Sugar transformation to cost J$100m

Jamaica Cane Products Sales (JCPS) will survive and remain wedded to state agency Sugar Industry Authority (SIA) as its marketing agent, even after privatisation which wraps up in August.

The Alvin Wint-led commission, that autopsied the industry's organisational structure in the final phase of the transition to full private ownership of all factories, is suggesting that the SIA be strengthened and given more autonomy as an executive agency, and that its research arm, the Sugar Industry Research Institute (SIRI), be retained.

The Wint Commission report had questioned whether the marketing of sugar by private producers would need the same structure as when the industry was largely state-owned, but made no direct recommendations on how it should be reshaped.

The structure requires sugar producers to sell into a pool managed by JCPS which ships the sugar to Europe and Jamaica's other markets.

On Tuesday, Professor Wint signalled that he was not opposed to Agriculture Minister Dr Christopher Tufton's stated position that JCPS, which is a private entity, remain as a marketing agent contracted to SIA.

But it appears that Professor Wint also wants it made manifestly clear which agency is calling the shots.

The SIA, he said, should be kept within the loop on marketing arrangements with the private entity and be in a "position where it can agree on issues relating to pricing, just to make sure there are no price deals that are entered into that could be injurious to the industry at large".

His report had also suggested that the executive chairman position at SIA be eliminated, as part of a downsizing of the agency, when current head, Ambassador Derrick Heaven, retires at the end of this year. But Tufton has told Wednesday Business that Heaven's replacement will have the same title for now.

Number of changes

Addressing those in attendance at the press conference held at his Hope Road offices yesterday, Christopher Tufton, minister of agriculture and fisheries, said all three entities would continue their functions, but is likely to see a number of changes geared towards greater efficiency.

The Wint report is expected to cost J$100 million to implement over four years to 2014 - funded from the resources of the European Union Accompanying Measures programme.

The need to cut cost at the SIA dominated the deliberations, whose relevance as a regulatory body came into question. The commission suggested that staff be cut from the existing 24 to four and that all executive positions be eliminated.

Tufton agreed with the commissioners that the agency should continue its primary role as regulator.

"The entire cane payment system to farmers is based on a pooled arrangement, and an independent adjudicator is required to ensure that farmers receive their fair share of the proceeds from sugar sale, regardless of where the sugar is realised. Since payment for cane is also based on quality, an independent regulator is required to administer the core sampling system," the minister said.

But this is subject to an operational audit to determine the SIA's optimal manning level and governance structure, including an assessment of the appropriateness of its movement to executive-agency status.

The audit will also examine the appropriateness of the SIA's movement to executive-agency status headed by a non-executive chair.

SIRI is to continue providing research services to the industry with the scope of its research agenda to include development of sugar cane varieties and soil analysis.

SIRI is manned by a staff of 72.

"The retention of SIRI is particularly important given the myriad of small cane farmers in the industry, producing approximately 40 per cent of sugar cane, and who undoubtedly need the support," Tufton said.

The operational audit will also determine if the recommendation to reduce staffing at the Karl James-run JCPS from 13 to six personnel, and funding from J$60 million to J$20 million annually is feasible.

source: jamaica-gleaner