by Derek W. Little Sugar Industry Research Institute

1. Jamaica’s Sugar Industrybeyond2010 by Derek W. Little Sugar Industry Research Institute

2. BACKGROUND I am an Agronomist, Sugar Technologist, Extentionist and occupy the post Head of Extension Services Department S.I.R.I. Apart from 3 months working with the Ministry of Agriculture my entire working years, thus far, has been with the Sugar Industry. The title “Jamaicans Sugar Industry beyond 2010” is important. It is important because the deliberations that we are engaged in and the decisions to be taken will determine what we do tomorrow, next year and hence forth. From an objective perspective, I do believe that I can add a little light to some of the issues being discussed. In this context, therefore the views expressed are mainly my own as I see them.

3. This perspective of the Jamaica’s Sugar Industry outlines recent trends in production as an indicator of the industry’s now situation as it seeks to re-position itself in a competitive sugar cane environment.

4. This presentation outlines briefly:- • Production/Productivity • Turn Around of the Guyana Industry • Some Causative Factors of the Jamaican Decline • Industry Regulations • Research and Development • Technology Transfer • Critical R & D Issues • Concluding Statements

5. PRODUCTION TRENDS Jamaica’s Sugar Industry has been at the crossroads for a number of years. Not only has it been at the crossroads but production has declined considerably over the last several years, which threatens its sustainability. Production over the last 10 years (2000-2009) for instance averaged 163,890 tonnes sugar but ranged from a low of 124,570 t in 2005 to 216,869 t in the year 2000. While the production in 2005 was the lowest in some 40 years, the 2010 production now rivals the 120,218 t produced in 1937.

6. PRODUCTION TRENDScont’d Cane milled averaged 1,812,081 t but ranged from a low of 1,334,579 t in 2009 to 2,237,176 t in 2001. The cane sugar ratio tc/ts and JRCS averaged 11.06 tc/ts and 10.27 JRCS respectively, while the industry average cane yield was 58.9 tc/ha. Over the past 10 years there has been a gradual decline in cane area cultivated and a corresponding decline in area harvested annually.

7. PRODUCTION TRENDScont’d From a total of 35,814 ha harvested in 2000 the figure for 2009 was 26,296 ha. That difference amounted to some 9,500 ha. At the average sugar yield of 5.32 ts/ha some 50,540 t sugar disappeared. Based on the 2009 sugar price this amounts to a loss of earnings of some US $ 26.0 million.

8. PRODUCTION TRENDScont’d The industry’s present levels of production cannot support or sustain the existing infrastructure and organizations. If production is to remain in the range of 140,000 t sugar, then one-half of the existing infrastructure has to go. If production is to be doubled to produce 250,000 - 300,000 t sugar or its equivalent by processing over 3.0 million tonnes cane, the present infrastructure and operational management cannot manage that transformation as is.

9. PRODUCTION TRENDScont’d It will require significant plant upgrade, investments in machinery and equipment and the right management in the fields and factory to make this possible. While the industry is being referred to in the collective sense, some sections have been upgraded and operating at high efficiency levels. However in general terms this industry has been on the decline path for quite some time and while this presentation will not give the details of who can do what, the real plan to halt the decline, sort out the in-efficiencies and then increase production is yet to be unfolded.

10. GUYANA’S SUGAR INDUSTRY The Guyana Sugar Industry which experienced a similar decline to Jamaica’s is perhaps a model for us to examine. Guyana’s production declined from some 300,000 t in the 1980’s to a mere 130,000 t in 1990. One person was given the charge to turn that industry around. The turn around of that industry with investment and effective management, production was raised to over 300,000 t by 1999. As it was put then the turn around of the Guyana Sugar Industry was no miracle, they returned to basics.

11. GUYANA’S SUGAR INDUSTRY Production 1980 – 1999 (ts 000)

12. GUYANA’S SUGAR INDUSTRY- - -The basics - - - • Good Agricultural Management • Proper Factory Maintenance • Right Institutional Framework • Professional Management • Supplemented Local Management with targeted support and inputs

13. How will Jamaica’s turn around process be driven? The Answer – I do not know!

14. Some Causative Factors in Jamaica’s Decline • Inability to adequately maintain Government owned factories • Inadequate field maintenance due to lack of resources • Impact of Hurricanes as well as other extreme weather conditions in some years • Sharp rise in inputs especially fertilizers and other agricultural chemicals. High cost of electricity as it affects Irrigation

15. Some Causative Factors in Jamaica’s Decline cont’d • High cost of production coupled with low cane and sugar yields • Inability to carry out the requisite annual replanting to take advantage of the newer and potentially higher yielding cane varieties. Over the last 10 years the annual replanting of run down fields fell short by over 50%. ________________________________________________ Has strong sectorial interests weaken the industry’s collaborative potentials to carry the industry forward?

