Caribbean sugar industry faces 'binary choice'

Caribbean sugar industry faces 'binary choice'

Wednesday, August 21, 2019

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BRIDGETOWN, Barbados, (CMC) — The Sugar Association of the Caribbean (SAC) is reiterating a position that regional sugar industry faces a binary choice of either enforcing a robust regional domestic market in the Caribbean Community (CARICOM) or risk closure, with all regional sugar and molasses imported into the Caribbean at volatile global prices.

A spokesman for the SAC told the Caribbean Media Corporation ( CMC) Monday that there have been no changes to the environment following a position paper released in September last year on the need to reform the Common External Tariff (CET) for a sustainable future for the Caribbean sugar industry.

Communications and media officer with the SAC, William Neal, said Caricom was still lagging “far behind” as the efforts continue to revitalise the sugar industry.

In the position paper, the SAC, a trade association supporting the interests of sugar producers within Caricom, said that a truly regionally integrated sugar industry has for decades been undermined by international European Union and United States policies towards imports of raw sugar.

It said at times of globally high sugar prices, regional manufacturers and industrial users of sugar have long called out for Caribbean suppliers of sugar to give preference to supplying the regional market, but “sadly the market incentives of artificially high sugar prices in Europe and the US prevented that vision from ever coming to pass.

“Yet, a regional sugar industry supplying the needs of industrial users of sugar in the region makes sense — both to reduce import costs, support Caricom industries, and provide long-term, consistent pricing beneficial to both buyer and seller.”

The SAC said that this is the model which is in place in the vast majority of sugar-growing regions around the world, and it believes it can be achieved in Caricom.

The SAC said that the industry, together with governments from across Caricom, therefore faces a binary choice of enforcing a robust regional domestic market in Caricom for regional sugar, which will allow the industry to upgrade and invest in new capacity to produce sugar as required by regional industrial users more efficiently, at fair prices, thereby securing the place of Caribbean sugar in Caribbean products.

It said the alternative is to risk closure of the industry, with all regional, sugar and molasses imported into the region at volatile global prices; a significantly weakened Caricom single market; and considerable unemployment across the region.

“The industry is ready to invest and has already advanced plans to adapt its existing production capacity to meet the regional demands for white sugar, with an estimated 290,000 tonnes of plantation white or other high-quality, food grade direct-consumption sugar produced annually by 2020 across the region.

“This will be more than sufficient to meet the requirements of the current regional market for such sugars,” the SAC said, noting that it's providing a solution that will strengthen the regional market for sugar which will allow that investment to proceed whilst offering continued protections to the legitimate needs of manufacturers in the region who are significant buyers of white and other domestic consumption sugars.

It argued that reform of the system will enable Caricom to reduce its balance of trade deficit by between US$132.5 million and US$271.7 million annually, by reducing imports of extra-regional sugar.

“It will further safeguard the already valuable foreign exchange earnings made by the sugar industry from sales of any sugar surplus to other profitable world markets. It will enable the region to retain and enhance a vibrant Caricom agricultural industry — safeguarding jobs and growth and stimulating investment in the region, and demonstrating how the CSME (Caricom Single Market and Economy) allows small, individual national Caribbean industries to be viable in a way which national support alone would not.”

The SAC said that by offering sugar producers a price for sugar in their domestic market, which covers the cost of production and incentivises increased production efficiency, the producers are able to be solvent businesses which can build their capacity to focus primarily on meeting the needs of their natural domestic customer base at competitive prices.

“The win-win is that sugar producers are protected from going out of business during periods when the world sugar price is extremely low; and industrial users are protected from extreme price hikes on major inputs for them when the world sugar price is extremely high. Independent impact assessments on a reformed Caribbean sugar market indicate that there would be little to no impact on the end-price of food products for consumers.

“Presently the Caricom brown sugar market is adequately protected through effective implementation of the CET. However, Caricom white sugar is displaced by the variable customs and tariff treatment of extra-regional white sugar.

“We believe that the current regional market urgently needs reform to offer sugar producers the same certainty they enjoy for the brown market — for all sugars produced in the region to ensure that their products will find a market at a price in the region which allows them to operate sustainably and justify the considerable investment currently underway in those industries.”

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