caribbean perspectives 1999 - iuf / uita / iul · “workers and their trade unions - future...

“Workers and their trade unions - future perspectives for the

English-speaking Caribbean sugar industries”

A report prepared for the International Union of Food Workers (IUF)

by Jorge Chullén

Toronto, March 1999

Workers and Future Perspectives of the Anglophone Caribbean Sugar Industries

Table of Content

A Note to the Revised Version

Introduction p. 3

I. Sugar in the English-speaking Caribbean p. 4

1. A Regional Approach p. 4

2. Sugar in the Caribbean: History and Economy p. 5

II. Restructuring of the Sugar Industries of the English-speaking Caribbean p. 7

1. The Decline of the English-speaking Caribbean Sugar Production p. 8

2. The Restructuring Process p. 10

3. A Balance of the Restructuring Process in the Sugar Industries p. 18

III. Market Prospects of the English-speaking Caribbean Sugar Industries p. 21

1. The Prospects of the Sugar Market in the European Union (EU) p. 21

2. The Prospects in the United States Sugar Market p. 28

3. Prospects under the World Trade Organization (WTO) p. 31

IV. Towards a Workers’ Common Position on the Future of the Caribbean Sugar Indus-

try

p. 33

1. The Context of the English-speaking Caribbean Sugar Industries p. 34

2. Sugar Workers’ Concerns and Actions p. 35

V. Conclusion p. 38

VI. Addendum: An Update on Jamaica (February 2000)

VII. References p. 39

VIII. Appendix - English-speaking Caribbean - Centrifugal Sugar Production 1970-1997 p. 40

Tables and Charts

Table 1 English-speaking Caribbean - Basic Economic Data p. 6

Table 2 Employment and the Sugar Industry in the English-speaking Caribbean p. 6

Table 3 Number of Mills in the English-speaking Caribbean 1961 - 1993 p. 9

Table 4 English-speaking Caribbean - Exports to EU and U.S. (1997) p. 21

Table 5 EU Lomé Sugar Quotas p. 24

Table 6 European Union Raw Sugar Balance 1998/99 p. 24

Table 7 EU Sugar Balance 1998/99 p. 25

Table 8 U.S. Tariff-rate quota and Caribbean countries p. 29

Chart 1 English-speaking Caribbean - Sugar production 1971-1999 p. 8


A Note to the Revised Version

An addendum to the original document was written in February 2000 to include informa-

tion on the developments of the sugar industry in Jamaica, which now appears in Section

VI. While researching and writing the original report, Jamaica and Trinidad were an ex-

ample of the quite direct (and blunt) challenges the Caribbean sugar economies face in a

restructuring process and the question of final survival. The way that the government, the

cane farmers and the workers reacted to the crisis showed the importance abscribed to

and hold by sugar whithin the Jamaica society, and very probably it also reflects the

common sentiment present in most of the other Caribbean nations when dealing with

sugar. At the moment of producing the final version of this study, it was felt necessary to

include such an update on Jamaica, as it also touches many of the points discussed by the

sugar trade unionists attending the Fourth IUF Sugar Workers Seminar for the English-

speaking Caribbean, held in Kingston, Jamaica, July 21-23, 1999.

Toronto,

February 2000

Introduction

The objective of this report is to present the basic aspects of the restructuring of the

sugar industries of the English-speaking Caribbean, to explore the industries’ prospects

and the forces that may influence their development, and to propose some common

grounds on which to build a workers’ position regarding the future of the regional sugar

industry.

In this report, the English-speaking Caribbean is defined as comprising six coun-

tries: Barbados, Belize, Guyana, Jamaica, St. Kitts-Nevis and Trinidad & Tobago. The

information and analysis presented highlight the common aspects of the different indus-

tries and the focus tends to be regional instead of using individual country reports.

In the English-speaking Caribbean sugar industries the restructuring process is

still in a state of flux and workers need to be an active part of the process. Workers and

unions have the opportunity; some might say the responsibility, to provide a critique and

alternatives to the implementation of market reforms. The social dislocation which fre-

quently results from such market reforms needs to be addressed by the civil society or-

ganizations, which include the unions and the workers; specially when, beyond the

pressure from the globalized economy and the international financial institutions (World

Bank and the International Monetary Fund), the market reforms do not always achieve

success, do not always produce the expected results in terms of social development, pov-

erty alleviation, employment creation or a more just income distribution. In the English-

speaking Caribbean sugar industries, this fact is particularly exemplified by the recent

failure of the liberalization and privatization programs in the industry of Jamaica; but

also by the recovery of production of the state-owned and foreign-managed Guyanese

industry; the sugar workers’ trust’s majority control over the only sugar company operat-

ing in Belize, and the short revival of the St. Kitts sugar. To be able to fully participate in

the restructuring process - where the free market ideology dominates the economic de-

bate, demands from the workers a thorough understanding of the actual situation of the

sugar industry and its global positioning, the ability to propose practical economic alter-


natives, and being aware of the industry’s social responsibilities. The report attempts to

be part of such process.

The report presents basic information on the regional sugar industries in Section

I, and in Section II it deals with the current restructuring process. In Section III it ex-

plores the prospects for the Caribbean industries with emphasis on the developments in

the sugar markets of the European Union and the United States, and the possible direc-

tion of the future talks in the World Trade Organization (WTO). Section IV completes

the report with comments on the position of the sugar workers and unions in the region

in regard to the undergoing restructuring and the future of their industries. In the text,

tonnes are metric tons and the currency used is the United States dollar ($).

Toronto,

March 2000


I. Sugar in the English-speaking Caribbean

1. A Regional Approach

A regional approach is useful to understand basic features and processes that occur in the

very old and quite diverse international sugar industry. In the present report, the area of

concern is the so-called English-speaking Caribbean, comprising six independent territo-

ries: Barbados, Belize, Guyana, Jamaica, St. Kitts-Nevis, and Trinidad & Tobago.

The concept of an “English-speaking Caribbean” underscores the traits that in-

terest the present report. First, it encompasses countries that share historical, cultural and

economic characteristics, making them a more homogeneous region than several others

in the global sugar industry. Geographically speaking two of the six countries are not

located in the Caribbean area: Guyana is in the South American mainland while Belize

belongs to the Central American isthmus, however, due to their past history, they are

usually considered as part of the English-speaking Caribbean. Guyana has also a socio-

geographical special configuration: the sparse Guyanese population tends to concentrate

in the narrow coastal area, where the sugar industry is also located, conforming an “is-

land” separated from the rest of country and indeed from the South America continent.

Cultural and racial traits as well (with a sugar work force which traces its roots to a large

contingent of Indian indentured laborers) make Guyana and its sugar industry very simi-

lar to other Caribbean islands, specially Trinidad. Belize was a British colony until 1981

and the sugar industry was controlled by a British multinational. The use of English as

the official language places Belize closer to the English-speaking islands than to the

Spanish-speaking Central American countries with which it shares borders (Mexico and

Guatemala).

Second, the “English-speaking Caribbean” concept leaves aside the Spanish-

speaking islands which, although going through a restructuring process of their own,

have a somewhat different path of development. The Cuban sugar situation is probably

one of the most complex among the traditional sugar cane industries around the world. In

the aftermath of the collapse of the Soviet Union, Cuba has reached the lowest sugar

production levels in fifty years, and simple barter agreements (oil-for-sugar) is all that

remains from the massive trade arrangement between the Soviet bloc and Cuba. One of

the efforts to reactivate the Cuban sugar production is the creation of farmer cooperatives

to replace of the state-owned cane farms. Such move away from state control is not with-

out problems as several analysis have already pointed out.

The state-owned sugar sector controlled by the State Sugar Council (CEA) in the

Dominican Republic, which in the 1970s owned over 60 percent of the national sugar

assets, began a restructuring process in January 1999. After several years of a production

crisis and the closure of two mills (from the ten CEA mills), the Dominican government

is ready to give the control of the industry to the private sector, but it has initially ruled

out the sale of any of the CEA’s assets. The once prosperous Puerto Rican sugar industry

that in the 1950s produced 1.17 million tonnes from 34 mills collapsed to only 14,500

tonnes from two mills in 1998.

The “English-speaking Caribbean” also leaves aside the French territories of

Guadeloupe and Martinique, although the sugar industry in Guadeloupe along with the

industry of Reunion (Indian Ocean) is an integral part of the European market, so crucial

for the future of the English-speaking Caribbean industries. Finally, the concept also


emphasizes the dependency on the EU sugar market, as it will be discussed later in the

report.

2. Sugar in the Caribbean: History and Economy

The European invasion and colonization of the small Caribbean islands which began in

the XVI century is inextricably related to the manufacturing of sugar, then a very highly

valued and scarce commodity. From that moment until the present times, sugar has

played a major role in the economic, social and cultural life of the Caribbean countries

and territories.

Britain, France, Spain, the Netherlands and Portugal, from among the European

powers, dominated the islands for over three centuries and made sugar a basic export.

Towards the end of the XV century (during Columbus' second voyage to America) cane

was introduced in Santo Domingo (the Dominican Republic). Two centuries later, sugar

had been completely established as a Caribbean export with nineteen European colonies

producing sugar for European consumption. Even in those years, sugar was already an

international economic activity involving the labour force of the African slaves, the lands

of the Caribbean islands, and the companies that sold the luxury product that sugar was

in the European markets.

Acquiring political independence, which some Caribbean territories did in the

XIX century (the Dominican Republic in 1844, Cuba from Spain in 1898 but then occu-

pied by the United States) changed little in their economic dependency, and sugar con-

tinued as important as before. Some British colonies achieved political independence

only in the 1960s and others, like Belize and St. Kitts, as recent as the early 1980s.

Even when the sugar industry is experiencing an economic retreat in the whole

Caribbean region, and some English-speaking islands have ceased to produce sugar in

the recent past (Antigua, Grenada, St. Lucia, St. Vincent); the industry still makes its

mark in the region. Sugar’s contribution to the gross domestic production (GDP) in those

countries ranges from a high of 60 percent in St. Kitts to a low 1.4 percent in Trinidad;

when seen in the context of the agricultural GNP, sugar contributes a high of 95 percent

in St. Kitts to a low of 31.4 per cent in Barbados (ICCSASW 1997b:4). Basic economic

data is shown in Table 1.

A labour intensive activity, the sugar industry is a major source of employment.

As Table 2 shows it is estimated that some 50,000 permanent wage workers are em-

ployed by the industry, and some analysts estimate that around 120,000 people are em-

ployed “in estates and factories, independent growers, and employees of independents in

the whole region.” (Thomas 1995) If employment in connected activities is included, the

number of jobs depending directly or indirectly on sugar cane cultivation and processing

could reach the half a million mark.

Table 1

English-speaking Caribbean - Basic Economic Data

Barbados Belize Guyana Jamaica St. Kitts Trinidad

Population (in millions) 0.26 0.23 0.85 2.55 0.04 1.31

Area (sq. km) 430 22,973 214,970 10,989 269 5,128

GNP Real Growth (%) (1) 2.3 4 5.5 1 4.8 3.5

GNP per capita (US$) 1995 6,800 2,700 663 1,400 4,760 4,100

Sugar revenue as % of GDP 2.4 10.9 30 3.4 60 1.4


Contribution to GNP (2)

Agriculture 7 30 32 5 7 3

Sugar as % of agriculture 31.4 77.3 68 43.2 95 45

Industry 19 20 4 37 20 15

Tourism 11.4 1.4

Number of visitors (3) 224,391 140,000 97,100 1,600,000 61,738 260,000

Mining 26 7

1. Barbados, Guyana and Trinidad 1995; Belize, Jamaica and St. Kitts 1996.

2. GDP Guyana 1993. Trinidad’s petroleum sector contributes 25 percent of the GDP, not men-

tioned in the chart.

3. Barbados, Belize and Guyana 1996, Jamaica and Trinidad 1995, St. Kitts, first quarter of

1997.

Source: "Americas Review 1998", The Economic and Business Report, Walden Publishing 1998,

ICCSASW 1997b

Table 2

Employment and the Sugar Industry in the English-speaking Caribbean

Barbados Belize Guyana Jamaica St. Kitts Trinidad

Total labour force (1,000) (1) 135 70 907 521

Employment (1) 114 62 423

Unemployment (%) (1) 15.8 11.4 15.9 17.2

Labour force distribution (%)

Agriculture 13 50 36 21 9

Industry 15 15 12 27 30

Tourism 16 1.9

Mining 12 5

Permanent workers in sugar 2,400 1,000 24,000 9,000 2,000 5,500

Seasonal workers in sugar 1,500 7,000 600 3,500

Farmers 2,200 8,000 12-20,000 6,000

% of cane 100% 45-55% 50%

Hectares cultivated 11,700 24,000 42,000 45,000 4,000 24,000

(1) Barbados 1996, Belize 1994, Jamaica 1992, Trinidad 1995.

Source: "Americas Review 1998", The Economic and Business Report, Walden Publishing 1998,

ICCSASW 1997b, “Aide Memoire on ACP Sugar”, ACP Group 1998.

The importance of sugar is also reflected in social aspects: in many cane growing

areas of the Caribbean, the social services and infrastructure (education, health, recrea-

tion, sports, etc.) available to the population depends heavily on the sugar industry. Also,

as several sugar trade unionists have pointed out, some of the economic infrastructure in

the sugar producing regions directly depends of the industry for construction and main-

tenance. A more detailed and finer analysis could provide figures on the social and

somewhat hidden ramifications of sugar and a more complete picture of the importance

of the sugar industry in the Caribbean could emerge.

