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LEFT OF CENTRE: Restructure or face collapse

Technical Centre for Agriculture and Rural Cooperation

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A report prepared for the Inter-American Development Bank (IDB) and carried in the Barbados Press has concluded that if sugar sector restructuring is not supported, the Barbados sugar industry will collapse in the next three to five years.
This would have a negative impact on gross domestic product (GDP) and international trade, since sugar represents approximately one per cent of GDP and ten per cent of total exports.
Some 1 500 jobs would be directly affected and 2 500 indirectly affected. The report noted that “the gap between average sugar export prices and production costs is growing year by year resulting in an increasing financial burden”.
Production costs have risen more than six per cent per annum in recent years. Management inefficiencies were blamed, for these costs continue to escalate.
A further gloomy assessment of the future of the industry was recently presented by Barbados Sugar Industry Ltd chairman Dr Attlee Brathwaite about the Barbados Agricultural Management Company’s (BAMC) financial situation, leading to headlines such as Barbados Sugar Industry Broke.
In the presentation, however, Brathwaite emphasized the need to develop speciality sugars and diversify revenue streams from sugar cane roduction – for example, ethanol, co-generation and value-added rum production, among others – as the only way forward for the industry.
On this subject, a study conducted in 2010 concluded that a single multipurpose factory producing speciality sugars, molasses and electricity would cost BDS$162 million, and an ethanol plant, BDS$237 million.
Building on this study, an Inter-American Development Bank  report suggested that such an investment could be viable if the focus were on ethanol production for export to the United States under the Caribbean Basin Initiative (although rules-of-origin issues could arise, given the scale of the project and the need for imported feedstock), and special sugar being further developed.
Elsewhere in the region, repairs to malfunctioning turbines at the Belize Sugar Industries Tower Hill plant, which halted cane processing, are proceeding rapidly.
This disruption occurred against the background of an otherwise promising start to the sugar season. These disruptions come on top of continuing financing difficulties, which are leading Belize Sugar Industries to explore the possibility of taking on a joint-venture partner.
The Guyana sugar sector, meanwhile, is facing difficulty hitting its production targets despite extensive investments in its Skeldon mill.
Meanwhile, the Ministry of Agriculture has begun discussions with Japan’s Marubeni Corporation regarding “the possibility of funding the restructuring of the sugar cane industry”, converting “the existing sugar sector into a sugar cane and renewable energy industry”.
According to the Barbados Cane Industry Corporation, “This new thrust will result in the processing of over 330 000 tonnes of sugar cane to produce 15 000 tonnes of raw sugar, 12 000 tonnes of refined sugar, 24 000 tonnes of molasses [and] 170 000 megawatt hours of electricity.”
The new facility is scheduled to start working in January 2016, although the project is at the final design stage and still defining capital requirements.
• Compiled by the Technical Centre for Agriculture and Rural Cooperation which was established in 1983 under the Lomé Convention between ACP countries and EU member states.