16. Industry Regulations Sugar industries worldwide are regulated. Regulation is required to facilitate the relationship between the growers and the millers. Examples; The South African Sugar Association (SASA) is constituted by a Sugar Act. The Act provides for an Agreement to regulate those who grow sugar cane and produce sugar and associated sugar products. The Sugar Act has been amended from time to time.

17. The South African Sugar Industry Agreement covers the following • Administration of cane production. • Co-ordination of the supply of sugarcane to the mills. • Dispute resolution structures. • Disposal of the raw sugar available for export by SASA on behalf of the industry. • Pooling of proceeds from the sale of sugar and molasses and the division of the net proceeds between the growing and milling. • The calculation of the price payable for cane deliveries • The imposition of levies to cover the cost of the administration of the industry by SASA. • Control of pests and diseases in sugarcane.

18. The Punjab Sugarcane(Regulation of Purchase and Supply)Act, 1953 The Punjab Sugarcane (Regulation of Purchase and Supply) Act 1953, covers a wide area of responsibilities as attached:- • Sugarcane Control Board. • Appointment of Cane Commissioner. • Determination of “Occupier” for purposes of this Act. • Appointment of an agent. • Licensing of Purchasing. • Duties of an agent.

19. The Punjab Sugarcane(Regulation of Purchase and Supply)Act, 1953 • Penalty for contraventions not otherwise provided for. • Estimate for quantity of cane required by factory. • Survey of area. • Power to declare varieties of cane to be unsuitable • for use in factories. • Prohibition of distribution of certain kinds of • seedcane. • Purchase of cane in assigned area. • Purchase of cane outside the assigned area. Cont’d

20. The Punjab Sugarcane(Regulation of Purchase and Supply)Act, 1953 • 13A. Payments. • Maintenance of register. • Tax on the purchase of cane. • Institution of proceeding. • Bar of suit or other proceedings. • Power to make rules. • Repeal of the Sugarcane Act, 1934, and the Sugarcane • (Punjab Ammendement) Act, 1943, and saving. Cont’d

21. The Kenya Sugar Board In Kenya the Government provided comprehensive directions to enhance development of the sector. The Kenya Sugar Board (KSB) is a public body set up by the Sugar Act of 2001 as follows:- Regulate, develop and promote the Sugar Industry. Co-ordinate the activities of individuals and organizations within the industry. Facilitate equitable access to the benefits and resources of the industry by all parties.

22. The Kenya Sugar Board A sugar development levy of 7% of the market price is charged by the Kenyan Government. This covers Cane Development Infrastructure, Factory Rehabilitation, Grants to Research and KSB Administration.

23. JAMAICA’S SUGAR INDUSTRY The role and function of the Sugar Industry Authority of Jamaica is not much different from those mentioned. If you don’t have anything to regulate then you do not need anyone to manage it. I can assure you however that it is much more difficult to regulate the Jamaican Industry than those mentioned elsewhere.

24. RESEARCH and DEVELOPMENT Research and development remains high on the agenda of sugar industries and research institutions across the globe. A look at two (2) research institutes – South Africa and Mauritius show strong reliance on Research and Development as well as Technology Transfer.

25. South African Sugarcane Research Institute (SASRI) “SASRI’s emphasis on technology and information transfer is evident from the close link between Extension and Research Services. Through the combination efforts of both research and extension staff, SASRI has maintained its position as the foremost African sugarcane research institute”. The primary objective of its Extension programme is to promote the communication of research outcomes at SASRI to all stakeholders in a useful and meaningful manner, to enhance industry productivity and sustainability.

26. Mauritius Sugar Industry Research Institute (MSIRI) “Research and development will be a necessary accompaniment to reform the Industry to enable it to be competitive and sustainable and to retain its important role in the national economy. Through successful brainstorming exercise, representatives of stakeholders in the industry were given the opportunity to participate in the elaboration of a Research and Development Plan for the Institute for the period 2005 – 2009“.

27. Members MSIRI Board – 12 members Members Research Advisory Committee = 4 Members Research Advisory Sub-Committee – Agronomy = 8 Members Research Advisory Sub-Committee – Biology = 8 Members Research Advisory Sub-Committee – Sugar Technology = 8 Each committee also includes the senior staff of the sector Mauritius Sugar Industry Research Institute Board & Advisory Committee:

28. SIRI’s ResearchandDevelopment SIRI produces a Work Programme and Budget annually. This is subjected to restriction, constriction and hence limits the potential of the Institute to produce. In the past SIRI invited stakeholders to contribute to the development of its work programme but benefited from very little response. Instead there is critical comment on some issues from time to time but generally a failure to take interest in what should be the focus. There is no doubt that the industry’s 2% cost could be better shared by stakeholders but on any book in the world there is a cost for Research and Development and technology transfer through Extension Advisory Services.

