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Recent developments in Caribbean sugar exports

04 May 2013

Press reports in March 2013 indicated that the Chinese-owned Pan-Caribbean Sugar Company (PCSC) was commencing exports of bagged raw sugar to the Italian market. This is seen by PCSC as the first example of sales of Jamaican direct-consumption raw sugar in the EU. Five 115-tonne containers form part of an initial market trial. PCSC claims that, if successful, the trial will prove that “Jamaican sugar can enter high-end markets” directly, and not just for refining. PCSC is reported to be investing US$1 million in “the most advanced raw sugar treatment equipment” for the company’s mills at Frome and Monymusk.

This initiative can be seen as an extension of efforts to boost domestic Jamaican supplies of brown sugar. Currently “Jamaica imports some 60,000 tonnes of brown sugar annually, mainly from other producing countries in the region to satisfy local demand.” However, according to the Chairmain of the Sugar Industry Authority Executive, Derek Heaven, “as of this 2012-2013 crop year, all the raw sugar for local consumption will be supplied from locally produced sugar.” Jamaica will however continue to import “65,000 tonnes of the refined product”.

In March it was also announced that the Dominican Republic’s exports of sugar to the EU in 2013 could reach 40,000 tonnes. This reflects production that is likely to be more than 10% higher than earlier estimates (600,000 tonnes compared to an estimate of 540,000 tonnes). This will enable the sugar sector to renew exports to the EU, meet domestic needs and fulfil its quota on the US market.

Elsewhere in the region, Belize Sugar Industries (BSI) has announced that it is likely to export between 14,000 and 16,000 tonnes of sugar to the US market in 2013, following improvements in the quality of Belize sugar production. This is not expected to affect exports to the EU. BSI is contracted to deliver 70,000 tonnes of sugar to the EU market, and, with production of 110,000 tonnes, there is enough to meet domestic demand, meet contracted commitments on the EU market and commence significant exports to the US market.

BSI reported on the website Belizeinvest.net that the 2013 season got off to a good start, with sugar production in March 17% higher than 2012 levels, following an 8% improvement in factory performance. However, with increased daily cane flow to the mill, the BSI factory manager stressed the importance of managing cane flows to the mill in order to ensure that the quality of cane processed is maximised.

American Sugar Refining (ASR), which acquired a controlling share in BSI in October 2012, is planning an 82% expansion in sugar cane production in the next 5 to 7 years, with a 36% expansion projected within the next 3 years. This will enable Belize to meet the demand in readily available markets for 150,000 tonnes of sugar. The improved performance is based on better farmer–miller relations, based on a revenue sharing arrangement that sees farmers receiving 65% of revenues and the mill 35%, after shipping costs have been deducted. Under this formula, any increase in the final sale price directly benefits the cane farmers.

Editorial comment

Recent foreign investment in the Caribbean sugar sector appears to be yielding benefits in terms of increased production and exports. In addition, the new dynamic introduced with corporate takeovers appears to be resulting in a more flexible and creative approach to marketing, aimed at maximising revenues across a range of markets and products. There now seems to be much more flexibility in the specific markets to be served, with marketing strategies becoming increasingly responsive to relative price movements on EU and US markets. This appears to be providing the basis for both further investments in cane production and investments in efficiency gains and value-added processing. However, with an increase in intra-corporate trading along certain supply chains, close attention will need to be paid to cost deductions, prior to the division of the proceeds.

Despite this bright picture in some Caribbean sugar exporting countries, concerns continue to arise regarding sugar production in Guyana, where production at state-run facilities has been consistently below target levels in recent years (see Agritrade article ‘ Barbados seeks Japanese support for sugar restructuring, while other Car...’, 18 March 2013).

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