II. Restructuring of the Sugar Industries of the English-speaking Car-

ibbean


The restructuring of the English-speaking sugar industries is to be understood in the con-

text of (but not limited to) the restructuring of the international sugar industry. The latter

is a complex process combining other individual developments, which in the 1990s is led

by the market reforms and liberalization programs. There are four main processes in-

volved in the restructuring of the sugar industry:

a. Changes in the industry’s fundamentals which could be summarized as fol-

low: in the past 25-30 years there has been a geographical shift of the indus-

try’s center of gravity from Europe (west and east) and North and Central

America (which includes the Caribbean) towards Asia and South America in

terms of production, consumption and international trade. The structural

transformations in sugar also include the emergence of sugar substitutes,

specially those used in industrial applications (high fructose syrups, for in-

stance); the modification of trade patterns (white/refined sugar over raws);

the shrinking of preferential markets (the demise of the Soviet Union-Cuba

trade arrangement and the reduction of the U.S. preferential market).

b. Modernization of production with new technology and labour management

practices, automation and computer-based processes, etc., which have con-

tributed to create a smaller and, apparently, more qualified labour force.

c. Concentration of ownership and control of the industry with a strong par-

ticipation of transnational corporations, and a general trend to have fewer

and more powerful companies, and fewer factories in number but larger in

production capacity.

d. Implementation of market reforms and neo-liberal policies such as liber-

alization, privatization and deregulation programs, which are the cornerstone

of the current restructuring process, in the wider context of the regionaliza-

tion/globalization of national economies.

1. The Decline of the English-speaking Caribbean Sugar Production

The English-speaking Caribbean sugar industries are going through the same restructur-

ing process, although the period of changes may be extended to include the 1970s. The

1970s (and the 1980s) was the time of decolonization and political independence in the

region, matched by what several observers termed “the need to control the economy’s

commanding heights.” In Guyana, Jamaica, St. Kitts and Trinidad the sugar industry was

nationalized along with other important economic sectors by the newly independent re-

publics. Unfortunately for these countries, the 1970s was also when production problems

started. To what extent the decline in sugar production could and should be linked to the

state ownership and management model which followed nationalization is a question that

falls out of the realm of this report; but the statistical series (see appendixes) clearly de-

scribe a long-term descent of production. The following chart summarizes the production

curve in the six countries of the English-speaking Caribbean.


Chart 1

English-speaking Caribbean - Sugar Production 1971-1999

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1998/99

mt

Barbados BelizeGuyana JamaicaSt.Kitts Trinidad

The chart shows how Barbados witnessed a steady decrease in production: from

140,000 tonnes in 1971 to slightly over 60,000 tonnes of estimated production in

1998/99. Belize, on the other hand, had a steady increment to almost doubling its produc-

tion from 64,000 tonnes to 127,000 tonnes, and is the only country to show a constant

growth in the period in question. Guyana’s production curve is dramatic: production fell

from 394,000 tonnes at the beginning of the period to only 133,000 tonnes in 1990; and

then experienced a remarkable recovery (from the mid 1990s) to the reach an estimate

300,000 tonnes in 1998/99. Jamaican sugar production fell from 390,000 tonnes in 1977

(its production peak surpassed 500,000 tonnes in the mid 1960s) to a low of 186,000

tonnes in 1997. Trinidad’s curve is similar to Jamaica: production fell from 237,000 ton-

nes in 1971 to 79,000 tonnes in 1989 (repeated in 1998), and it is expected to have a

slight increase to 115,000 in 1998/99. St. Kitts has held production in the range of

20,000-30,000 tonnes in the whole period.

While world sugar production grew from 73 million tonnes in 1971 to an esti-

mated 130 million in 1998/99, representing a 69.19 percent growth (annual rate of 3.8

percent), the English-speaking Caribbean sugar production declined by 30 percent (a

negative annual rate of 1.69 percent). The region’s total participation in world production

was halved from 1.68 percent in 1971 to 0.69 percent in 1997 (it reached the 3-4 percent

share in the 1950s). The English-speaking Caribbean has failed to sustain the world aver-

age rate of growth (by contrast, some regions have surpassed the world average) and has

lost significant ground in the international sugar scene. This is an integral part of the


geographical shift of the center of gravity of the sugar industry towards Asia and South

America.

The decline in production has several causes, and analysts mention a broad range

of them: from the neglect in capital investment to a politically motivated scheme to run

down the industry, the latter mixed with some racial animosities. (In both Guyana and

Trinidad, the sugar industry is the economic basis for a population of Indian descent,

while the urban-based industries reflect more a population of African descent.) What-

ever the causes for the long-term decline the fact is that production fell significantly in

the 1971-1999 period, which is also reflected in the reduction of the number of mills

shown in Table 3.

Table 3

Number of Mills in the English-speaking Caribbean 1961 - 1993

1961 1970 1980 1990 1991 1992 1993

Barbados 20 15 8 4 3 3 3

Belize 1 2 2 1 1 1 1

Guyana 11 11 10 8 8 8 8

Jamaica 18 15 12 9 9 9 8

St. Kitts 1 1 1 1 1 1 1

Trinidad 4 6 5 2 2 2 2

Total 55 50 44 25 24 24 23

Source: Sugar Association of the Caribbean, quoted by Thomas 1995:16

The reduction in the number of mills in itself is not an indication of production

problems in the industry in general (in fact, the consolidation of production in larger

mills, but fewer in number, is one aspect of the restructuring); nonetheless, in the Carib-

bean it does reflect production problemas while, at the same time, points to a new set of

difficulties: mills are not only becoming fewer and relatively poorer, but also getting

older and antiquated. In fact, the most recent factories in the region are the Portvale in

Barbados (built in 1982) and the Tower Hill in Belize (1962). From the 23 factories

listed in 1993, sixteen were commissioned in 1926 or earlier. (Haraksingh 1998:68). A

1995 ILO study on the privatization of the sugar industries in the region reviews a series

of indexes of sugar agricultural and industrial yields in the six countries, and then con-

cludes by saying that the productivity indicators reflect a situation in which:

a. the physical infrastructure of the sugar industry has been deteriorating,

while new investments have not been adequately forthcoming, so as to

keep up efficiency levels;

b. the sugar factories are all in need of refurbishing because of old out-

dated equipment, presently they are operating at less than acceptable

levels of efficiency;

c. husbandry (particularly ratooning and fertilizer use), cultivation and

reaping practices have deteriorated with the “kill-to-mill” times signifi-

cantly increased…, this has contributed to the low cane yields and dete-

riorating cane quality;

d. there is an increasing incidence of poorer sugar cane varieties, pests and

diseases;

e. there exists ageing agricultural machinery. (Thomas 1995:13)


The decline in production gave way to other processes as well: in some cases the

workers decided to abandon the industry and moved to other activities due to the low

wages, poor working conditions and even poorer future perspectives; in some others, “a

great deal of land was withdrawn from agriculture and diverted, irreversibly, to other

purposes – tourism in Barbados and St. Kitts, real estate and housing in Jamaica and

Trinidad.” While the workers may be attracted back to the industry (as in Guyana), the

lost of cane lands may hamper the efforts to reactivate sugar production in the near fu-

ture. (Haraksingh 1998:68)

After the general decline in production of the 1970s and 1980s in Barbados,

Guyana, Jamaica and Trinidad, by the early 1990s a restructuring of the industry was

needed. Again, the regional industry followed (and was part of) the larger process in the

international sugar industry, which in the same years started to witness a restructuring

process with the implementation of liberalization programs and market reforms.

2. The Restructuring Process

As the main objective of this report is to explore the grounds for a common workers’

position, this section presents the information by blocs on the main themes of restructur-

ing, as explained at the beginning of this chapter, to highlight the similarities (and differ-

ences) of the general process in each of the countries involved.


English-speaking Caribbean Sugar Industries: Background Information

Barbados Belize Guyana

� In 1991 some 100 highly

indebted plantations (HIP) were

taken over by the government.

� Booker Tate signed a 5-

year renewable contract to run

the industry.

� Plantations jointly owned

the three existing mills.

� Early 1970s: Tate & Lyle

sold its cane growing operations

to farmers.

� Mid 1970s, T&L transferred

ownership (81 percent) of the

Belize Sugar Industries (BSI) to

a workers’ trust (BEH). Gov-

ernment has also equity, T&L

retained 10 percent of shares.

� One mill processes sugar,

the other ceased sugar produc-

tion in 1985 and produces only

molasses sent to Jamaica (for

rum production).

� Cane grown by about 8,000

farmers, cane cut manually

using small numbers of migrant

workers (Mexico and Honduras).

� Industry nationalized in

1976 and GUYSUCO was

created to control estates and

factories. (Booker McConnell

was the previous owner.)

� Farmers account for 7-8

percent of the cane milled.

� Contract with Booker Tate

(October 1990) to prepare com-

pany for divestment, among

conditions were: no interference

from the government in the

running of Guysuco, and im-

provement of minimum wage.

Jamaica St. Kitts Trinidad

� Government bought several

estates in 1971, transferred

them to producer cooperatives

which failed in the early 1980s.

The government resumed own-

ership.

� Mid 1980s Booker Tate

invited to manage facilities.

� In 1993/94 all eight estates

and factories were in private

hands

� In 1998/99 the government

has taken control over the in-

dustry (see below).

� About 20,000 smallholders

growing cane, along with large

private and public estates.

� Government bought the

sugar factory and estates in 1975

(St. Kitts Sugar Manufacturing

Company.)

� 52 privately owned estates

produce cane for the factory.

� Between 1975-1986 there

were two state agencies (sugar

processing and sales, the second

in cane growing), they were

merged in 1986.

� Managed by Booker Tate

until 1996, when government

assumed responsibility. Booker

Tate has a technical assistance

contract.

� Tate & Lyle bought Caroni

in 1937. Company was nation-

alized in 1975 (owns 40,000 ha

of land).

� Caroni produces about 50

percent of the cane and runs the

only mill in the island.

� In 1992, a Tripartite Com-

mittee (TC) was set up by the

newly elected administration. It

submitted a consensus report in

June. The report planned

Caroni as a break-even opera-

tion by 1999/2000 and profits

afterwards.


English-speaking Caribbean: Privatization, ownership, control


� Government acquired HIP, set

up the Barbados Agricultural Man-

agement Company (BAMC) to run

industry.

� Rationalization of manage-

ment: centralized decision-making

and avoidance of duplication.

� Ten-year process to transfer

majority stake from Tate & Lyle

to BEH, a workers’ trust: 1985-

95.

� Booker Tate: long-term

renewable management contract.

� The Libertad factory,

Corazal, owned by Petrojam of

Jamaica (production of molasses

for rum) may resume sugar pro-

duction. Government in talks

with Petrojam and possible tech-

nical advice from Taiwan Sugar

Corporation.

� Long-term renewable man-

agement contract with Booker

Tate (until 2001, when Guysuco

will be “fully restructured”

USDA 1998).

� International Financial Insti-

tutions (IFIs) pressing for di-

vestment of Guysuco (1990s).

� Plans to amalgamate the

management of adjacent sugar

estates. LBI and Enmore estates

were amalgamated in 1997.

Difficulties in the amalgamation

of Albion/Port Mourant and

Rose Hall (1999).


� IFIs pressing for divestment of

state owned estates. Phase I (com-

pleted in Jan. 1994) sold state-

owned assets to the Sugar Com-

pany of Jamaica (SCJ) and to a

local group. Phase II: divestment of

8,390 acres of land to farmers (to

be completed by 1996).

� In 1993 SCJ acquired 3 mills.

Tate & Lyle (former owner), Wray

& Nephew (local distiller), and the

Merchant Bank of Jamaica, mem-

bers of SCJ. Government: a minor-

ity stake.

� SCJ hired Booker Tate on a

long-term renewable management

contract.

� U.S.-based Tropicana Hold-

ings’ leased the Duckenfield estate.

� October 1998: government

took control of SCJ due to finan-

cial losses and not fulfillment of

conditions of privatization (support

to farmers, etc.)

� A US$100 million rehabilita-

tion package for the industry. Gov-

ernment may regain majority stake

in SCJ and become a major partner

in the industry. (Booker Tate one of

the consultants.)

� Divestment program pro-

posed for 1993, but not imple-

mented. (An agreement with the

IADB included that failing the

sale of the factory, the industry

will be closed down.)

� Caroni (1975) Ltd. a state

owned and run company.

� Tripartite Committee in

1992: Government should give

real autonomy to the board to

manage Caroni.

� In late 1997, government

said privatization of state-owned

companies would resume. Caroni

one of the targets.

� The company runs a $16.6

million loss every year and in

1993 the government condoned a

$333 million debt. Ispat, an

India-based company, said to be

interested in acquiring Caroni.


English-speaking Caribbean: Deregulation, decontrol


� Revenues from sugar imports

(if needed) to be redistributed to the

industry as subsidies.


� Phasing out responsibilities of

the Sugar Industry Authority (R&D,

marketing, sugar imports, domestic

sugar price fixing, allocation of

export quotas, fixing cane prices).

� Divestment of all commercial

activities of the SIA, which will be

reduced to a regulatory function.

� Decontrol of sugar imports but

in Sept. 1998: the Jamaica Cane

Products Sales may become the

sole sugar importer in the island

(rehabilitation program).

� TC: sugar imports liberalized

but Caroni’s control over sugar

imports will be encouraged.

� Caroni is required to sell

refined sugar at the world price to

Trinidadian firms which manufac-

ture products for export.

English-speaking Caribbean: Production efficient goals


� Stabilize production at 75,000

tonnes/year to cover preferential

export markets (EU and U.S.) and

domestic consumption.

� Stability reached at 110,000

tonnes/year since mid 1980s.

� Plans to increase production

with the Libertad factory.

� Consolidate production at

275,000 tonnes, then expansion

to 430,000 tonnes (2003?) -

300,000 by 2001.


� Stabilize production at 290-

300,000 tonnes/year by year 2000.

� Goal of 30-35,000 tonnes

year: to cover preferential mar-

kets and domestic use.

� TC proposed 125-130,000

tonnes/year.

English-speaking Caribbean: Reduction of Cost of Production


� Reduce production costs from

34 c/lb to 20 c/lb.

� Plans to reduce cost of pro-

duction.

� Cost to be reduced from 17-

18 to 13-14 c/lb in 5 years.

� 1999: contract calls for

Booker Tate to achieve bench-

mark in cost reduction, otherwise

company will pay penalties.


� Reduce costs to 14-15 c/lb by

year 2000.

� Cost to be reduced to 18

c/lb. (A 1991 World Bank report

said St. Kitts had one of the

lowest costs in the world at 9

cent/lb.)

� TC proposed to reduce cost

to 22.5 c/lb (a very high cost by

international standards).


English-speaking Caribbean: Modernization of Field Operations


� The 40 HIPs, factories, port

and marketing facilities were con-

solidated under the corporate man-

agement.

� HIPs merged into 21 farms.

� Coordination of the remaining

60 plantations.

