Wed | Oct 23, 2019

Sugar breakthrough - Caricom producers upbeat after Belize meetings

Published:Wednesday | October 9, 2019 | 12:13 AMHuntley Medley/Senior Business Writer

A Caribbean Development Bank-funded technical study has found that plantation white sugar can be used to replace refined sugar and, in fact, is being used in manufacturing processes within Caricom and elsewhere in the world, a finding that has changed the tone of a trade dispute among Caricom producers.

Interest groups came away from a series of meetings in Belize, where the report was presented, saying the talks from October 2-4 made more progress in the past week than in the past several years in resolving the long-running stand-off between sugar producers and manufacturers over the quality of white sugar, also called plantation white.

The two sides are fighting over the high volumes of refined sugar being imported into the region to the disadvantage of regional producers of plantation white.

“It’s the best progress we have made in years,” said Karl James, chairman of the Sugar Association of the Caribbean, SAC.

Providing an update on the discussions, James said there were also presentations on the long-standing use of plantation white sugar by large companies, including soft drink makers Coca-Cola and PepsiCo and food and drink manufacturing conglomerate Nestlé.

The report is a win for Belize, which is the leading producer of plantation white sugar, accounting for nearly all of the region’s output; and potentially for Guyana, which is said to be advanced with plans to start producing plantation white.

With the question answered by empirical study, the region’s ministers of agriculture and trade have agreed to forward a number of recommendations for agreement and policy changes at the next meeting of Caricom’s Council for Trade and Economic Development in November.

The main proposed policy change is central to a lobby effort mounted by the SAC running several years and involves the imposition of the existing 40 per cent common external tariff, CET, on all sugar – brown, refined and plantation white – entering Caricom markets from outside the regional grouping. Jamaica and Barbados are the other Caricom sugar-producing territories.

The application for granting of waivers or exemptions from applying the CET on refined sugar in countries with heavy manufacturing operations like Trinidad & Tobago and Jamaica has been a source of upset for sugar producers in the region for some time.

The Belize decisions are likely to provide a ready Caricom market for 160,000 tonnes of plantation white sugar produced in the region each year and slash the extra-regional imports of refined sugar, which is said to be about 200,000 tonnes per year.

James said the Belize meetings produced further evidence that not only are large amounts of refined sugar being exempted on the basis that the product is not produced in the region, but that substantial amounts of plantation white sugar are also being imported from Guatemala, Brazil and Colombia without the established tariff being applied.

Producers and users of white sugar in the region have agreed to meet to discuss issues pertaining to the supply and price of the product as the region readies itself for a policy shift that is likely to see the greater purchase and use of plantation white sugar to make products including sodas, flavoured water, other drinks, as well as a wide range of baked products and other foods.

“That is where we are, and we are hoping to do some legwork between now and November so that more of the users will understand what we are trying to do,” James said in interview with the Financial Gleaner on Tuesday.

The talks will now turn to whether regional producers can supply Caricom manufacturers with the product in sufficient quantities, and at the desired quality levels and price.

“We are prepared to sit with the manufacturers and talk rationally about their needs,” James said.

It is expected that the key point to be resolved in those discussions will be the matter of the price at which the product will be sold to regional manufacturers, who have been seeking the cheapest source of white sugar to maintain their efficiencies, product price points and profit margins.

James adds that liquid sugar, which is more desirable for drink manufacturing, could soon be produced by Jamaica, Belize and Guyana and will receive the same policy treatment as other forms of sugar. This decision is likely to encourage the reopening of some liquid sugar operations which were shuttered because of the lack of market protection.

Jamaica’s Worthy Park Estates is said to be poised to start making plantation white sugar and liquid sugar.

huntley.medley@gleanerjm.com