Sugar pooling arrangement in trouble

PAN CARIBBEAN Sugar Company (PCSC) Limited is now at odds with the Sugar Industry Authority (SIA) over the pooling arrangement for a three-year supply deal between British sugar refiner Tate and Lyle and Jamaica Cane Product Sales (JCPS).

PCSC, the operators of Frome and Monymusk sugar factories, has refused to be part of the current pooling system beyond the 2011-2012 crop year, and has reportedly resigned from the Sugar Manufacturers' Corporation of Jamaica Limited.

"It is a difficult situation, but we are in ongoing talks with them (PCSC) to see if they will reverse their decision," Ambassador Derrick Heaven, executive chairman of the SIA, told The Gleaner last week. "But this is definitely not good for the industry at all."

Should discussions fail, Heaven is still confident that the commitment to the European giants for the supply of 150,000 tonnes of the sweetener between the 2012-2013 and 2014-2015 crop years, which is expected to generate US$224 million, will still be realised.

"We had to play it safe, with the exclusion of Frome and Monymusk and as a result we could only guarantee 50,000 tonnes," the chairman explains. "But Appleton, Golden Grove and Worthy Park have been excellent, and along with Long Pond will be able to meet the target."

Despite several attempts Francis He, the chief executive officer at PCSC, could not be reached for comment. However, according to one leading manufacturer, who requested that his identity be withheld, the decision by the Chinese could turn out to be disruptive.

"Fragmentation is never good for our business," the manufacturer said. "This could be very disruptive for the industry. We have always spoken and dealt on a united front. This could now create a situation that farmers may want to give their cane to where they can get the best price on the international market, and this could be problematic."

Spurred by the anticipated shortage of the sweetener on the world market over the next few years, Tate and Lyle, sought to lock supplies of 200,000 tonnes annually for five years from as early as January last year.

Being proactive

"We are being proactive and have spoken to all the players in the industry, including the local private owners and the Chinese, JCPS and the ministry," Paul Worthington, regional technical director for Tate and Lyle, told The Gleaner in May.

However, JCPS settled for a supply deal with British firm ED&F Man Sugar Limited for the 2011-2012 crop year for, 80,000 tonnes, where they are set to earn €664.41, or US$936.98 per ton.

source: jamaica-gleaner