29. SIRI’S EXTENSION SERVICE The Extension Services Unit (ESU) represents the important link between the Institute, Cane Growers and the Manufacturing Sector of the Sugar Industry. It is the medium through which research findings of the Institute or other new ideas are translated into improved agronomic practices. The practice or the innovative ideas are often used to influence management decisions towards greater production and productivity. The approach is to identify problems, find the solutions, provide information, guide implementation and analyse the results.

30. SIRI’S EXTENSION SERVICE cont’d SIRI Extension which was formally established in 1975 was a recommendation out of the Mordecai Commission that saw the need for Technical Advisory Services to be made available to cane farmers instead of the trickle-down way in which technology was reaching the farmers. Today cane farmers benefit from SIRI’s Research and Extension Services in new cane varieties, soil analyses for fertilizer recommendations, testing of agricultural chemicals and a host of other services available to both estates and farmers.

31. SIRI’S EXTENSION SERVICE cont’d The Extension Services Unit offers services as follows: - Land surveying, land-forming, reblocking, field layout, canal and drain layout. - Establishment of nursery areas and procurement of seed cane for growers. - Leaf and soil sampling as part of the Fertilizer Advisory Service. - Conduct Training Sessions in general cane husbandry. - Conduct investigations in factors affecting cane and sugar production. proved agronomic practices. The practice or the innovative ideas are often used to influence management decisions towards greater production and productivity. The approach is to identify problems, find the solutions, provide information, guide implementation and analyse the results.

32. SIRI’S EXTENSION SERVICE cont’d - Monitoring of Loan Programmes provided through SIA - Promotion and Expansion of new commercial sugar cane varieties - Monitor Technical Standards as a pre-condition to the disbursement of grants and loans. - Assistance in preparation and collection of Cane Yield Data. - Preparation of Cane Estimates and Cane Production Reports. - Disease and Pest Control Information. - Collection of Data relevant to Cost of Production. - Monitoring of Certified Seed Cane Project. There is certainly no overlapping of work between SIRI’s Extension and any other organizations – we collaborate.

33. The Extension Staff The Extension Unit is comprised of ten (10) Area Agronomists ranging in service from 3 to 31 years averaging 17.1 yrs. If my service is added the average changes to 19 yrs. These are persons who have dedicated their careers and in some ways have committed their working lives to the affairs of the Sugar Industry.

34. SIRI’S EXTENSION SERVICE cont’d Extension however has the unfortunate position of being at the forefront of the farmers problems and so their anger and frustrations are often vented out at the Extension person, to communicate to the authorities. SIRI’s Extension has had its own attritions: In 1990’s 17 officers In 2000 down to 11 In 2010 staff members remain at 11.

35. SUGAR INDUSTRY beyond 2010 The industry today faces a number of problems which needs to be addressed. These include:- Increasing production costs Poor ratoon maintenance Declining productivity Low returns on production High levels of debt due to inability to repay existing loans Inefficient harvesting and factory operations Need for increased mechanized harvesting as presently less than 20% is harvested annually

36. SUGAR INDUSTRYbeyond2010 cont’d The industry cannot recover from its present dilemma without a significant injection of well managed funds. A good gesture from the EU funding would be to finance the full replanting required in one year as a jump start for the industry or to provide a one year Ratoon Management Fund (RMF) to give an immediate boost to cane production.

37. SUGAR INDUSTRY beyond 2010 cont’d Its interesting to note that based on the 10 yr production average of 163,890 tonnes sugar the contributions by factory area were as follows:- Frome 31.7% Monymusk 13.8% Bernard Lodge 10.7% Trelawny 6.8% Appleton 16.2% Worthy Park 13.6% St. Thomas 7.2%

38. SUGAR INDUSTRY beyond2010 cont’d Of the total cane production cane farmers produced just about 41%. Beyond 2010 however much more cane will be required from each area to increase the percentages significantly and make the industry viable and sustainable. National cane yields have not reached 70 tc/ha since the 1960’s. Concerted efforts are therefore required to raise yields by an overall 20 tc/ha. In 2009 canes harvested were as follows:- SCJ Estates (pre-divestment) 547,299 tonnes 40.5% Private Estates 267,567 tonnes 19.8% Cane Farmers 536,415 tonnes 39.7%