� Rotating crops.

� Training and extension ser-

vices to farmers.

� The Belize Cane Farmers’

Association: a cooperative which

organizes cane production and

deliveries.

� Sugar Industry Task Force

(Nov. 1998) to evaluate and

propose actions to improve cur-

rent system of cane production.

Includes government officials,

BSI and cane farmers’ represen-

tatives. Submission of report by

Feb. 1999.

� Only sugar growing opera-

tions, diversification projects to

be phased-out.

� Environment friendly prac-

tices but Guysuco is increasing

the use of ripeners: from 60 per-

cent in 1996 crop to a projected

75 percent in 1997, objective was

not fulfilled due to opposition by

the unions.


� SIA fixes cane payments (62-

38 share between farmers and

mills)

� Cane yields to improve.

� Sugar lands to be leased, to

prevent diverting to other uses.

� TC: farmers to contribute 60

percent, encouraged to form co-

operatives to facilitate mechaniza-

tion.

� Training and extension ser-

vices be provided.

� Improvement of cane deliv-

ery.

� Farmers paid on quality of

cane (a pilot project to start in

1998 with 5 percent of the 6,000

farmers).

� Land reallocation pro-

grammes.

� Improvement of cane varie-

ties and pest/disease control

� Diversification promoted:

citrus, exotic fruits, fish farming,

etc.

� In 1996-97 Caroni started to

lease more land to farmers (54

percent of cane supplied by them),

and expect to reach 75-25 by year

2001.


English-speaking Caribbean: Mechanization


� Goal to mechanize 72 percent

of cultivated area (against 42 per-

cent in early 1990s).

� Automation of cane loading

onto punts for transport.

� Automation of fertilization

and weeding presently done by

hand.

� Mechanization of the harvest

faces problems due to the lay-out

of fields and quality of soil (soft,

high in moisture and clay con-

tent).


� Mechanization proposed al-

though labour costs are low and

terrain difficult: proposed due to

poor state of industrial relations,

and reluctance of population to cut

cane (hard work, low wages).

� Mechanization proposed to

cover 70 percent of cultivated

area.

English-speaking Caribbean: Modernization of Factory Operations


� Plans to close one of the three

factories (shelved for the time

being due to political situation);

installed capacity is over 95,000

tonnes/year.

� New investment in a second

factory.

� Plans for a packaging plant.

� Co-generation plans.

� Resuming sugar production

in the Libertad factory (ceased

production in 1985).

� Particle board and rum

production.

� Plans to close one factory,

and possibly three (plans shelved

because the “political climate” did

not favoured it).

� Plans to improve two mills.


� Appleton receiving new in-

vestment: a new mill with 25 per-

cent increased capacity.

� Plans to improve factory

yields with new investments and

improve quality of cane (sucrose

content).

� Installed capacity is 340,000

tonnes, therefore consolidation is

expected to adjust to production

goals.

� Improvement in cane deliver-

ies and shipping of sugar.


English-speaking Caribbean: Labour Productivity, Practices, Social Aspects


� To improve labour productiv-

ity from 12 tonnes worker/year to

40 tonnes per worker/year.

� Farm labour to be assigned on

a day-to-day basis due to consoli-

dation of HIPs.

� Piece-work system in field and

factories (“unique in the world) has

been replaced by a time-based

system.

� Rationalization through attri-

tion, enforcing retirement at 65

years of age, voluntary retirement.

� Old “paternalistic” methods

replaced by computer-based proc-

esses to register labour force (data

on workers).

� Job evaluation on a rated sys-

tem, participation of unions and

workers in the system’s design.

� Training.

� Plans to offer permanent em-

ployment only to those workers

required year round.

� Plans to reduce 10 percent

of labour force in the next 5

years (2002?)

� Booker Tate allowed to pay

wages and salaries above IMF

conditionalities. Minimum wage

was double (early 1990s).

� Jobs increased by one fifth.

� Social benefits (housing,

community services, sport, recrea-

tional, cultural activities.

� Improved medical facilities.

� Improved health and safety

standards.

� Amalgamation of neighbor-

ing sugar estates will allow easier

movement of resources, including

labour.


� “Industrial relations are replete

with conflict and tension.” (Thomas

1995:33)

� No immediate reduction in

employment, but in the medium

term it should be expected (factory

workers).

� Recruiting high level man-

agement.

� Training of workers, includ-

ing artisans.

� Increasing the length of the

work week (5 to 6 days).

� Modification of task meas-

urement: management claims

that current is 3 to 4.5 hours

against the sought 6 hour/day.

� Reduction in farm labour

using more chemicals (weed

control).

� Reduction of labour force by

attrition.

� Rely on migrant labour

(from Guyana and other territo-

ries) in the harvest season.

� Payments of wages awarded

by not implemented.

� Training (apprenticeship

schemes, work-study programs,

etc.)

� Improvement of social and

recreational facilities; community

services; health and safety.

� Pension plans and other so-

cial benefits for workers.


English-speaking Caribbean: Proposals from Unions and other groups


Unions � Ownership not to revert to

previous owners.

� Role of small cane growers to

be clarified and highlighted.

� Workers’ right on guaranteed

minimum weekly hours.

� To improve participation on

the Board. (Management sees

such request as “anachronistic”

since the Board decides on wages

and working conditions.)

� Occupational health and

safety concerns.

� Unions opposed to priva-

tization due to consequences:

retrenchment and redundancy

(GAWU).

Other � Expansion of sugar pro-

duction, aiming to Latin

American markets and lob-

bying for an increase in the

U.S. tariff-rate quota (to

accommodate Libertad’s

sugar).

� Sugar levy will be fixed

at G$2 bln (US$13.8 mln)

“to make it more transpar-

ent.” Before the levy was 70

percent of the difference

between the EU protocol

price and 115 percent of the

world market price.


Unions � Unions demand participatory

approach, more involvement in

decision-making.

� Training and education.

Other

groups

� No hard information available

on the US$100 mln rehabilitation

package.

� Government officials are

quoted as saying that some mills

will not be profitable in at least 5

years.

� A 1997 PriceWaterhouse

review of Caroni: the com-

pany was not economical

viable.

� Government with three

options: (a) closing down

Caroni and laying-off 5,000

full-time employees, (b)

selling part of it, (c ) multi-

year programme to reduce

Caroni’s dependence on the

government but will not

make it financially independ-

ent.

� In the 1999 budget the

government considers re-

structuring Caroni’s units

independently. A committee

to decide involvement of the

state, labour and the private

sector. Union said it had not

been consulted on the matter.


The presence of Tate & Lyle and Booker Tate is evident in the English-speaking

Caribbean sugar industries, a fact that has historical and economic roots. Tate & Lyle, the

world’s largest sugar and sweetener company with operations in over 30 countries, has

been active in the region since 1937 with raw sugar operations in Jamaica, Trinidad and

Belize. T&L’s sugar assets were nationalized in the 1970s, but after a decade and a half

T&L went back to Jamaica: In 1993 T&L was part of the Sugar Company of Jamaica

(SCJ) consortium which acquired the country’s largest sugar company. T&L maintains

also a 10 percent stake in the Belize Sugar Industry (BSI). The company’ participation is

also noticeable in the European scene: Tate & Lyle refines the bulk of the Caribbean raw

sugar traded under the Lomé Sugar Protocol.

Booker Tate’s participation is important and interesting. The company was the

result of a merge of the management services of Tate & Lyle and Booker plc, former

owner of the Guyanese sugar industry. Booker Tate specializes in managerial services

and has management contracts in a dozen countries around the world and offers consul-

tancy and technical assistance services as well. Booker Tate has either a management or

a technical assistance contracts in five of the six English-speaking Caribbean countries

(except in Trinidad). Not always interested in directly acquiring ownership, multination-

als are well positioned to provide professional management, consultancy services, infor-

mation, and international contacts with other sectors of the industry (i.e. financial

resources, equipment, etc.)

Three others companies play an important role in the region: Fletcher Smith,

owned by Booker (65 percent) and Tate & Lyle (35 percent), supplies machinery for

sugar manufacturing and provides access to financial contacts to its clients. Two London-

based trading houses: ED&F Man and Czarnikow, handle the ACP sugar and give mar-

keting advice. Other companies, specially from India, have been reported as interested in

the regional industry: in 1993 the newly elected government of Cheddi Jagan in Guyana

established contacts with Indian companies to obtain technical and financial assistance

for Guysuco, as an alternative to a World Bank rehabilitation package; while Ispat, a

steel-industry company, expressed interest in the privatization of Caroni Ltd. in Trinidad.

3. A Balance of the Restructuring Process in the Sugar Industries

To judge by the level of production reached, the restructuring of the English-speaking

Caribbean sugar industries has not produced equal results. The six countries involved

could be divided in three groups: Guyana and Belize where the recovery and/or consoli-

dation of sugar production is related to the restructuring of the industry; Barbados and St.

Kitts where the restructuring seems to be limiting the scope of the industry in favour of

other sectors; and Jamaica and Trinidad where the industry is facing serious difficulties

to establish a clear path of future development.

Guyana and Belize. Guyana is the only country where the positive recovery and the pro-

posed expansion of sugar production could be directly linked to the restructuring of the

industry that began in October 1990 when Booker Tate won a contract to manage the

Guyana Sugar Corporation (Guysuco). The contract was to be the first step in the di-

vestment of Guysuco but a change of government took place in 1992. The newly elected

Jagan Administration was not a supporter of the free market reforms, and the divestment

of the industry was halted. The restructuring seems to have provided some solution to


two basic problems in the Guyanese sugar industry: the political interference by the gov-

ernment in the management of Guysuco - allowing also for fresh capital to flow into the

industry - and secondly, with improvements of the minimum wage and social services,

the scarcity of workers was resolved. At present the Guyanese sugar industry has plans to

expand production to an annual 430,000 tonnes in the next five years.

The restructuring in Belize is a different process. It began in the mid 1980s when

Tate & Lyle, after selling its cane growing operations, reached an agreement with the

government for an employee buy-out scheme of the industrial facilities. Ten years later,

by 1995, the Belize Employees Holdings (a workers’ trust) had acquired 81 percent of

the Belize Sugar Industries (BSI), the country’s only sugar company; Tate & Lyle kept a

minority stake and Booker Tate obtained a management contract. Belize stabilized pro-

duction at around 120,000 tonnes per year. Nonetheless, the government has announced

recently a plan to resume sugar production in the Libertad mill, which may be bought

from Petrojam, a Jamaica-based company.

Interestingly enough in these two countries the restructuring did not transfer the

ownership of the industry to the private sector, as is normally held by the proponents of

the market reforms: the state-ownership is alive and well in Guyana and a contract with

Booker Tate seems to guarantee some professional-run top management, the latter sup-

ported by experienced local personnel at the mid-level positions and in the administra-

tion of the sugar estates. In Belize it is an employees’ trust which has replaced the

foreign company’s ownership. The recovery of production, the improvement of infra-

structure and social conditions and the investment of new capital, all of which are objec-

tives of a restructuring process, seem possible without relinquishing the ownership of the

industry; at the same time, the control (management) of both industries has been trans-

ferred to an independent group. The restructuring process has put forward the question of

ownership as distinct from the control/management of an industry.

Barbados and St. Kitts. Coming from different sugar histories, these two countries seem

to be heading in the same direction in their restructuring: sugar will probably become a

secondary (and limited) influence in the economy and society, leaving space for other

activities (i.e. tourism) to expand. The restructuring is experienced differently in Barba-

dos, once a large Caribbean sugar producer, where the last forty years have seen a steady

decline in production, and where arguments in favour of the industry are normally based

on the protection of the fragile top-soil against erosion and its contributions to the sur-

roundings of tourist resorts.

The St. Kitts sugar industry is the smallest in the region. Although sugar produc-

tion varied between 20,000-30,000 tonnes, with a high percentage difference (up to 50

percent); the fact remains that in absolute terms the industry is very small. Relatively

speaking, sugar is still an important agricultural employer but does not seem to have

room nor the possibilities for a significant expansion (agriculture as a sector contributes

around 5 percent of the GDP). In the 1980s, attempts to reduce dependency on sugar

encouraged the development of light manufacturing (electronic components and textiles),

while tourism was the most rapidly developing sector. Construction also showed a dy-

namic growth.

Jamaica and Trinidad. Where the restructuring process faces its more important chal-

lenges is in Jamaica and Trinidad, with both countries going through a production crisis

compounded by what seems to be a lack of clear objectives in the short and medium

terms.


In late January 1999 some 800 workers walked off the job at the Tropicana’s

sugar estate in Duckenfield in Jamaica. The immediate reason was that the workers

lacked information on the status of the company, which was in receivership and has been

reported as sold. The unions said that the information on the company was available but

it was withheld to avoid redundancy payments to the workers. This was only one aspect

in the troubled Jamaican industry. In 1993/94 in the context of a restructuring program

the government privatized the state-owned sugar estates. The Sugar Company of Jamaica

(SCJ), a consortium formed by Wray & Nephew (a local distiller), Tate & Lyle and the

Merchant Bank of Jamaica bought three mills which account for 70 percent of the na-

tional sugar output. In the same process the U.S.-based Tropicana had leased the Ducken-

field estate.

By September 1998, in response to heavy financial losses in the industry and fac-

ing the risk of greater social problems, the government announced a $100 million reha-

bilitation package which targeted the SCJ but also included the Tropicana, Hampden and

Long Pond sugar estates. As a result of the rehabilitation program the government might

acquire a majority stake in the SCJ. Five years after privatizing the sugar mills and es-

tates, the government is back as a major player in the industry. It is not clear what the

future holds for the Jamaican industry, even government officials admit that the estates

may not be profitable in at least five more years (e.g. Tropicana’s Duckenfield). Accord-

ing to local sources from the eight operating mills only one (Worthy Park) seems to be in

good financial conditions.

The case of Trinidad is one of great complexity. In 1992 a tripartite committee

with representatives of the state, the workers and the cane farmers, submitted an unani-

mous report recommending some steps to place Caroni in the path to economic viability.

The committee had the support of the different groups in the industry, but unfortunately

the government did not provide timely resources to give the program a chance of success.

