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Jamaica safe from decline in sugar price globally, but…

Published:Tuesday | April 21, 2015 | 12:00 AMMark Titus

Western Bureau:

WHILE THE sharp decline in sugar price on the world stage is now creating anxiety among several African, Caribbean and Pacific (ACP) states, Jamaica is being spared from the jitters, thanks to its lucrative three-year deal with the British refiner Tate & Lyle, which will be in place until the end of the year.

"The price in Europe has been declining for the past two years, but, fortunately, we negotiated a three-year supply deal, so Jamaica is not affected presently, but this could change as this year is the last of our arrangement," Karl James, general manager of Jamaica Cane Products Sales (JCPS), told The Gleaner from Guyana yesterday. "We will begin negotiations in May, but we will certainly not be accepting those offers we are hearing now."

Reforms to the EU's common agricultural policy in March 2013 will result in the abolition of sugar quotas come 2017, which will bring an end to the preferential treatment that ACP sugar producers have been enjoying since 1975. The end date was initially set for 2015, but an extension of two years was granted in a split decision among member states after some countries sought additional time for the sector to adjust.

Under the new regime, it will mean greater competition for Jamaica from lower-cost producers, but in his departure interview with The Gleaner, Dr Wu Huaixiang, former chief executive officer of Pan Caribbean Sugar Company, expressed concern that local production, overall, might struggle to compete under the new arrangement.

"Jamaica's sugar industry can reach great heights, but the challenges remain," said Wu. "... The biggest challenge for me is the post-2017 period when we will have to compete with other ACP countries for sugar markets."

"As a country, Jamaica is not doing enough to address this challenge. I also think the regional sugar market can be invigorated and developed, but Jamaica, or some other country, has to take the lead," Wu said.

James, who is also chairman of the Sugar Association of the Caribbean (SAC), revealed that his trip to Guyana is to discuss and establish a formula that would guarantee constant supply to the region.

"We are also looking seriously at the Caribbean market, and, in my other capacity as head of the SAC, it is going to be an area of stronger focus from 2015 onwards," stated James. "We are trying to work out a formula to ensure that we can supply the market on a constant basis."

Currently, there are four active sugar-producing nations in the region - Jamaica, Belize, Guyana, and Barbados. The deal with Tate & Lyle sees Jamaica getting close to US$894 per tonne for 50 to 60 tons of sugar in each crop year of the deal.