New shipping terms to shave US$10m off sugar export cost

The country will this year experience a reduction of at least US$10 million in shipping costs to London for the projected export of roughly 139,000 tonnes of sugar, due to the global economic meltdown accompanied with falling oil prices.

According to Karl James, general manager of Jamaica Cane Products Sales - the company that markets sugar produced locally - his company recently signed a contract with an overseas shipping agent, to take sugar to the United Kingdom at a cost of US$27.20 per tonne, US$74.55 less than the amount paid last year.

"When I negotiated the contract for the 2007/2008 crop the oil price was going up and the availability of ships was also tight because China was awash with imports and exports so the vessels were all tied up, so at that time we had a problem of availability and the high cost of oil," James told the Sunday Finance yesterday. "But this year, you have ships out there that are without work because of the global recession and because oil prices are down," he added, in explaining the main reasons for the drastic decline in shipping costs.

Last crop, sugar producers received roughly $44,500 per tonne for sugar.

Other players in the industry, including cane farmers and cane cutters are also expected to realise increases in earnings, due to the reduction in shipping costs.

Meanwhile, James said that the country is likely to earn US$78 million from sugar exports this season from the export from roughly 139,000 tonnes of sugar.

The first shipment of the product consisting of 21,000 tonnes is scheduled to leave the island within the next two weeks for London, as part of the country's sugar export arrangement with the European Union.

James added that following next month's shipment, the country is expected to make at least one shipment per month over the next four months.

"At the rate at which we are producing and with the other sugar factories expecting to start producing soon we feel confident that we will be able to have the sugar available for those shipments," James told Sunday Finance.

Since the start of the 2008/2009 cropping season, the three sugar producing plants - Frome, Worthy Park and Appleton - that are up and running have manufactured approximately 16,000 tonnes of sugar.

Last year, the country exported 134,000 tonnes of the sweetener.

In the meantime, Allan Rickards, the chairman of the Jamaica Sugar Cane Growers Association said the remaining four sugar producing plants are expected to start production by the end of next month.

"The schedule is St Thomas and Monymusk on the 7th of February, while Long Pond and Bernard Lodge will start of the 28th of February," he said.