With the change of government in 1993, the UNC coalition came to power. Im-

portant for the industry was that the leader of the UNC, Basdeo Panday 1, was the presi-

dent-on-leave of a sugar union, the All Trinidad Sugar and General Workers Trade Union

(ATSGWTU). Nonetheless, six years later the industry’s (and the workers’) early expec-

tations to get some solid support from the government have not yet materialized.

In December 1998 Battlefront, ATSGWTU’s newspaper, reported that Panday,

now head of the government, had announced plans to build a 1,000-room luxury hotel at

Brechin Castle, on sugar lands of the state-owned Caroni Ltd. Battlefront added that

Panday said that “by developing ‘other’ industries, he was determined ‘to move the chil-

dren of sugarcane workers out of the plantation economy of the temporary and seasonal

employment into the world of regular, well paid, permanent jobs in a modern industrial

sector’.” Hundreds of temporary jobs are expected during the building of the hotel and

“on completion there would be permanent jobs for a number of people.” The Trinidadian

sugar industry that failed to promote a restructuring program which had the support of

the industry’s main stakeholders (the tripartite committee of 1992), may be at the begin-

ning of another attempt to restructure, but this time with slim chances of flourishing;

more probably of being limited and kept at a modest size.

1 Mr. Panday was president of the union until July 1998, a position he held for 23 years,. A long-

term supporter of the plans to put Caroni Ltd. in the tracks of economic viability, Basdeo Panday

was also the main actor in an spectacular political protest which took place when negotiations

between the government and the union reached a deadlock in 1991: he resorted to a hunger strike

in the office of the Labour Minister and a solution was promptly found.


III. Market Prospects for the English-speaking Caribbean Sugar In-

dustries

If the restructuring presents these domestic/internal features, the Caribbean sugar indus-

tries still have to deal with another set of challenges arising from the changes in the pref-

erential sugar markets in the European Union and the United States.

Every single Caribbean sugar industry - an not only the English-speaking coun-

tries -, crucially depends on foreign markets to sell its sugar: the amount of sugar pro-

duced largely surpasses the small domestic and regional markets. Cuba also exemplifies

this reality: it depended on the U.S. market before 1960, came to depend on the Soviet

Union and its allies when the U.S. embargo was enforced, and when the Soviet Union

collapsed and the preferential market disappeared a crisis appeared in Cuba to involve all

economic sectors.

The international free trade negotiations (under the GATT and very soon the

WTO), the pressure from low-cost sugar producers (e.g., Brazil, Australia, Thailand),

internal developments in the EU and the U.S. and other factors, have contributed in the

recent past to create an uncertain future for the Caribbean sugar, so dependent on the

export markets. In this section we explore the market prospects in the EU and the U.S.,

review what happened to sugar under the Uruguay Round of the GATT, what can be

anticipated in the upcoming WTO talks, and we will attempt to identify possible lines of

development for the Caribbean sugar industries.

1. The Prospects of the Sugar Market in the European Union (EU)

Table 4 shows the level of dependency of the English-speaking Caribbean sugar indus-

tries on the export markets, specially Europe: Barbados and St. Kitts sell all their sugar

exports to Europe, which also buys over 80 percent of Guyana’s and Jamaica’s exports,

over 60 percent of Trinidad’s and somewhat less than half of Belize’s exports. (The de-

pendency on the U.S. market is less prominent.)

Table 4

English-speaking Caribbean - Exports to EU and U.S. (1997)

metric tons, raw value

Production Exports to EU % to EU to U.S. % to U.S.

Barbados 62,393 60,566 60,566 100.0 - 0.0

Belize 131,368 115,376 53,591 46.4 22,209 19.2

Guyana 283,275 253,211 208,424 82.3 23,850 9.4

Jamaica 232,998 170,947 149,937 87.7 20,897 12.2

St. Kitts 31,000 16,278 16,278 100.0 - 0.0

Trinidad 120,141 57,019 35,741 62.7 12,567 22.0

Source: ISO, Yearbook 1997

A related aspect (quite important for the Caribbean sugar) involves the changes

and the political and trade decisions to be taken by the European Union in response to


larger economic developments. As this report is written (March 1999) a good example of

the uncertainty of markets is the trade dispute over the EU banana regime, even though

the scheme for EU sugar imports differs from the banana regime.

According to the news reports, the EU and the U.S. have been fighting over the

EU banana regime for six years, and three times the WTO has ruled against the EU

which favours imports from the former European colonies in the Caribbean over bananas

shipped from some Central American countries, where some U.S.-based companies con-

trolled the bulk of the business. Before the WTO made known its ruling on the U.S.

companies’ losses in the European market because of the banana regime (announced for

March 15, 1999), the U.S. imposed a 100 percent tariff on $520 million worth of Euro-

pean goods ranging from Italian cheese to French designer handbags to British cashmere

sweaters. Government officials of some Caribbean banana exporters condemned the U.S.

decision, which was deemed as “deeply unfair to the industries affected, which have no

connection whatever to the banana dispute.” A comment followed: “Small nations would

be particularly at risk, once major powers decided unilaterally on penal action against

other WTO members before dispute settlement procedures have been exhausted.” (Globe

& Mail, March 4, 1999:B8; March 5, 1999:B7)

This is an example of some of the challenges from a globalized economy: the

stability of trade agreements between two partners might become jeopardized due to the

pressure from a third party, specially when trade negotiations are set in motion and, in

practice, all goods and services ended up on the bargaining table. As well, the economic

power of multinationals provides a good basis for some lobbying efforts that can eventu-

ally modify international trade patterns; and, important for Caribbean producers: small

players have limited power to influence decisions taken by the major players.

Sugar can not be isolated from these and other developments. Even though the

Sugar Lomé Protocol, which guarantees a fix amount of sugar imports from the ACP

countries (see below), will be in force for an indefinite period and is not affected by the

periodic negotiations between the EU and the ACP countries, the question of guaranteed

sugar prices (currently about 31 c/lb or $683/mt) always surfaces: whether is possible for

the EU to continue to pay preferential prices for the sugar under quota. The consensus

among sugar analysts is that in the foreseeable future the sugar quota amount could be

maintained but the preferential price will be pushed downwards. Some of factors are

related to the changes that the EU is expected to introduce very soon (from the point of

view of the Caribbean sugar suppliers), among them:

a. the reform of the EU Common Agricultural Policy (CAP) and the “Agenda

2000” aiming to create a new model for the European agriculture, even when

sugar is not included in the present package. The CAP reforms are related to

the position that the EU will take in the upcoming negotiations in the WTO;

b. the enlargement of the EU to include central and eastern European countries

(CEECs), also sugar producers, and the expected changes in the EU sugar

balance and the subsequent pressure on the sugar regime. Some of the

CEECs countries have already privatized their sugar industries, which in

some cases have been entirely bought by west European sugar companies;

c. the possible impact of the trade negotiations that the EU maintains with

other sugar-surplus regions such as Mercosur (Brazil); Mexico and other

Latin American countries; and South Africa. Although sugar is frequently

excluded from the negotiations, it can not be expected that will be remained

untouched by the changes;


d. the introduction of the Euro (the European common currency) on January 1st,

1999 and its future impact on the currency exchange movements: Britain, the

main importer of the Caribbean sugar, did not join the monetary union; and,

on the other side of the Atlantic, several Caribbean economies function

based on the U.S. dollar rather than on the European currency.

The Lomé Sugar Protocol. To briefly elaborate on the above mentioned points, it is nec-

essary to outline the Lomé Sugar Protocol (LSP) under which the Caribbean producers

receive preferential treatment. The LSP regulates the sugar trade between the European

Union (EU) and the Asia, Caribbean and Pacific (ACP) countries, former European

colonies, (some territories have exported raw sugar to Europe for over two centuries).

The LSP is an extension of the Lomé Convention, which governs the interna-

tional development cooperation between the EU and sixty-six ACP countries. The Con-

vention is negotiated every five years, but the LSP has an independent existence outside

the Convention.2 The EU buys an annual 1.3 million tonnes of sugar (white value) from

the ACP countries and pays a premium price, related to the price received by the Euro-

pean domestic sugar producers. This sugar is known as the Sugar Protocol (SP). The LSP

is of “indefinite duration,” as stipulated in the first article of the protocol, which also

considers that in case the Lomé Convention ceases to operate, the LSP signatories will

adopt “the appropriate institutional provisions to ensure the continued application of the

(sugar) provisions.” (See Table 5 for Lomé sugar quotas.)

In 1995 the EU created the Special Preference Sugars (SPS) category to include

Portugal’s share of raw sugar but also whatever other amounts deemed necessary to en-

sure adequate raw supplies to the EU refiners in Britain, Finland, France and Portugal.

The SPS are in effect until June 30th, 2001 (when they will be re-negotiated), although

their volume is determined each year taking into account several factors: the estimates of

the European domestic production, the production in the French Département d’Outre-

Mer (DOM) of Reunion and Guadeloupe, the needs of European sugar refiners. From the

total amount of sugar needed, a portion is allocated to Brazil and Cuba, traditional raw

suppliers to Portugal, under the Most Favored Nations (MFN) treatment. The remainder

is the so-called SPS, defined at two moments: in May-June before the harvest starts, with

a readjustment in February after the DOM’s production is known. Any shortfall in the

sugar deliveries (SP or SPS) is redistributed either among all ACP countries or among the

country members of the same region.3 SP quota prices average 31 c/lb while SPS prices

are about 85 per cent of the SP price. (See Table 6)

Table 5

EU Lomé Sugar Quotas

(metric tons, white sugar equivalent)

Country Amount Country Amount

2 A sugar arrangement that preceded the LSP was the Commonwealth Sugar Agreement (CSA)

between the United Kingdom, as importer, and sugar producers of the British Commonwealth. To a

great extent, the CSA was mutually beneficial for both partners and, in some cases, it was the same

company operating at both ends: for instance, Tate & Lyle as a refiner in Britain and as a producer

in the Caribbean. In 1973, when the United Kingdom became part of the European Economic

Community, a new sugar protocol was negotiated to recognized arrangements under the CSA. 3 To prevent reallocation of quotas to countries with no sugar available, the ACP-EU sugar group

relies on sugar brokers who provide their expertise to reach a satisfactory arrangement.


Barbados 50,312.4 PR Congo 10,186.1

Belize 40,348.8 Fiji 165,348.3

Guyana 159,410.1 Ivory Coast 10,186.1

Jamaica 118,696.0 Madagascar 10,760.0

St. Kitts-Nevis 15,590.9 Malawi 20,824.4

Trinidad & Tobago 43,751.0 Mauritius 491,030.5

Swaziland 117,844.5

Tanzania 10,186.1

Zimbabwe 30,224.8

India 10,000.0

Caribbean 428,109.2 Rest ACP + India 876,590.8

Total Lomé Sugar 1,304,700.0

Table 6

European Union Raw Sugar Balance 1998/99 (Final)

Maximum supply needs

Finland 60,000

France 297,000

Portugal 292,000

UK 1,130,000

Total 1,779,000

Available supplies

ACP Protocol/India 1,305,000

Less not available for refining 114,000

Total 1,191,000

DOM

Reunion 176,000

Antilles (Guadeloupe) 50,000

Total 226,000

Less

Consumption 30,000

Not available for refining 24,000

Total 54,000

Net DOM availability 172,000

Total availability 1,363,000

Deficit 416,000

Less MFN 82,000

SPS to be allocated 334,000

of which India quota 10,000

SPS quota for ACP 324,000

(*) In 1997/98 the SPS were 265,000 tonnes.

Source: Licht March 2, 1999:129

The European Sugar Regime. The EU sugar regime is a complex system which includes

production quotas, export restitutions or subsidies, price intervention mechanisms, im-

port tariff and tariff-rate quotas, quotas for sugar substitutes (isoglucose or corn syrup,


inulin), and regulations for preferential sugar (SP and SPS). In basic terms, each Euro-

pean country receives a production quota (Quota A) and a supplement (Quota B, a per-

centage of Quota A) cover domestic consumption and are paid at guaranteed prices. The

amount over Quotas A and B (Quota C) is exported to the world market or kept as carry-

over to the following year. Sugar analysts tend to agree that the transformation of the

European Union from a net sugar importer in the 1970s to one of the world’s top-three

producer/exporter in the 1990s was supported by this sugar regime, complemented by the

ample and profitable domestic market available and the increase in productivity achieved

in the recent past.

Table 7

EU Sugar Balance 1998/99

(in 1,000 tonnes, white value)

Initial Stocks

Free Stocks 893

Minimum Stocks 400

Blocked Stocks 1,195 2,488

Total Production A+B+C 16,477

of which A+B 13,099

Imports

ACP Preferential 1,305

ACP/India SPS 304

Other reduced levy 82

Canaries/Azores/Madeira 60

Others 35 1,786

Total availability all sugar 21,251

Consumption 12,700

Exports in processed goods 920

Final Stocks

Free Stocks 953

Minimum Stocks 400 1,353

Quota sugar available for export 2,900

Produced in excess of quota 3,378

Carry forward to 1998/99 1,000

To be exported (C-sugar) 2,378

Total sugar export availability 5,278

Source: EU Commission, 10.11.98, quoted by Licht January 04 1999:1

Reform of the EU Common Agricultural Policy. Analysts speculate that some of the

reasons why sugar was excluded from the Agenda 2000 were the low cost of the sugar

program and that the Commission looked to avoid unnecessary political complications if

the Agenda 2000 became an ambitious and large program for reform. The European Un-

ion understands that international and regional challenges demanded a reform of the

CAP, for instance:

a. the world market prospects are for a strong growth in demand and prices of-

fering a good rate of return but the current level of prices in the EU is too


high to take advantage of this expansion. “If this is not corrected, the conse-

quences are easy to predict: surpluses will appear again and stocks will start

to build up and create intolerable budget costs, (it) will gradually lose its po-

sition on both the world and internal market, (and) would have detrimental

effects on employment as well,”

b. the support given through the CAP “is distributed somewhat unequally and is

concentrated on regions and producers who are not among the most disad-

vantaged,”

c. the diversity of EU-15 agriculture is not reflected in what was a CAP de-

signed for a EU-6,

d. the future expansion of the EU,

e. the international trade negotiations in the WTO and bilateral trade agree-

ments demand that the agricultural policy should be laid out “in a way that

satisfies … (the EU’s) own interests and takes a realistic view of develop-

ments in the international context.” (European Commission.)

