WESTERN BUREAU — The sugar industry has welcomed the Government’s plan to pump 90 million euros (J$6.3 billion), which it will borrow from a Belgium-based bank, into the ailing sector.

“The funds will have a positive impact on the industry because what has been curtailing the growth of the industry is a lack of funds,” chairman of the All Island Jamaica Cane Farmers Association (AIJCFA), A C P MacDonald told the Observer.

According to MacDonald, with the strong leadership of the state-run Sugar Company of Jamaica (SCJ) and the good relationship that company has with the AIJCFA, he is confident that the funds will help to stimulate growth in the sector.

Last Tuesday, Parliament gave the go-ahead for the money to be borrowed from KBC Bank. The loan will be backed by a guarantee from the Jamaican Government.

Government members used their majority in the House to sway the vote after objections from Opposition spokesman on agriculture, J C Hutchinson, who was concerned that small farmers may not benefit from the loan.

The bulk of the funds has a five-year life-span, revolves annually and has an interest rate of 300 basis points above the Euribor rate. The remainder attracts interest at 200 points above Euribor and will be repaid in full at the end of each session on a revolving loan basis.

Roughly 20 million euros (J$1.4 billion) of the funds will be used to retool the five sugar factories under SCJ control.

About 60 million euros (J$4.17 billion) will be used to restructure SCJ’s debts to the Development Bank of Jamaica, as well as to service previous KBC loans. In addition, KBC will keep 10 million euros (J$695 million) in a debt service reserve account.

For more than five years there has been a steady decline in sugar production in the island, as well as a marked reduction in the number of hectares under cultivation.

According to industry figures, the island’s sugar production dropped from 337,332 tonnes during the 1996/97 crop to a low of 175,252 tonnes for the 2000/01 crop.

Production for the 2002/03 crop is expected to be below the 155,000-tonne mark.

But Allan Rickards, a former AIJCFA consultant believes the financing will impact positively on the sector, but at the same time has called for the full disbursement of a $150-million loan earmarked for sugar-cane replanting.

“That financing for the SCJ’s factories and estates will impact positively on the industry as the SCJ would now be in a position to increase production and to provide technical assistance to cane farmers,” Rickards argued.

He maintained that the island’s sugar industry was in need of a massive replanting programme and questioned what he said was the slow pace at which the loans were being disbursed.

Almost two years ago, Agriculture Minister Roger Clarke announced in Parliament that the $150-million cane replanting loan would be disbursed during the 2000/01 crop.

Under the programme, the loans were to be disbursed by the Development Bank of Jamaica through the People’s Co-operative Banks islandwide at an interest rate of nine per cent per annum.

But to date, only about a third of the funds has been disbursed.

“The cane farmers are upset and angry at this and it is very embarrassing to the farmers,” Rickards said. “They are now questioning whether the funds exist or not.”