39. SUGAR INDUSTRY beyond2010 cont’d Beyond 2010 requires that the industry returns to the basics of cane growing and processing as was done in Guyana. Could there be one Driver to execute Jamaica’s Turn Around Plan as was done in Guyana? This is the time when the Industry should be challenging Research and Development to show the way in its turn around process. This is the time

40. SUGAR INDUSTRYbeyond2010cont’d Commissioners I just wish to divert for a moment A figure of $400 mil, has been mentioned as the cost to the industry for Regulations S.I.R.I etc. I agree, that is a tidy sum to be taken out of the industry’s earnings, but I just wish to take the point a little further. If you relate $400mil to last years production of 126,000 tonnes sugar that equals $3,175/t sugar produced. If production goes up to 150,000 tonnes that equals $2,667/t sugar produced. If production goes up to $200,000 that equals $2,000/t sugar produced.

41. SUGAR INDUSTRYbeyond2010cont’d What does $2,000/ tonne sugar pay for? I do not know the details but it includes the following:- Some to Administration Costs Some for repairs, maintenance, operation of Core Samplers and Laboratory Equipment at factories. Some for Research and Development Provides Analytical Laboratory Services Provides new Cane Varieties for the Industry. Provides Management Information for the Industry. Can provide any request for Technical Assistance in cane growing and processing.

42. SUGAR INDUSTRYbeyond2010cont’d If this industry cannot get back to 200,000 tonnes sugar within the next 3 years then we can all forget about it. But more than that a figure of $173 million dollars has been mentioned as the cost for running SIRI. From a production of 200,000 tonnes sugar, this is equivalent to J$865 per tonne sugar produced. Can Jamaica’s Sugar Industry afford a cost of $865.0 per tonne sugar for Research, Development and Technology Transfer?

43. Critical Research & Development Issues • The Industry’s Cane Expansion Programme funded by the EU through the STU of the Ministry of Agriculture and managed by the SIA with SIRI Extension is critical to the redevelopment of the industry. • The Industry’s Cane Testing and Payment System requires constant explaining and interpretation of results as is done every year by SIRI Extension who interacts with farmers through Seminars, Harvesting Meetings, Newsletters and other methods of information dissemination. This is critical to the confidence and integrity of the Core Sampling and Cane Payment System.

44. Critical Research & Development Issues cont’d • The Core Data Programme and Cane Payment System which are sensitive matters are managed exclusively by the Computer Department of SIRI. • The Core Machinery and Equipment are serviced and repaired by the Engineering Department of SIRI. • The fertilizer management programme for the industry which entails soil and leaf sampling conducted by Extension Agronomists, Analyses by the Central Laboratory and fertilizer recommendations by the Nutritionist is critical to the industry’s cane production and productivity.

45. Critical Research & Development Issues cont’d • The Agricultural Engineering Department provides technical guidelines in Irrigation and Drainage, Machinery Calibration and recently installation of Drip Systems for farmers. • The Agronomy Department continues the testing of a host of cane varieties for sucrose, fibre and resistance to pest and diseases. In addition provides guidelines for use of chemicals in weed control as well as cane ripening.

46. Critical Research & Development Issues cont’d • The Central Laboratory is the controller of standards in analyses provided weekly for sugar, molasses, soil, leaf, water and cane juice etc. • The Industry’s Code of Practice on Environmental Issues as well as the industry’s return to green cane harvesting (GCH) are critical issues to be addressed. • The industry’s cost management activities through the Annual cane Yield Survey and includes data collection aided by Extension Agronomists provide useful information for management decisions.

47. CLOSING STATEMENTS The industry’s viability and sustainability depends on factories being able to start processing early, optimizing efficiency during peak harvesting periods, improving operating time to over 80% and completing the crop in a desirable time frame. The industry requires national cane yields of 75 – 80 tc/ha. Major players need to be producing close to 100 tc/ha while those with much challenges should be assisted to move up to 60 tc/ha.

48. CLOSING STATEMENTS cont’d The future of the industry begins with halting the fall out taking place in cane area being cultivated. In addition to the Agricultural focus of the Research and Development activities of SIRI much more research is required to meet the need and opportunities that lie ahead in value added and new products. “For an Organization to survive its rate of learning must be greater than the rate of change in its external environment”. Professor Reg Revans

49. THANK YOU Presented to the Commission of Inquiry into the Sugar Industry July 12, 2010

50. CLOSING STATEMENTS cont’d The future of the industry begins with halting the fall out taking place in cane area being cultivated. In addition to the Agricultural focus of the Research and Development activities of SIRI much more research is required to meet the need and opportunities that lie ahead in value added and new products. “For an Organization to survive its rate of learning must be greater than the rate of change in its external environment”. Professor Reg Revans