The reform of the CAP aims to create a new model for European agriculture, a

sector that would be “competitive without being over-subsidised,” that maintains the

diversity of agricultural methods, while introducing environment-friendly production

practices; and a sector where exists a clear relationship between the EU and its members

for purposes of policy decisions. Some measures already proposed include “sufficiently

large price cuts that will guarantee growth of home-market outlets and (the) increase …

(of Europe’s) participation in the world market.” It is proposed that the price cuts will be

replaced by direct aid payments to producers; that support will be given to sectors really

in need (i.e. to identify beneficiaries) and it is expected that a clear division of responsi-

bilities between Brussels and the member states will prevent abuse of the system. Sectors

such as cereals, wine, tobacco, milk and diary products, beef and veal, and olive oil, have

been included in the package and will be first targets for reform.

If the support prices are reduced in the mentioned sectors, and the methodology

and policy making changed, sugar can not expect to be too much out of line, being the

sugar regime criticized by industrial users. For instance, in 1998 the Committee of Indus-

trial Users of Sugar (CIUS) representing the European food and drinks industries submit-

ted a proposal to the European Commission to cut the intervention price for white sugar.

The CIUS argued that the intervention price has not been changed since 1994 but proc-

essing costs “in terms of labour and energy have decreased dramatically.” In reply, the

European Committee for Sugar Manufacturing (CEFS) said that the industrial users’

calculations were “full of mistakes” and that, on the contrary, an increase of the interven-

tion price “would not be unfounded.”

Although the larger context for the episode can not be fully described here, some

notes may outline how contentious the sugar issue could become: First, it is a common

practice for European sugar producers to keep factory-gate prices “a closely guarded

secret,” and the CIUS’s calculations may indeed suffer from some lack of information.

The fact is that various EU members have only one or two sugar companies operating in

and dominating the domestic market, and independent sources for reliable information

are not easy to find.

Second, the intervention price is not strange to corporate manipulation. In 1998

the European Commission imposed a $61 million fine to British Sugar, Tate & Lyle and

two large sugar traders for fixing prices for white sugar in the UK in the period from

June 1986 to July 1990. Tate & Lyle accepted the fine (they also helped the process by


volunteering two self-incriminating letters) while British Sugar, which received the larg-

est share of the fine and was identified as the “driving force” behind the cartel, said it

would appeal the decision. (Licht 1998:545)

There is also the political aspect. In Brussels on 21-22 February 1999 some

30,000 farmers from the EU-15 staged the largest demonstration of the past 25 years to

protest the proposed cuts of 30 percent in the guaranteed farm prices. The farmers in-

sisted that the cuts will reduce their income as much as 20 percent, will put many of

them into bankruptcy and drive people away from agriculture. The French agriculture

minister (France is where farmers have a very strong political influence) declared that

there would be no farm deal “without an agreement to cut into other EU subsidy pro-

grams.” The EU sugar regime may be a “low-cost” program - as some analysts say - and

may not be part of the initial reform of CAP, but how realistic is to assume that it will

remain untouched in the foreseeable future?

The Enlargement of the European Union. In 1992 the EU signed “association agree-

ments” with Poland, Hungary and Czechoslovakia (the latter being adapted after the

country’s separation into the Czech Republic and Slovakia), the three countries sched-

uled to be the first to gain accession to the EU. The criteria for membership was defined

in 1993, and in 1997 ten CEECs applied for membership: Bulgaria, the Czech Republic,

Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. After the

London Conference (1998) the accession program demands that the candidates adopt the

acquis communautaire, a massive body of EU legislation, to enable them to take part in

the internal market.

To understand the impact of the EU enlargement on sugar it would be necessary

a clear and detailed discussion of the sugar industries of the CEECs (as well as a more

detailed information on the EU sugar regime), that falls outside the present report. How-

ever, some lines of possible future conflicts, due to the EU enlargement, include the fol-

lowing: that sugar prices in the CEECs will have to increase in 30-50 percent if they are

to be compatible with the EU sugar prices (the risk of not increasing prices is that sugar

from the CEEC countries may flow into the higher-price areas of the European Union);

the CEECs’ sugar industries’ efficiency is lower than the EU (agricultural yields are

about 30-50 percent lower) and new investment may induce a rapid growth in produc-

tion: in that case the production quotas will have to be redrawn to control the CEEC

expansion, and the new sugar situation may demand a reduction in the EU intervention

price.

On the other hand, west European sugar companies are playing a key role in the

restructuring of the CEECs’ sugar industries. To mention only the first three countries

slated for accession:

Hungary: after a privatization process which began in the early 1990s, the sugar

industry is now 100 percent foreign owned and controlled by three companies: Eridiana

Béghin-Say (French-Italian), Agrana (Austrian, subsidiary of the German Südzucker),

and Eastern Sugar (a Dutch company, jointly owned by Tate & Lyle and the French Gé-

nérale Sucrière). It is expected that the number of factories will drop from 12 to 3 or 4

before accession to the EU. The 1998/99 production is estimated at 491,000 tonnes and

consumption is set at 424,000 tonnes.

Czech Republic: a consolidation process reduced the number of factories from

51 in 1991 to 19 in 1997, and will probably go down to 10 within the next five years.

West European companies include Agrana (Austria), Eastern Sugar (Netherlands), Su-

crière Distillerie de l’Aisne -SDA (France) and SDA/ZAG (Germany). Although produc-


tion is falling (estimated at 509,000 tonnes in 1998/99) is still higher than the internal

consumption (480,000 tonnes).

Poland has a large sugar beet industry where British Sugar and Tate & Lyle in-

vested in the early 1990s. In 1995 Pfeifer & Langen (Germany) entered the industry fol-

lowed by Südzucker (Germany) in 1997 but no major sugar project has been

materialized. Poland is a surplus producer (1998/99 production estimates are 2.18 mil-

lion tonnes against 1.8 million tonnes in consumption) but only a fraction of the exports

can receive government support (about 100,000 tonnes). Exports in calendar 1997 were

500,000 tonnes.

From the brief information provided (the restructuring in the sugar industries of

other central European countries is very similar) it is reasonable to expect that the

CEECs’ sugar industries will have to adapt to the EU conditions but, at the same time,

the latter will be transformed by the proposed reforms and the pressure exerted by the

new partners. The participation of west European sugar industries points to a strategy

that also sees the moving towards the east of at least a portion of their production facili-

ties, while capturing the new markets becoming available.4

How this movement will affect the future of the current Caribbean-EU sugar

structure? Probably an opinion from the corporate sector could help to bring the discus-

sion on the topic to a final note. Talking about ACP sugar and the EU, Patricia Jamieson,

Tate & Lyle Sugar EU and Raw Sugar Director, says that “a gradual trend towards freer

markets will… make it harder for developing countries to exercise privileged access to

the European Union.” She also emphasizes that the “ACP states must increase efficiency

and lower costs in order to stay in business because there will be downward pressure on

EU sugar prices and margins… (the pressure will) intensify when the World Trade Or-

ganization kicks off at the ends of 1999.” The EU sugar regime -SPS- will come up for

renewal in June 2001 and “is likely to be targeted by free trading countries.” Jamieson

adds that Tate & Lyle supports “a slow rundowns of the EU sugar regime and continua-

tion of the special preferential sugars (SPS) which would enable Tate to compete more

strongly and give ACP suppliers time to adjust.” Like other European refiners, however,

Tate & Lyle “is producing below capacity and… it could refine more sugar in a deregu-

lated market.” (Licht, November 24, 1998:606).

One piece of information to keep in mind is that for very practical reasons the

Caribbean sugar industries are linked to Tate & Lyle, their European refiner counterpart;

but T&L is only one among several west European sugar companies competing in the

same market: there is also Germany’s Südsucker, France’s Eridiana Beghin-Say, Britain’s

British Sugar, among others.

2. The Prospects in the United States Sugar Market

The U.S. preferential sugar market, as integral part of the domestic sugar program, is also

under criticism, specially from the industrial users and the refining sector. The U.S. do-

mestic sugar program is a complex system, similar to the European sugar regimen, which

comprises import quotas, guaranteed prices through a system of loans, re-export pro-

gram, etc.

4 The current restructuring in the west European sugar industries with large corporate mergers,

consolidation of production, etc. also points to increase production capacity by expanding to the

east: by comparison with western Europe, fresh capital investment could more easily improve the

eastern sugar agricultural and industrial yields..


The U.S. has had in place some system of import quotas since the 1930s (except

in 1975-77 period). The current U.S. sugar program originated in 1960, after the Cuban

Revolution, when the U.S. distributed the amount of sugar supplied by Cuba among forty

countries. In 1990, a tariff-rate quota (TRQ) replaced the absolute quota system to com-

ply with GATT regulations.

Under the present system sugar exports by quota-holders are allowed to enter the

U.S. paying only a low (first tier) tariff or at a zero-tariff (e.g., the Caribbean Basin Ini-

tiative countries). They also benefit from preferential prices, which are linked to prices

received by the domestic producers. The annual TRQ amount varies according to calcu-

lations made by the U.S. Department of Agriculture (USDA) on the domestic sugar bal-

ance. The TRQ is announced in September (the Fiscal Year runs from October to

September), when a first allotment is also assigned to each quota holder. There are three

possible increases scheduled for January, March and May of the Fiscal Year, which de-

pend on the USDA’s estimates of the domestic sugar balance. If the stock-to-

consumption ratio is 15.5 percent or less, the increase is automatically granted. The total

amount under quota is distributed on a percentage basis. The Dominican Republic (16.4

percent), Brazil (13.5 percent) and the Philippines (12.58 percent) are the three top quota

holders; the English-speaking Caribbean countries take on a 5 percent of the total. For

Caribbean sugar producers, the U.S. market is less important and pays less than the EU

(about 20 c/lb against 31 c/lb in Europe). (Table 8)

Table 8

U.S. Tariff-rate quota and Caribbean countries

1997/98 % 1998/99 %

Barbados 7,830 0.49 7,583 0.65

Belize 16,773 1.05 11,916 1.02

Guyana 18,298 1.14 12,999 1.12

Jamaica 16,773 1.05 11,916 1.02

St. Kitts-Nevis 7,258 0.45 7,258 0.62

Trinidad 10,672 0.67 7,583 0.65

Total Caribbean region 77,604 4.85 59,255 5.09

Total tariff-quota (1) 1,600,000 1,164,934

(1) 1997/98 total tariff-quota; 1998/99 initial amount announced in September 1998

The U.S. domestic sugar program currently faces two main challenges, one from

the internal front, the second external. Presented as a budget-neutral program, over the

years, the sugar program has had important consequences: first, by providing secure and

remunerative prices it has encouraged a continuos expansion of the continental sugar

beet and cane sectors; second, it has a negative impact on the importation of raw sugar

with the corresponding shrinking of the refining sector and, third, it has encouraged the

development of high fructose syrups as substitutes for sugar in industrial applications.

This process in itself has been a restructuring of the U.S. sugar and sweetener markets -

coupled with a corporate restructuring 5- in the 1970s and 1980s.

5 The corporate structure in the U.S. sugar and sweetener industries is complex. There are compa-

nies with interests in the sugar beet sector, the refining sector and the corn-based sweeteners.

Moreover, the corporate cross-linkages are becoming gaining in complexity: among the U.S.-based

companies and integrating companies with operations in the Canadian and Mexican sugar and

sweetener industries.


The domestic sugar program has come under scrutiny by sugar industrial users,

consumer groups, and the refining sector. These groups are demanding a meaningful

reform, if not the outright elimination, of the sugar domestic program. For instance, the

refining sector has seen the number of plants reduced from 14 in 1982 to only 6, and has

lost about 35 percent of the processing capacity: a relaxing on the import tariffs could

benefit their business. On the other hand, a budget-neutral program does not charge the

taxpayers, but consumers claim that they pay inflated prices for sugar, which some fig-

ures claim to be in the billions of dollars per year. 6

On the external front: the U.S. signed the North American Free Trade Agreement

(NAFTA) with Mexico and Canada to see trade barriers eliminated in a 15-year period. A

“side-letter” signed in the sugar sector modified some of the sugar provisions included in

the original accord. The sugar provisions deal fundamentally with the access of Mexican

sugar to the U.S. market, which is to be granted if Mexico achieves the status of a net-

surplus producer. The amount of Mexican sugar allowed into the U.S. will increase ac-

cording to the year of the treaty. Mexican producers now demand a 250,000 tonnes ac-

cess in year 2000, which will put the domestic sugar program and the TRQ system under

a lot of pressure.

In 1997 a trade dispute aroused around the importation of U.S.-produced High

Fructose Corn Syrup (HFCS) into Mexico. Mexican sugar producers submitted docu-

mentation that convinced the authorities that HFCS imports were in fact a dumping prac-

tice and, as a result, the government applied compensatory tariffs. The resolution of this

dispute will have important consequences for the sugar trade, given that the consumption

of HFCS is included in the calculations of Mexico’s net-surplus status (according to the

U.S. sugar industry), status on which it depends a greater access of Mexican sugar to the

U.S. market 7. The matter is still under consideration by both a NAFTA panel and the

WTO.

Yet another challenge to the U.S. sugar domestic program may originate in the

U.S. embargo on Cuba, which several U.S. groups call obsolete and anti-economical (for

the U.S.) Although the embargo is more a political rather than a sugar issue, it seems

reasonable to expect that some solution to present embargo will be found, specially when

considering the pace of the global political changes after the collapse of the Soviet Union

and the recent wave of foreign investment in Cuba. If the embargo ends, Cuban raw

sugar could easily find its way to the refineries in the U.S.

