Unless the sugar industry in the Caribbean Community (CARICOM) can develop in the coming months a coordinated and concerted plan of action, it is quite possible that in a few years’ time there will be little left of an industry that, for evil and good, has played a central role in the making of the Caribbean.
This is because this year will see two tsunami-like events occur, both of which threaten the survival of the industry in its present form.
The first relates to the changes that will take place this October in the EU’s sugar regime. Then, as a long planned domestic measure, the EU will abolish national sugar production quotas in Europe. This will have the effect of reducing the price paid for Africa, Caribbean and Pacific (ACP) sugar, while also causing the overall volume of EU sugar imports to fall as Europe becomes self-sufficient.
The measure, according to the European Commission’s late 2015 report “EU Agricultural Outlook 2015 – 2025”, is likely to see the EU sugar price declining to something approaching the already low world market price, forcing the EU sugar sector “to become more competitive”, and “reducing the incentive for trade partners to export to the EU”.
For high cost, Caribbean producers — Guyana, Barbados, Belize and Jamaica — and almost all smaller cane producers in the ACP, this potentially spells the end of the EU market, as previously quota-restrained EU beet farmers expand production, taking advantage of much improved yields and industry consolidation, to sell without restriction across Europe and to export.
The second challenge arises out of the UK’s 2016 decision to leave the EU. Britain is expected to notify formally the EU of this later this month, triggering years of uncertainty for all of Britain’s trade partners as they negotiate new arrangements.
For the region, which still exports much of its sugar to the UK for refining, the timing is complicated. Not only will the new EU sugar regime apply to the UK until it formally separates in 2019 at the earliest, but this means that Britain is unlikely for some time yet, to be able to reconcile politically, how it will address the sugar issue.
This arises because any UK government is going to have to determine how to balance and resolve the competing post-Brexit interests of its domestic sugar producers; its cane sugar refiners; desired trade deals with major cane sugar and by-product producers like Brazil; and ACP development, probably in that order.
It is already clear that the British Sugar Corporation, which represents British beet growers is preparing for a monumental fight. They make the case that because they are efficient and make a significant economic contribution to the UK economy, they offer Britain the opportunity to protect the UK from imports of cane and beet sugar from producers wherever they may be.
Unfortunately, the industry in CARICOM must address both challenges at a time when the sugar sector still has many fundamental, unresolved issues.
While progress is being made in Belize and Jamaica, and the Dominican Republic has a viable privatised industry, there remain problems across CARICOM arising from the persistently high cost of production, poor labour relations, and inefficiencies.
More significantly, despite years of discussion and external support, governments and the industry have not so far been unable to undertake the type of reforms underway elsewhere in the ACP that could viably link sugar production to sugar refining, to the rum and ethanol industries, and to power generation and food production.
Source: guyaneseonline.wordpress.com