse as Fiji and Guyana, where in recent months Chinese investors have shown an interest in sugar sector development.