In 2001 the U.S. Farm Act is up for renewal. By then, the WTO talks will be in

their second year; the EU would have agreed on most of the CAP reforms while the

“screening” of CEECs countries for accession will be at an advanced stage; the EU -SPS-

sugar regime will be under negotiations; the Mexico-U.S. HFCS trade dispute may have

been resolved; and political developments would probably have pressed to find a resolu-

tion to the Cuban embargo. All these factors, and some others, announce already a very

6 Calculations on the “consumers’ overpayment” are based on the difference between the U.S.

internal price and the international free market price, which is multiplied by the total domestic

consumption of 10 million tonnes. For instance, with March 1999 values: the U.S. internal price at

22 c/lb, the international free market price at 7 c/lb, make a 15 c/lb difference or $330.6/tonne or

US$3.3 billion a year. 7 Part of the dispute about the sugar in NAFTA is the U.S. sugar industry recognizes the “side-

letter” as the legislation approved (passed on the U.S. congress), while the Mexicans say that the

NAFTA original sugar provisions are the ones to stand (and were approved by the Mexican con-

gress). The former includes the HFCS in the calculations of Mexico’s net sugar exporter, the latter

does not.


weak U.S. domestic sugar program, with a low support price for domestic producers and

therefore a low price for quota imports; while the tariff-rate quota may be reduced to an

inconsequential market in terms of prices, specially if the Mexicans are successful in

shipping the 250,000 tonnes a year they demand. In this U.S. sugar scenario, once again,

the Caribbean sugar industries have a limited role to play.

3. Prospects under the World Trade Organization (WTO)

It may be somewhat strange but, probably, the best news for the small Caribbean sugar

industries, that depend so much on export markets, may come from the talks in the World

Trade Organization (WTO). It may sound strange because the WTO, an organization that

has as its final goal the furthering of free international trade, may provide some possibili-

ties for the Caribbean sugar to secure a preferential market (in terms of prices and vol-

ume). To explain this possibility, we need to recapitulate what happened to sugar during

the negotiations of the Uruguay Round of the GATT which preceded the WTO.

It has been said many times that the agreements under GATT (applicable since

January 1st 1995) did not affect the fundamentals of the international sugar industry; in

part because some of the major sugar players (EU, the U.S. and Japan) were able to pre-

serve their sugar programs unchanged. However, the GATT did introduce some changes

that may affect the sugar position of a given country, and may allow for the modification

of some national policies. The main GATT decisions on agricultural products were:

a- all non-tariff measures (as the sugar absolute quotas) will become tariffs, and

the latter will be reduced by 20 percent in the 1995-2001 period; developing

countries will reduce their tariffs by 24 percent;

b- agricultural imports will have a minimum market access of 3 percent of the

domestic consumption (will raise to 5 percent in 2000/2001), it will be pos-

sible, however, to introduce some special protection mechanisms in favour of

domestic producers in some exceptional market circumstances;

c- the domestic support will be reduced by 20 percent (13.3 percent for devel-

oping countries), with some exceptions like the EU accession programs and

deficiency payments to producers;

d- subsidies to exports will be reduced by 36 percent (in value), 21 percent

(quantity).

Effectively, to comply with the GATT agreements the European Union intro-

duced changes in its sugar regimen: First, a variable system of tariffs on agricultural

imports became fixed tariffs, that will be reduced by 20 percent by year 2001 (3.3 per-

cent annual); however, the EU producers are able to benefit from a protection mechanism

if the international prices fall below a certain level or the imports raise above a given

volume (for instance, the protection mechanism was applied to the importation of sugar

molasses in 1998). Second, the subsidies to agricultural exports (EU sugar exports) are to

be reduced, although the effect of the reduction is eased by the EU quota structure where

quotas “A” and “B” are profitable enough as to prevent major losses by exporting quota

“C”. In what concerns to the Caribbean sugar industries, the LSP and SP amounts fall

within the minimum market access granted by the GATT, and as such they are not open

to challenges. The pressure will come from the internal developments like the reform of

the CAP and the EU enlargement, as explained earlier.


In the case of United States, the main commitments under GATT were to a

minimum importation of 1.134 million tonnes of sugar per year; a gradual reduction of

the second-tier tariff; and a reduction of 20 percent in the domestic price support. In real

terms, the U.S. sugar tariff-quota has been set above the guaranteed minimum of market

access; the reduction of the second-tier tariff (which makes out-of-quota imports prohibi-

tively expensive) is of significance only if international prices were to stay consistently

below the 6 c/lb mark (by year 2001 the second-tier tariff will be 15.36 c/lb); and the 20

percent reduction in domestic support is applicable to a large group of agricultural com-

modities, therefore the sugar support price (about 18 c/lb) remains largely unaffected.

Also, the import quotas became amounts under the “tariff-rate quota” which are covered

by the minimum market access. As in the case of the EU, the pressure on the sugar do-

mestic program comes from the interests of other domestic sugar groups and from devel-

opments in the regional integration (NAFTA and Mexico).

Sugar analysts coincided that the GATT Uruguay Round left the industry virtu-

ally untouched 8, and some groups have proposed what may be described as the core

aspects of a liberalization program for the international sugar industry:

1. The gradual reduction of high domestic support prices with the substitution,

as necessary, of direct, decoupled compensation payments;

2. Parallel reduction in tariffs;

3. The progressive elimination of export subsidies;

4. The progressive elimination of import quotas;

5. The freeing up and eventual elimination of production quotas;

6. Safeguards for the interests of existing preferential suppliers; (specially the

small economies with sugar industries that may not survive an open market

competition. It is recommended technical assistance to improve infrastruc-

ture and increase their competitiveness. In some cases it may be possible to

budget resources for international cooperation or introduce special clauses

for subsidies within the WTO;9) and

7. A level playing field with other sweetener.” (IPC 1996:15, parenthesis

added.)

These policy recommendations were proposed by the International Policy Coun-

cil, a Washington DC-based think-tank supported by major corporations in the sugar and

food industries. Six of the seven recommendations will do away with preferential mar-

kets, as they reduce domestic supports and eliminate production and trade barriers to free

trade and the allocation of resources based on competitiveness. However, one of them

8 For the majority of countries, the impact of the GATT agreements relates to the percentage of the

domestic consumption to be covered by imports and the starting level of the fixed tariffs. The

World Association of Beet and Cane Growers says that around 20 countries presented a tariff quota

at a low or zero rate duty, and, most likely only these countries will see some reorganization of

their international sugar trade (depending on volume, prices, etc.) under GATT. For the great ma-

jority of countries, the GATT agreements on imports will have no real impact on their sugar indus-

try. Additionally, in 1997 close to 40% of the world sugar imports were bought by non-WTO

members such as China, Russia and Saudi Arabia. 9 “The Cuban experience, says IPC, following the collapse of the Soviet Union has shown what can

happen to developing sugar exporters when they are deprived of access to markets at preferential

prices. Even without a change in the Lomé Convention’s Sugar Protocol, ACP sugar producers

would suffer a similar fate if the EU were to lower its support prices to world market levels.” It

adds: “liberalization ought not to be achieved at the expense of those existing preferential suppliers

who would suffer substantially as a result.” IPC 1996:17


directly addresses the “existing preferential suppliers” - like the Caribbean sugar indus-

tries - and proposes that their interests need to be protected. Whether or not the model

implied in these policy recommendations will guide the WTO talks is to be seen. The

WTO has scheduled its ministerial meeting in Seattle, Washington state, U.S., from No-

vember 30 to December 3, 1999, and delegates from 134 WTO member countries will be

in attendance. The meeting will launch the WTO global trade negotiations to further

market liberalization.

After exploring the challenges for the Caribbean sugar in the context of the changes that

the EU and U.S. markets are, and will continue, facing in the future; a favourable pro-

posal appears with the possibility of protecting small economies and traditional preferen-

tial suppliers from an open market competition. This reinforces what the EU and the U.S.

have already negotiated under the GATT in terms of minimum market access and it may

gain the approval of the WTO itself. This is still a possibility and the actual agreement

will depend on how the negotiations are conducted. If they are successful, new matters

are to be considered: how and up to what level such support will be determined and

granted; what methods will be used to transfer the resources; what institutions will be

involved in the decision-making and implementation of the development programs; for

how long the agreement will be in place, etc.

In the short run the Caribbean sugar industries will continue to enjoy the benefits

of the preferential markets (better chances in the EU than in the U.S.); but, at the same

time, the long-term future of such markets is uncertain. Whether the Caribbean industries

will able to use this secure period to streamline production, as suggested by Tate &

Lyle’s Jamieson, and become more competitive by receiving international aid, as pro-

posed by the IPC, are questions still to be answered.

The small regional Caribbean market could become the “domestic” basis for one

or two of the national industries. At present, sugar imports from countries outside

CARICOM pay a 40 percent tariff, while intraregional trade are tariff-free. Guyana is the

only country benefiting from the regional market: in 1997 it exported 20,000 tonnes to

CARICOM destinations. All six sugar producers are members of CARICOM, which also

has, as observers, other important sugar producers such as the Dominican Republic, Co-

lombia, Mexico and Venezuela. 10

10 A brief note on free trade bilateral/regional arrangements. The WTO has been informed of the

existence of some sixty free trade agreements. The trade liberalization developed by some partners

is normally matched by the exclusion of non-members from the benefits, with the imposition of

common external tariffs. What is somewhat puzzling in these arrangements is that sugar, among

other “sensitive” products, is usually excluded from the negotiations, it is given the full period of

implementation of the treaty to adjust or it is placed under “special” agreements. However, as the

trade liberalization progresses, sugar comes under pressure and the industry finds itself through

difficult negotiations with very little preparation. This has been the case of sugar in Mercosur, the

side-agreement between U.S. and Mexico in NAFTA, the “gentlemen’s pact” between U.S. and

Canada, to mention only a few cases known to the author. All of these resulted in trade disputes,

with a shaky legal framework to help discuss the issues at hand. The practice seems to continue:

the EU’s free trade talks with Mercosur and Chile, with Mexico, and with South Africa have ap-

parently excluded sugar. The Dominican Republic’s talks with CARICOM and some Central

American countries did the same.


IV. Towards a Workers’ Common Position on the Future of the Carib-

bean Sugar Industry

Working towards a workers’ common position on the future of the English-speaking Car-

ibbean sugar industries needs to incorporate economic and historical facts which operate

at different levels. The first is the international sugar industry intertwined with the politi-

cal negotiations in the context of free trade talks (WTO and other arrangements), which

directly influence the social and economic role the industry plays at the national level.

The second is the micro level, a look at the industry and changes from the workplace.

1. The Context of the English-speaking Caribbean Sugar Industries

At the macro level (international and national), the Caribbean industries’ fundamentals

and future challenges could be summarized as follows.

First, with a small economic basis and small population and domestic market, the

Caribbean sugar industries face great limitations to take advantage of economies of

scale; the export-oriented sugar economy makes their survival dependent on adequately

accessing preferential foreign markets (in volume, prices and long-term duration). Such

preferential markets (the EU and the U.S.) found some protection under the Uruguay

Round of the GATT, and may probably be considered by the WTO; but internal devel-

opments are changing the rules for the domestic sugar industries in those same markets.

It should be expected that this will create a negative environment for a continued prefer-

ential treatment and remunerative prices given to foreign sugar.

Second, given the transformations of the international sugar industry and the

movement towards a freer trade environment, the Caribbean sugar industries need to

restructure themselves and become more efficient. All the industries in the region have

plans to cut their costs of producing sugar and modernize production (but they are also

aware that restructuring will not be sufficient if it is not accompanied by access to for-

eign markets.)

Third, the regional industry has been dependent not only on preferential markets,

but also on governmental subsidies and state intervention, due to the weight that sugar

carries in those countries (as an important employer, a foreign exchange earner, etc.)

When it comes to decide the use of scarce resources (economic and otherwise), sugar is

losing the privileged position it held in the past and now faces competition from other

sectors (like tourism). This competition affects the capital and labour markets and the

allocation of land. Besides, the state has always had a strong participation in the sugar

industry, making the political component not only important but also difficult to handle.

Four, beyond their historical, economic and social similarities, the six English-

speaking sugar industries seemed to be going through a moment of differentiation. The

future appears differently to the countries involved: Guyana and Belize have found a

relative stability and their expansion plans seemed well grounded; the industries in Ja-

maica and Trinidad face serious challenges to continue at the level they used to be; and

Barbados and St. Kitts seem to have accepted sugar in a more limited role in their

economies.11 In these circumstances, general policies may have different results for the

11 In the recent past four Anglophone Caribbean islands ceased to produce sugar: Antigua, Gre-

nada, St. Lucia and St. Vincent. The historical trend favouring the relatively more efficient produc-

ers is also at play in the present times.


individual countries and industries involved, as it is demonstrated when one country

defaults on its sugar deliveries under quota and the benefits are transferred to others. In a

more general perspective, the challenge to maintain and improve the regional sugar in-

dustry is summarized by Kusha Haraksingh, ex-chairman of Caroni Ltd. and president of

the Sugar Association of the Caribbean, when he says that the viability (of the sugar in-

dustry) is “a goal still to be achieved rather than an accomplishment safely in the bag.”

(Haraksingh 1998:64.) For a regional industry that is several hundred years old, this is a

very strong statement.

2. Sugar Workers’ Concerns and Actions

Foreign markets will always be a major concern, even though the Caribbean countries

have little influence and control over them. To achieve the much sought viability, the

industries need to become more efficient producers (reducing the cost of production) and

to utilize resources wisely (deciding on production targets). The former is the main drive

in the restructuring of the Caribbean sugar industries, around which other factors re-

volve: the consolidation and rationalization of production, the modernization of field

and factory practices, mechanization, ownership and control, etc. (Information on these

topics is presented in Chapter II.)

The workers’ concerns, as understood by this report, appear at three different

levels, which the case of Caroni (1875) Ltd. in Trinidad helps to identify:

The union -says ATSGWTU’s Battlefront - is faced with many challenges, the

foremost being the survival of Caroni (1975) Ltd., which employs more than 80

percent of the union’s membership. The prospects for the future of the sugar in-

dustry is not anything to shout about, and the biggest challenge ahead for the

new leadership of the union will be to find ways and means to make the company

viable.” And it adds: “New technologies and new developments will involve

training and re-training on an on-going and sustained basis. Skills development

of both the sugar company and the union will be crucial. (ATSGWTU’s Battle-

front, Nov./Dec. 1998:2)

Caroni has also the experience of the Tripartite Committee organized in 1992

and comprised by representatives of government, workers and farmers. It submitted an

unanimous report with recommendations on how to place the industry in the path of re-

covery and financial independence. The committee was an exercise in democratic par-

ticipation with the involvement of all main stakeholders in the industry. On the other

hand, the agreement of these groups regarding the report’s recommendations spoke

highly of their ability to negotiate and to reach a consensus on the steps to ensure the

industry’s future. The Trinidad experience also indicates three levels of workers’ partici-

pation: first, the workplace; second, the industry and its future; third, democratic partici-

pation. We now turn our attention to each one of them.

