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Has Caribbean sugar got a future?

INDUSTRY THREAT: The Caribbean region’s sugar industry could face challenges following Brexit

UNLESS the sugar industry in the English-speaking Caribbean can develop a concerted plan of action over the next few months, it is quite possible that in a few years’ time there will be little left of an industry which, for evil and good, has played a central role in the making of the region, writes David Jessop.

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 Europe’s sugar regime. Then, as a long- planned measure, the EU will abolish national beet sugar production quotas in Europe, reducing prices and causing the overall volume of sugar imported to fall as Europe becomes self-sufficient.

For high-cost Caribbean cane sugar producers – Guyana, Barbados, Belize and Jamaica – this potentially spells the end of the European market. The second challenge arises out of the UK’s decision to leave the EU. Britain has officially given formal notification to the EU to leave, triggering years of uncertainty for all of Britain’s trade partners as they negotiate new arrangements.

For the Caribbean region, which still exports much of its sugar to the UK for refining, this means that until the UK formally separates in 2019 at the earliest, Britain is unlikely to be able to reconcile politically, how it will address the sugar issue.

This is because any UK Government is going to have to determine how to balance and resolve the competing post-Brexit interests of its domestic beet sugar producers, its cane sugar refiners, desired trade deals with major cane sugar and by- product producers like Brazil and the continuing problems of Caribbean agricultural development.

It is already clear that the British Sugar Corporation, which represents Britain’s beet farmers, 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 foreign producers, wherever they may be.

Unfortunately, the industry in the Caribbean 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 so far been unable to under- take the type of reforms underway in countries like Mauritius which have viably linked sugar production to sugar refining, to the rum and ethanol industries, and to power generation and food production. What is now happening in Europe raises questions about whether sugar production can survive in the Caribbean.

A conference in Jamaica has just taken place, aiming to find a basis on which a common response might be achieved. The most likely outcome is to place greater emphasis on sugar production for the regional market, a decision that would require an adjustment in the region’s Common External Tariff to protect the industry while it adapts to new market conditions.

Although any measure that sustains higher sugar prices in the Caribbean may prove controversial with for example the region’s soft drinks manufacturers and rum producers who want low cost raw materials, a viable future for the sugar industry remains important.

Even if the industry now only accounts for less than two per cent of regional GDP – a figure that pales in comparison to tourism – it is still a significant employer of labour, a supporter of rural communities, a provider of a range of social services, preserver of the environment and contributor to carbon reduction, while halting urban drift and the associated problems of crime.

What eventually transpires remains to be seen, but within 10 years, the EU market for raw sugar from the Caribbean will most likely be all but a matter of history. Hopefully by then, what is left of sugar in the Caribbean will be very different, reoriented, efficient and part of a broader cane-based industry.

David Jessop has worked on Caribbean issues for more than 40 years. He consults on Caribbean political and economic affairs, has a weekly syndicated column that for the last 20 years has appeared in the leading newspapers in the Caribbean, and is the editor of Caribbean Insight and Cuba Briefing. He is also a non-executive director on the Board of Jamaica National Money Services Ltd.

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