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Observer Business Leader nominee # 9: Worthy Park Sugar Estate Ltd

By Moses Jackson

Sunday, November 25, 2012



 

Today, we publish the ninth of 15 stories on the nominees for the Jamaica Observer Business Leader Corporate Award. To be considered for nomination, all companies had to be at least 50 years old, or be able to trace their roots to 1962 or before. The award presentation and announcement of the Business Leader Corporate will take place on Sunday, December 2, at the Jamaica Pegasus Hotel in Kingston.

FOR more than four centuries sugar was the unchallenged king of the Jamaican economy.

From Westmoreland in the west to Portland in the east, cane fields extended as far as the eyes could see. Sugar and rum destined for the tables and cellars of European families were in constant production.

Sugar output peaked in 1965, three years into political Independence. Across the island more than 20 factories were abuzz with activities. They were fed with canes harvested at the plantations on which they were located, or sourced from feeder fields planted by thousands of mainly small contract farmers.

At the end of the season, a record 500,000 tonnes of sugar had been produced. This commodity seemed poised to lead Jamaica's thrust towards creating a post-Independence industrial economy. Everybody was talking sugar.

But the product never lived up to its promise. Over the succeeding decades output almost ground to a halt as one factory followed by another reached the end of its long-term life cycle and began to exit the industry.

The list represents a nostalgic and evocative journey back in time. Some of these plantations played such dominant roles in employment within their communities, and beyond that their names were constantly on the lips of Jamaicans. Barnett Estate in Montego Bay, Serge Island in St Thomas, Richmond/Landovery in St Ann, Grey's Inn in St Mary, Innswood and Caymanas in St Catherine, New Yarmouth in Clarendon. All gone.

Tracts of expansive fertile lands once under sugar were planted in other crops. Others fell idle, and worse yet some have been utilised for housing settlements.

These days the country is struggling to produce 150,000 tonnes of sugar per year.

Worthy Park Sugar Estate Ltd near Ewarton, St Catherine is one of six companies that continue Jamaica's centuries old tradition of planting cane, crushing sugar, and in more recent times, using the by-products to create value-added output.

Only 3,000 of the 9,000 acres of land that make up this plantation are arable. All 3,000 usable acres are under cultivation.

This sugar manufacturer, in its drive to increase throughput for its factory, has secured a one-year renewable lease for the 600-acre state-owned Caymanas Estate near Spanish Town. This land is also under cultivation.

An important source of sugar cane for the factory is the over 2,000 small farmers with whom the Worthy Park owners have supply contracts. They live and plant their fields primarily in Crofts Hill, Point Hill, Top Hill, and Lluidas Vale — within several miles of the estate.

In addition to providing a livelihood to these farmers, Worthy Park employs over 800 workers — for all aspects of its operation — from working the cane fields to manning the machines and managing production on the factory floor. The company produces roughly 22,000 tonnes of sugar each year.

But in recent times, the owners have undertaken a major diversification of their product line aimed at generating greater value-added and stronger margins.

The US$12-million that they invested in 2005 in building a rum distillery has been a game-changer for the enterprise. The distillery utilises about half of the molasses — the primary by-product of sugar processing — that the factory produces. The other half is sold to other rum producers.

The Worthy Park overproof rum hit the Jamaican market a few years ago under the brand name Rum-Bar Rum.

This product is apparently taking root among its targeted customers; it has already grabbed 17 per cent of the market segment since its introduction. The company has also added two product lines since the successful launch of the overproof rum — Worthy Gold aged rum, and a liqueur called Rum-Bar Rum cream.

Last year, the distillery sold 98,000 cases of rum. This segment of the business generated some $700 million in revenue and accounted for over a third of the $2.4-billion in gross sales that Worthy Park generated that year.

The owners are confident that they can increase annual rum sales to 150,000 cases within another two years. They believe that given their aggressive export thrust, this business segment could overtake sugar as the core product within three years. The rum is now exported to Italy, UK, Brazil, Nigeria, USA, The Cayman Islands, Canada, The Netherlands, and India. There are plans to boost sales by targeting Jamaicans living in USA, UK and Canada.

It should come as no surprise that Worthy Park is known primarily for its sugar production, given that it has been in this business for nearly 100 unbroken years.

What is generally less known is that this company is perhaps Jamaica's largest producer of broiler chicken. It entered this market in the 1980s as a contract farmer with Jamaica Broilers Ltd.

Under this arrangement, Broilers supplies the contract farmer with the young chicks and the feed to make them grow. Once mature, they are collected and transported to its processing plant in Kingston.

The chicken farm at Worthy Park has nine coops, each 12,000 square feet in size. Some 18,000 broilers are produced every seven weeks from each of the coops.

The Worthy Park Estate has been under a single-family ownership since 1918, when farmer Fredrick Clarke paid £44,000 for the 12,000-acre plantation. The estate had been in existence since 1670.

Clarke borrowed £30,000 from the Westmoreland Building Society to help fund the acquisition. The loan was not fully repaid until 1961.

Peter McConnell, the current executive chairman of Worthy Park, is Clarke's grandson. Clarke's great grandson and McConnell's nephew Gordon Clarke is a director of the company and manager of the distillery.

McConnell says that the business has survived nearly 100 years in his family's hands because the owners work and live on the estate.

"It is the only family-owned company in the sugar cane industry that has survived," he points out. "This is because this is not an absentee proprietorship. Our family, beginning with our grandfather and his sons, have been committed to the business. We own it, live on it, and run it."

There are three other important factors that have made Worthy Park not just survive, but stand out today as the benchmark for efficiency within the industry.

First, the company has continually upgraded its equipment in its constant drive to improve efficiency.

Additionally, the owners have created a very tightly integrated operation, while maximising the natural assets that are part of the sprawling estate.

An example of how this integration is saving the company millions of dollars is how one line of business makes use of the by-products generated by another segment. So the trash from the cane becomes part of the bedding for the birds. In turn, their litter is used to fertilise the cane field. Of course, the main by-product of sugar production — the molasses — is used to make the rum, while the distillery produces a waste that is also used as fertiliser.

The biggest cost-saving however, comes from the 1.3 megawatts steam-driven turbines that provide electricity for all the machines during sugar production. The trash from the cane is used as the primary fuel to create the steam that drives the turbines.

Water for the property is gravity-fed via a 360-year-old aqueduct from a spring in the hills overlooking the estate.

"This is why we have been able to survive," says McConnell.

Worthy Park Estate yields the highest tonnes of sugar per acre of cane in Jamaica, and according to McConnell, is even ahead of Australia on this measure of efficiency.

This is an important component in ultimately determining the return that the owners will yield on their crop as all the sugar produced is exported.

Basically, sugar produced in Jamaica is consolidated within a pool by the island's marketing agent — Jamaica Cane Producers Sales Ltd. This company is responsible for negotiating prices and volumes with international sugar traders like Tate and Lyle.

McConnell says that sugar price has rebounded significantly in the past few years to US$75,000 per tonne. Jamaica exported 140,000 tonnes to earn US$117 million from the industry during the last crop.

But for Worthy Park, the future seems to be in rum production.

"Rum is growing as a sector," says McConnell. "We doubled our rum sales for the past three years. We believe it is possible that in two years our rum sales will surpass that of sugar."

Moses Jackson is the founder and convenor of the Jamaica Observer annual Business Leader Award programme. He may be reached at moseshbsjackson@yahoo.com


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