Workers in the workplace. Unions and workers have to be able to actively participate in

the industry: Battlefront mentions training in the workplace, but the list of activities can

easily be extended to include: access to information, ongoing analysis, organization,

participation in the decision-making process, etc.

The information on the restructuring of the industry presented in Chapter II (e.g.,

consolidation of production in field and factory, mechanization, labour productivity and


practices) outlines a basic challenge for unions and workers: why and what changes are

being introduced in the workplace and how can they to be confronted?

Sometimes the modernization of labour management practices is an improve-

ment of obsolete and antiquated customs, as in Barbados where records on the date when

workers started their service was difficult to come by. In other cases, it is an opportunity

to improve labour practices and working conditions, like the raising of the minimum

wage in Guyana or the proposal to grant a permanent/seasonal status to the so-called

“temporary” workers in Trinidad. There are also the cost-cutting measures: the consoli-

dation of the Barbados highly indebted plantations under central management allow for

an easier decision on the use of labour force within the several production units; or when

is proposed that Caroni’s units be restructured individually.

The question of mechanization is similar. Even though in Guyana mechanization

is not expected (due to the special configuration of the cane lands and the quality of the

soil); in four other Caribbean countries mechanization is pursued by the industries. The

consolidation of industrial capacity is a related issue: closure of mills is being proposed

in Barbados and Guyana, and may be also probable in Jamaica. Other issues also appear:

training, social benefits, evaluation, job classification, etc.

Unions and workers need to be able to anticipate such movements and be pre-

pared to face them in a way that minimizes human dislocation and suffering.12 The re-

structuring process will modify the general context for labour: in recent years all

Caribbean industries have proposed to stabilize sugar production at levels higher than the

present ones (although lower than in the 1950s), even though employment is not expand-

ing: less workers will have to produce relatively more. The reverse is, as analysts say,

that labour productivity could bring higher salaries for the workers that stayed employed.

Workers and the future of the industry. Although Caroni’s own survival is probably at

risk (making this an extreme case), the concern of workers and unions with the future of

the industry is a key factor in any union strategy in the Caribbean sugar industry of

today.

In the Caribbean sugar represents a “way of life and a culture” or is part of “na-

tional psyche,” in a clear reference to sugar’s long history and economic importance.

Due to the same conditions, it is not an easy task to find practical and viable alternatives

to the sugar industry, specially when considering employment generation and the support

to the lives of entire communities.

The Caribbean economies are transforming themselves (and being transformed

by external developments) and the long-term viability of the sugar industry is at stake, at

12 A striking example of the need for workers to anticipate and be prepared for transformations in

the workplace was witnessed by the author during a visit to the sugar industry of Guyana in March

1999. On March 20 workers at the Albion/Pourt Mourant and the Rose Hall sugar estates went on

strike to oppose the move of the state-owned Guysuco to impose the “two estates - one production

target” in the sugar estates. The estates, which are geographically near one another, merged the

upper management in order to make the cane processing and sugar production more efficient:

according to need the cane could be transported to either factory, and in the near future, it is also

possible that production resources (including labour) would be moved according to needs. The

workers opposed the “single target” because they considered that the system would result in in-

come losses; while the company claimed that, on the contrary, the system will improve the work-

ers’ gains. The episode showed the need for workers and unions to anticipate such developments,

but also the urgency to have an informed analysis of the actual situation and future perspectives

and the ability to articulate negotiating positions. The amalgamation of two other estates in 1997

(Enmore and La Bonne Intention -LBI) elicited no opposition from workers and unions.


least in its present configuration: the competition for land between the sugar industry

and tourism in Barbados is one instance of this new reality. In the larger Caribbean area

the fact that sugar lost its privileged position as the major foreign exchange earner to

tourism in Cuba, speaks volume of the transformation of the Caribbean economies. Not-

withstanding, sugar continues to be a sector that controls important economic national

resources.

It is difficult to conceive any Caribbean government as willing to follow a radi-

cal course and proceed to dismantle their sugar industry, even if it is done under a great

financial pressure. This radical measure was proposed by the consultant firm PriceWa-

terhouse as a possible solution to Trinidad’s high-cost sugar industry; however, as the

Trinidad government’s reaction showed (also the more recent case of the Jamaica gov-

ernment), it is much more probable that Caribbean governments will continue to support

the industry and hope for a longer transition period, rather than to implement such a

traumatic measure.

An additional factor is that the restructuring process, as discussed earlier, is still

a very fluid process where no irreversible decision has been taken: for example, the pri-

vatization process has been halted in Guyana, failed in Jamaica, and found a workable

alternative in Belize.

What is the workers’ position regarding the future of their own industry? Being

sugar the source of their employment, sugar workers with no doubt will be inclined to

protect the industry; nonetheless, to what extent such protection could and will be

granted and what future configuration is sought, are questions that have no clear answer

yet.

Workers and Democracy. Unions and workers need to be active part of a much larger

grouping, they need to talk and negotiate with other national sugar groups and, by

extension, workers and unions have to articulate their concerns in national and inter-

national forums where decisions that affect the industry are taken.

In island-economies like the Caribbean countries more than in any other sugar

industry around the world, the need to create consensus among the sugar groups is im-

perative. Additionally, given that the state has a participation in all six English-speaking

sugar industries, it is difficult to leave aside the political aspect of the industry.

The workers have to articulate their proposals on how the goal of becoming more

efficient producers is to be achieved or how the industry’s legitimate aspiration to con-

tinue benefiting from preferential market arrangement is to be ensured. At the same time,

however, they need to propose how the effect of the rationalization of production is to be

mitigated and social and human dislocation to be avoided, or how the benefits from the

preferential markets are to be shared by all the sugar groups and the society as a whole.

For instance, if to become a more efficient producer means to reduce the cost of produc-

tion anywhere from 25 to 40 percent, workers should not be expected to carry the burden

of the rationalization and streamlining of production. A solid recovery program needs to

be negotiated and agreed upon by all groups in the industry groups and the state. Of

course, this is always easier said than done.

International (and very often national) talks are dominated by the free trade ide-

ology and economic liberalization programs in the context of the WTO negotiations. The

WTO is a government-only organization, and as such it does not recognize the participa-

tion of third parties or civil society organizations. However, this should not preclude

attempts by workers and unions to influence their own governments’ trade negotiating

positions and, secondly, as the failure of the recent talks on Multilateral Agreement on


Investments (MAI) in 1998 shows: international bodies are not invulnerable to the pres-

sure exerted by civil society institutions and the international public opinion.13

V. Conclusion

The English-speaking Caribbean sugar industries share many common features and long-

term concerns; but they are also in the midst of a restructuring process which may result

in a structural differentiation. The industries were designed to export most of their pro-

duction and have received substantial benefits from preferential markets in the European

Union and, to a lesser extent, in the United States. Their long-term survival depends on

continuing to have access to preferential markets, a difficult task in an international sugar

industry which is redefining its fundamental aspects in terms of production, consumption

and trade patterns.

The international free trade negotiations under the Uruguay Round of the GATT

confirmed a guaranteed minimum market access, which covers the sugar quota amounts

in both the EU and the U.S. Nonetheless they are also at the verge of modifying their

farm policies, which will probably exert negative pressure on the continuation of any

preferential treatment enjoyed by foreign products, like the Caribbean sugar. That kind of

challenges are based on the concerns of some domestic sugar groups (industrial users,

consumer organizations, etc.) and on economic developments and integration processes

(e.g., EU enlargement, U.S.-Mexico in NAFTA) over which the Caribbean sugar indus-

tries have little influence.

The changes in the international sugar industry relate to the restructuring of the

Caribbean sugar industries: the drive to reduce costs of production and become more

efficient is matched by the transformations and changes in labour practices, the consoli-

dation of production, changes in the ownership and control of the industry, etc. Although

the restructuring has been implemented since the early 1990s, the process is still in a

very fluid state and by no means has been completed or its goals fulfilled; this is spe-

cially true in reference to the ownership and the privatization of the industry.

In this context, workers and unions need to participate in the discussion about

the future of the sugar industry, in part because the prominent place occupied by the in-

dustry in the region and because it is the source of their employment and well-being.

Workers have to be active at various levels: at the workplace, and at the national industry

and at the international level. For the workers to be able to respond to these challenges,

they need to develop some basic activities: networking and contacts (regional and inter-

national); information, research and analysis; education and training; organization for

collective bargaining and political participation. Hopefully, this report will contribute to

the larger process by which workers in the English-speaking Caribbean sugar industries

will be able to find common grounds on what to build a coherent workers’ voice at the

national and international levels.

13 The talks on the Multilateral Agreement of Investment (MAI) failed due in part to an energetic

campaign of non-governmental and civil society organizations which publicized the negative im-

pact on the society as a whole of allowing a free movement to the financial capital. The public

opinion was a key factor in halting the MAI. In the same line, an important issue for workers and

trade unions in the international free trade talks is the so-called social clause that links the compli-

ance with some ILO labour standards to international trade. The WTO has said the topic is a matter

for the ILO. The question deserves a more substantial discussion, not possible to develop here.


VI. Addendum: An Update on Jamaica: March 1999 to February

2000

In October 1998, almost at the starting of the 1998/1999 harvest, a private sector consor-

tium comprising the local distillery firm Wray & Nephew, the Merchant Bank of Ja-

maica, and the British company Tate & Lyle (and Booker Tate with a managerial

contract), decided to sell back to the government the 51 percent stake it held in the Sugar

Company of Jamaica (SCJ), at the price of J$1.00. The consortium had acquired the SCJ

majority stake in 1994. Of course, the transaction meant that the government actually

bought a multimillion dollar debt in order to keep the company and the national sugar

industry running, giving that SCJ controls about 70 percent of the country’s sugar pro-

duction.

The results of the 1998/99 harvest, which ended in late June 1999, were disap-

pointing as the industry reached 205,000 tonnes of sugar, below the targeted 220,000

tonnes. Poor results had been expected given the state of the cane fields after a drought

and the difficulties the farmers had faced to realize new investments. As an instance of

the kind of problems, an acute shortage of cane was felt towards the end of the harvest

cycle, a shortage that the industry estimated as costing J$300 million (US$6.6 million) in

lost production. Additionally, the fact that the private sector consortium had left the SCJ

spelled disaster for the industry. Nonetheless, in the midst of the crisis, several sugar

groups agreed that the same poor harvest results, seen from the appalling and critical

situation, had been acceptable and that, equally important, a major social catastrophe had

been avoided.

The government confirmed its intention to rescue the industry by middle of the

1998/99 harvest, following its announcement of a US$100 million rehabilitation pack-

age. In March 1999 a 65 million euros loan, negotiated with an European consortium of

banks, was guaranteed by the government. Repayments on the loan were to be made

from the sales of sugar to the European Union under the Lomé Sugar Protocol (the regu-

lar sugar quota and the Special Preference Sugars). It was said, at that moment, that the

fresh money would finance the replanting of cane fields and the rehabilitation of facto-

ries. The government’s concerns in the sugar industry and its commitment to its survival

has been expressed in many occasions, and by several officials who, in different posi-

tions, have faced criticisms - which have become common among certain Jamaican

groups - that the sugar industry has no reason to continue operating in the country at

costs that are three or four times higher than those of more efficient sugar producers

world-wide

The workers’ participation in the 1998/99 harvest was also important. Roger

Clarke, Minister of Agriculture, in the opening address to the Fourth IUF-Sugar Workers

Seminar (Kingston, July 21-23, 1999) said that while companies can move in and out

from the industry, the workers have “something at stake here,” since they have few

chances of mobility and have to stay in the industry. In fact, after the October 1998 "buy-

back" of the SCJ, the harvest had become a joint effort of the government, cane growers

and workers; and the latter helped to greatly improve industrial relations, moving away

from their traditional conflictive nature.

Recent Developments in the Sugar Industry of Jamaica

In the twelve-month period from March 1999 to February 2000, some elements of sugar

policy have been implemented by the government, among them:


Loans to the Sugar Industry: Improving the March 1999 loan, in January 2000 the gov-

ernment guaranteed a loan for 84 million euros (1US$=1.03 euros) in favour of the Agri-

cultural Credit Bank and destined for the sugar industry. According to reports, the loan

has four components:

(a) 50 million euros to replace the outstanding balance of the original 65 million

euros loan;

(b) 11 million euros loan backed by the Export Credit Agency (ECA) to provide

financing for new equipment, to increase sugar cane cultivation and increase sugar pro-

duction;

(c) a 20 million euros revolving, short-term credit for working capital invest-

ments; and,

(d) a 3 million euros to provide financing for a non-ECA backed loan.

It is expected that cane farmers, specially, and factories, will now have access to finan-

cial resources to improve their agricultural practices. At some point during the prepara-

tions for the 1999/2000 harvest (October 1999), some cane growers threatened with

boycotting the crop as their regular financial conditions had been altered, and they were

to lose the credits that enable them to prepare for the start of the season.

Increasing Domestic Prices and Import Tariffs: By early July 1999, the government au-

thorized an increase in the domestic sugar prices, bringing them to the equivalent of US

21.8 cents/lb for brown sugar, and 25.4 cents/lb for refined sugar. The government said

that no price increase had been made since 1995, and the Minister of Finance announced

that the extra revenues, related to the price increase, would amount to J$42 million in the

1998/99 cycle and J$275 million in 1999/2000. In October 1999, the government passed

legislation imposing a 40 percent custom duty and a 63 percent stamp duty on imported

refined sugar, to protect the local industry and prevent competition from foreign sugar.

Improving Agricultural Practices: There seems to be some attempts at improving the

field operations, among them: a proposal to shorten the harvest season - which would

also depend on the factories’ capacity and performance -; an attempt to reduce the time

elapsed between the cutting and the processing of the cane, which in some cases involves

a 5-day waiting period (during which the cane losses quality and affects negatively the

factory’s performance); a strong - and old - recommendation from the sugar technicians

to increase agricultural yields by about 10 percent (from averages of 68 tonnes per hec-

tare to 75 t/h) while maintaining a good quality cane as measured by the Jamaica Recov-

erable Cane Sugar Index (JRCS); and, in what seems to be an innovation, the West End

Cane Farmers Association formed a central harvesting committee, with the goal of over-

seeing that the cane reaches the factory within 24 hours of harvesting. Benefits of this

latter work would be known during the current harvest. (As well, farmers and the gov-

ernment are concerned with the traditional - and negative - practice of illicit cane fires,

which obliges the factory to take cane, which might be either of poor quality or at an

untimely and unplanned moment.)

