The Government has expressed disappointment that four years after the sugar industry was privatised, investors are still hanging on to the European raw sugar market and are yet to push hard enough to diversify the product and explore new markets.

Local producers must step up to the plate and do something new, as sugar prices are expected to drop by 30 to 40 per cent on the European market next year, Permanent Secretary in the Ministry, Donovan Stanberry said on Wednesday, as he outlined the situation in the industry at a meeting of the Public Administration and Appropriations Committee (PAAC) at Gordon House.

“The industry is at a cross roads right now. My own disappointment is that the privatised entities have been slow, to diversify. Sugar cane is a most versatile crop that offers a number of streams of income if properly exploited. Unfortunately, even though the writing has been on the wall since 2003 with the reform of the EU regime, the sector is basically oriented to send raw sugar in the belly of a ship to Europe,” Stanberry told members.

He further pointed out that even near market such as Caricom, which consumes 300,000 tonnes of raw unrefined sugar per year, is not being exploited. “Almost 80 per cent of that is from outside the region. The common external tariff gives a certain level of protection that that market can be exploited, and nobody — certainly not our producers in Jamaica, have gone there,” he stated.

The permanent secretary said too, that the companies are not taking up the government’s “E10″mandate to produce ethanol from local products such as sugar cane. “We have not seen any thrust towards ethanol,” he said.

Stanberry said he was at a loss as to why the entities were not exploring the possibilities, despite policies being in place to facilitate those efforts. “We have to look less to Europe, frankly speaking. Under the old regime, the European refineries were constrained to buy sugar from ACP (African Caribbean and Pacific) countries, at much higher prices than obtained on the world market, now with the (Economic Partnership agreement) EPA to send any amount of sugar to Europe, but there is no guaranteed price”.

He emphasised that local producers can no longer rely on that market as Europe was “busy” negotiating trade agreements with blocs of countries, which can produce sugar more efficiently than Jamaica. “I don’t see a future sending raw sugar to Europe,” he remarked.

Stanberry said divestment had brought a mixed bag of fortunes for the industry, because although in the last crop year production had gone up by 20 per cent, and three factories — Worthy Park, Golden Grove, and Appleton — had experienced their highest level of production in history, this year there has been a set-back. Production is expected to go down from 154,000 tonnes to 132,000 tonnes this year, a decline of just over 14 per cent, largely because of the drought.

He said that while there has been significant evidence of investment in the retrofitting of factories, by Pan Caribbean Limited for example, production has not been good and overall tonnage is expected to decline to 132,000 moving from 154,000 tonnes last year.

The Government completed privatisation of state-owned factories in August 2011 with the signing of a divestment agreement with the COMPLANT Group of Companies for the acquisition of the Bernard Lodge, Frome, and Monymusk factories, along with associated lands for $774 million. COMPLANT is represented by Pan-Caribbean Limited in Jamaica.

As part of the agreement, the Chinese company has also leased 18,000 hectares of cane lands for US$35 per hectare, per annum for 49 years. The Government said the deal was historic and would see significant investments pumped into the beleaguered sugar sector over four years, and at the same time relieve the burden on its coffers. Then Minister, Dr Christopher Tufton said the country would gain $828.6 million in revenue in the first year and $54.6 million per annum after, from the lease agreements. The other two factories, in Trelawny and St Thomas, were previously sold in 2009, to local investors under the condition that they would expand and modernise the facilities.