THE European Union yesterday signed a J$454-million (euro5.218-million) financing agreement with the Jamaican government as part of a seven-year assistance to the ailing local sugar industry.

“This is the first annual allocation of a substantial financial support programme with significantly higher annual allocations during the period 2007 to 2013,” Ambassador Marco Mazzacchi-Alemanni, head of the European Commission delegation to Jamaica, told the signing ceremony held at the finance ministry in Kingston.

This landmark agreement is the first phase of the EU Accompanying Measures for Sugar Protocol Countries, which seeks to offset dislocation caused in African, Caribbean and Pacific (ACP) states by the reduction of sugar price in the European market.

In 2005, the EU, in response to a World Trade Organisation (WTO) ruling, decided to reduce the price paid for sugar by five per cent in 2006 with a total decrease of 36 per cent by 2009.

Subsequently, in 2006 the EU agreed to provide assistance to the 18 ACP countries affected by its sugar reform regime, with Jamaica becoming the first Caribbean nation to receive assistance under the programme.

“Today’s ceremony is the start of a large new policy support programme and a major expansion in the relationship between Jamaica and the EU, Mazzacchi-Alemanni said yesterday.

The signing of the agreement yesterday was immediately welcomed by head of the All Island Cane Farmers Association, Allan Rickards. “It’s a good day for the industry, we can now plan,” said an upbeat Rickards.

Roger Clarke, Jamaica’s minister of agriculture and lands, said that loss of income resulting from the EU reduction in sugar price would amount to approximately J$2.1 billion by 2009. He added that the rural to urban migration stemming from a dislocated sugar cane industry would also place extreme pressure on the urban infrastructure.

Clarke said that government had therefore formulated a strategy to effectively transition to a sustainable sugar cane industry between 2006 and 2015.

“With regard to privatisation of the industry, we have received eleven expressions of interest. we have accepted five of these,” said Clarke.

The five are Angostura Limited of Trinidad, Coimex from Brazil, Dhamphur Sugar Mills from India, and Energen Development Limited and J Wray and Nephew from Jamaica.

In the meantime, Finance Minister Omar Davies, who was among the signatories to the EU sugar agreement, said the administration had spent a significant amount of money to defend the industry, including taking responsibility for the debt of the Sugar Corporation of Jamaica (SCJ), as at December 31.

The EU finance programme will be delivered through direct budget support, thus putting the Jamaican government fully in the driver’s seat when striving to implement its strategy for the sugar sector, Marco Mazzacchi-Alemanni told the signing ceremony.

He said the declining price for Jamaica’s sugar in Europe was a challenge for the country, requiring improved effectiveness in the local cane and sugar industry.

But he said the EU assistance was an opportunity for Jamaica to implement much-needed reforms in the sector.

He listed the opportunities as:

. the privatisation and improved competitiveness of the sector;

. diversification within the industry, including ethanol production, co-generation of electricity, and rum production; and

. diversification into other crops.

The assistance to the sugar industry, when combined with the present assistance to the banana sector in the amount of euro37.13 million, makes the EU one of the largest donors providing resources for the local agricultural sector and rural development.