The Situation of the Sugar Estates: There are eight sugar estates in Jamaica, enterprises

which have a mill and cane fields. Six of them are depended on the government either as

a state-owned company, like the Sugar Company of Jamaica, or depend on heavy finan-

cial government support like ex-Tropicana, Hampden and Long Pond estates. Interest-

ingly enough, sugar reports say that the remaining two, Appleton and Worthy Park


estates, both privately owned and run, are the only ones being profitable at present. Re-

portedly, the Appleton factory can produce up 28,000 tonnes of sugar and 10 million

litres of rum per harvest, even though it produced slightly over 20,000 tonnes in 1996/97,

and suffered a dramatic drop to 5,600 tonnes the following year, according to figures

from the Sugar Producers Federation. Some Jamaican sources like to say that Appleton

ranks among the most modern sugar factories in the Caribbean; while Worthy Park (pro-

duction of 24,000 tonnes in 1997/98) is reckoned as a “model of efficiency.”

The state-owned Sugar Company of Jamaica, controls three factories (Frome,

Monymusk and Bernard Lodge) and was “bought-back” by the government in October

1998. It is the largest sugar producer in the country and accounts, as mentioned above,

for about 70 percent of the national sugar output. In a way, the SCJ greatly influences the

performance of the whole industry. For the 1999/2000, according to one official, the SCJ

should not “do worse than last year” and should maintain the 1998/99 production levels.

The ex-Tropicana Duckenfield estate was put under receivership because of its

heavy debts in 1997. It received government financing amounting to close to J$190 mil-

lion and, according to the local press, still owes some J$ 80 million to the government in

unpaid “statutory deductions.” Reportedly, during the receivership period, the govern-

ment attempted to divest it, evidently without success. Nonetheless, the government con-

siders that the factory is important to the social and economic stability of the local area

and has decided not to close it. In late December 1999, the estate was transferred to the

newly government-formed St. Thomas Sugar Company Limited. The estate provides

employment for over 700 workers, produced close to 8,000 tonnes of sugar in 1998 and

is listed with a 1,200 tonnes of daily crushing capacity.

A similar process might be in store for Hampden estate presently under receiver-

ship with Pricewaterhouse and said to be ready for sale before May 2000. Hampden is

scheduled to start the 1999/2000 harvest in late February and expects to produce 9,000

tonnes of sugar. Pricewaterhouse representatives said that extensive work has been done

to the distillery, and, to a lesser extent, to the factory building. As in the case of the ex-

Tropicana estate, Hampden is also important to the local economy and society, with 650

direct jobs and many cane growers supplying cane to the mill. Press reports estimates the

estate’s total debt with the National Commercial Bank at over J$ 500 million. No much

detailed information is available on Long Pond (production of 12,000 tonnes of sugar in

1998), except that it expects a late start in the 1999/2000 harvest (postponed to March

from the usual January start) due to repairs. Workers at Long Pond, some reports say,

should expect a reduced number of hours of work, as the estate faces serious financial

difficulties, as the rest of the state-owned or, in this case, the heavily state-financed sugar

estates.

Reducing the Cost of Production: The goal of becoming competitive is well entrenched

in the minds of the Jamaican sugar groups. Government officials insist that the cost of

production must be reduced from the current 33 cents/lb to 18 or 19 cents/lb in the next

four years. It is expected that the measures taken will give the industry a chance to

achieve such goals, beginning with sustaining production at the 220,000 tonnes in the

1999/2000 harvest (the same target as the previous year) and then increase it to 300,000

tonnes the following season.

The Commitment of the Workers: In the midst of the crisis, the Bustamante Industrial

Trade Union (BITU), the National Workers Union (NWU) and the University and Allied

Workers Union (UAWU) negotiated and signed a 2-year collective with the Sugar Fed-


eration, which represents the employers. The agreement covers more than 7,000 sugar

workers in the eight sugar estates and was signed on January 31, 2000.

The agreement calls for a 5 percent increase in Year 1 and another 5 percent in-

crease in Year 2 in all basic, daily and task rates. The number of rate categories will be

reduced no later than December 31, 2000. Also agreed is a production bonus of 5 percent

of the gross crop earnings in Year 1 and 7.5 percent in Year 2. Other provisions include

clothing allowances, an increase in the group life insure coverage, and that workers who

work 66 percent of their allotted days during the crop will qualify for guaranteed em-

ployment out of crop. The estates will give priority to employees before utilizing the

services of outside contractors, and a training program will give workers the opportunity

to acquire or upgrade their skills. It is also agreed to improve the communication be-

tween workers and employers through consultative committees at the factories.

An important achievement is the offer to build 5,000 houses for sugar workers in

the next five years. It is said that three out of every four sugar workers do not own a

house. The sugar estates, the unions and the government, through the National Housing

Trust (NHT), agreed that the estates will provide non-sugar lands to be developed into

urban areas, and the NHT will provide affordable mortgages. The first 1,000 houses are

to be built beginning February 1st.

When the collective agreement was signed, trade unions leaders said that they

had agreed to the wage increases under pressure, and only after taking into consideration

the poor state of the industry. The sugar producers said that the agreement will cost them

J$245 million. Some groups from the Jamaican society hailed the agreement as a “crea-

tive” way to ensure material gains for the labour sector in an industry which, as sugar, is

going through a very difficult moment.

Perspectives

Whether the Jamaica sugar industry will be able to overcome the current obstacles is still

to be seen. What the period from October 1998 to the time of writing (February 2000)

reveals, however, is the different way in which the several groups involved in the sugar

industry can and are able to react to basic (survival) questions: While the companies

might be able to take a loss and move away from evident difficult environments; the

government, the cane growers and workers, face the same adversities somewhat differ-

ently: they have little choice than to stay in the industry and try to overcome the obsta-

cles.

For a government in a society where sugar accounts for so much (it is said that

35 out of the sixty electoral districts in Jamaica heavily depend on sugar), the survival of

the industry is crucial for its social and political stability. When the government guaran-

tees the loans for the sugar industry or proposes solutions for the continuation of the ex-

Tropicana estate under a new government-formed company (which seems to be a prob-

able future for Hampden as well), it clearly indicates a political will (and decision) to

allocate scarce resources to an evidently troubled sector, against criticisms from groups

that declare the economic and financial impossibility of a sugar recovering in Jamaica.

The estimated 12,500 cane farmers (some sources cite figures as high as 20,000

farmers) have little mobility out of sugar; they are, after all, involved in what is a long-

term investment in their cane fields. As some point, during the preparations for the

1999/2000 harvest, farmers’ representatives declared “it is now or never” for a real im-

provement in the farming sector. Even though it is probable that similar dramatic state-


ments have been made in the past; the present times are demanding and farmers can eas-

ily read the writing on the wall.

In the March 1998 collective bargaining, previous to the one completed in Janu-

ary 2000, the sugar unions started negotiating with a 90 percent wage increase demand,

which eventually became a 20 percent wage increase. This time round it is a 5 percent

wage increase, to be repeated in the following year. As economic conditions have hardly

improved for the common Jamaican citizen in the recent past, the trade unionists recog-

nized that the wage increase gives little economic compensation to the workers, but as

housing benefits are part of the new deal they partially mitigate the negative economic

impact on the workers’ situation. Workers have not only showed their commitment in

bringing the 1998/99 harvest to completion, but have shown that they also are ready to

bear some of the economic brunt implied by the recovery of sugar production in their

country.

With the policy measures recently implemented (availability of financing, in-

creasing the domestic prices, protection against imports, etc.) the Jamaica sugar industry

may have the opportunity to hold production at the 1998/99 levels in the current

1999/2000 harvest, and then attempt a slow recovery. This would allow the industry a

breathing space, which has not experienced in the recent past, and possibly will create a

more positive sentiment as structural factors improve (availability of cane, for instance).

In the meantime, what the present situation reveals about the three groups in question

(government, growers, and workers), beyond some differences in the interpretation of

events and/or considerations, is that they understand that sugar is the main source for

their livelihood and stability, in the political, the economic and social realms. Because of

that, they have to make special adjustments and respond to the basic question of survival.

Without doubts, the Jamaican case shows the extent to which, for the Caribbean peoples,

sugar does matter indeed.


VII. References

Ahlfeld H., “Beet and Cane Sugar Against the Background of Structural Change in the World

Sugar Market,” in F.O.Licht’s International Sugar and Sweetener Report, Vol. 130, No

22, July 9, 1998 P. 361-370

F.O.Licht’s International Sugar and Sweetener Report, Ratzeburg, Germany, various issues.

Haraksingh, Kusha: The Sugar Industries of the Anglophone Caribbean, 1977-1997 in “Sugar

World: Information and Analysis for Sugar Workers, 1977-1997”. Chullén, Jorge & Lin-

coln, David, editors. ICCSASW, Toronto, September 1998.

ICCSASW 1997 (a): “Labour in the Sugar Industries of the English-Speaking Caribbean,”

ICCSASW-CCSTAM, Toronto, February 1997.

--------------- 1997 (b): “Labour and Collective Bargaining in the Caribbean Sugar Industry,”

ICCSASW- CCSTAM, Toronto, December 1997.

--------------- 1997 (c ): “Sugar Industries of the English-Speaking Caribbean: Structural Aspects,”

ICCSASW-CCSTAM, Toronto, December 1997.

International Monetary Fund, International Financial Statistics, February 1999, Washington DC,

USA.

Thomas, Clive Y. “Privatization and Human resources Issues in the Caribbean Sugar Industry,”

International Labour Office, Sectoral Activities Programme, 1995, ILO, Geneva.

European Union Agriculture and Rural Development: “Special Accession Program for Agricul-

ture and Rural Development,” European Commission, Directorate-general of Agriculture

(DG-VI) Brussels, Belgium, nd.

--------------“Agenda 2000. The future for European Agriculture,” European Commission, Direc-

torate-general of Agriculture (DG-VI) Brussels, Belgium, nd.

-------------- Web site at: http://europa.eu.in/en/comm/dg06/index.htm

-------------- Hungary Report - Executive Summary, web site

-------------- Poland Report - Executive Summary, web site

United States Department of Agriculture, Guyana, Sugar Report, Foreign Agricultural Service,

June 10, 1998, GAIN Report # GY8001

------------- Jamaica, Sugar Annual Report, Foreign Agricultural Service, April 10, 1998, AGR

Number JM8003

------------- Trinidad, Sugar Annual Report, Foreign Agricultural Service, April 10, 1998, AGR

Number TD8001


VIII. Appendix

English-speaking Caribbean - Centrifugal Sugar Production

1970-1997 (metric tons, raw value)

Year Barbados Belize Guyana Jamaica St. Kitts Trinidad Region World Region as

% of World

1971 140,451 64,756 394,540 393,632 26,224 220,177 1,239,780 73,959,434 1.68

1972 116,500 73,002 335,338 387,441 27,053 237,898 1,177,232 75,744,360 1.55

1973 120,839 73,689 280,283 339,086 24,463 185,544 1,023,904 78,012,886 1.31

1974 112,680 91,884 352,740 378,445 26,732 186,815 1,149,296 78,853,394 1.46

1975 101,967 85,684 310,859 366,441 25,855 163,040 1,053,846 81,588,989 1.29

1976 106,486 68,242 342,770 365,498 36,460 205,010 1,124,466 82,399,576 1.36

1977 119,836 97,831 253,127 395,811 24,794 178,004 1,069,403 90,349,822 1.18

1978 103,785 119,138 341,911 305,580 40,899 148,137 1,059,450 90,832,258 1.17

1979 117,110 105,330 316,414 291,025 40,745 143,521 1,014,145 89,327,189 1.14

1980 135,493 108,363 286,230 236,389 35,609 113,580 915,664 84,514,147 1.08

1981 96,867 103,645 320,168 204,010 33,135 93,317 851,142 92,522,362 0.92

1982 88,378 113,628 304,963 198,050 36,876 78,685 820,580 101,431,991 0.81

1983 85,837 120,323 265,481 202,295 27,594 79,020 780,550 96,815,427 0.81

1984 97,688 108,576 256,481 187,778 30,612 66,500 747,635 99,218,675 0.75

1985 101,414 109,520 257,688 209,125 27,455 80,000 785,202 98,351,825 0.80

1986 112,633 104,704 260,547 198,771 28,491 94,736 799,882 100,288,224 0.80

1987 83,868 87,761 233,815 189,435 25,256 88,075 708,210 103,972,014 0.68

1988 81,033 88,846 178,308 221,715 25,815 94,204 689,921 104,803,955 0.66

1989 67,044 93,949 170,497 204,973 24,769 100,443 661,675 107,863,744 0.61

1990 69,954 108,146 133,761 208,592 25,000 122,284 667,737 110,817,964 0.60

1991 66,531 103,367 168,114 233,882 19,768 103,655 695,317 112,254,219 0.62

1992 55,000 107,653 254,633 228,024 20,000 113,702 779,012 117,335,292 0.66

1993 48,000 108,293 255,581 219,046 25,000 107,936 763,856 111,363,722 0.69

1994 51,000 107,620 264,697 223,041 30,000 127,086 803,444 109,621,667 0.73

1995 55,000 115,169 257,987 214,089 25,000 116,976 784,221 117,527,830 0.67

1996 59,114 113,128 287,035 236,027 20,000 116,639 831,943 124,216,935 0.67

1997 62,393 131,368 283,275 232,998 31,000 120,141 861,175 125,132,115 0.69

1997/98

(1)

48,000 125,000 260,000 186,000 29,000 79,000 727,000 126,826,000 0.57

1998/99

(2)

63,000 127,000 299,000 210,000 30,000 115,000 844,000 130,053,000 0.65

Source: Sugar Yearbook, International Sugar Organization, various issues.

(1) F.O.Licht, provisional figure

(2) F.O.Licht, first estimate

caribbean perspectives 1999 - iuf / uita / iul · “workers and their trade unions - future...

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