ECONOMIC VIEWPOINT: Does sugar still have a role to play in B'dos?
BARBADOS continues to persist with sugar at a time when most other regional producers have long abandoned their industry. As far as is known only Jamaica, Guyana and I think Belize remained in the industry, which is vital to their economic sustainability.
So there is some merit in the decision by this country to stick with the industry. It is therefore believed that even though sugar's contribution to GDP has diminished, it still has a role to play in the scheme of things.
Currently, the country is faced with making some hard decisions when it comes to revitalising the local economy in the wake of COVID-19 and what it has done to this economy. The story was told last week by the Governor of the Central Bank of Barbados, Cleviston Haynes, when he reviewed the performance of the economy for the first nine months of 2020.
With the exception of non-sugar agriculture, which registered growth of the order of just over three per cent, other areas of the economy remained down.
When he spoke to this newspaper last month as preparations continue to further boost the sugar industry, Mark Sealy of the Barbados Sugar Industry Limited addressed some of the ways forward. Like the Minister of Agriculture and Food Security Indar Weir, the two men are convinced that sugar still has a role to play in Barbados. While production is down to around 10,000 tons, the long-term plan is to raise output to about 20,000 tons.
Don't know if the plan to sell sugar on the regional market is still a priority, but meeting the requirements of domestic consumers remains one of the goals for the future.
Indeed, the Bank's Governor had said at a previous news conference that all of the sugar produced from the 2020 crop was sold locally.
Another plan outlined by the Minister is for the industry to manufacture molasses to meet demands from the Rum industry, which has emerged as the country's leading export commodity replacing the same industry which once filled that slot in the economy. In interviews with this business magazine, a locally-based engineer has said repeatedly that the industry should also be producing bottled water to be sold locally, given that other brands of water have become a big hit in the domestic market.
There were occasions as well when the production of electricity, animal feed and even ethanol at the height of the global food crisis, when other countries were using their
commodities – corn, soyabeans, beet, etc. – to produce energy products, was talked about. At that time, the price of oil had galloped to US$148 a barrel and was putting a heavy toll on oil importing countries, Barbados among them, which were forced to fork out more money to pay for oil imports.
Barbados itself had toyed with the idea of planting some cane varieties referred to at the time as fuel canes for the purpose of developing ethanol. The country too had been burdened by an energy import bill, which was averaging about Bds$700 million a year.
That was a huge amount to be paying for imported energy, just when the pangs of the 2008 global recession were having a toll on the economy and when the foreign exchange earning sectors were under performing. Even now as COVID-19 bears down on the country, the bill for imported energy has abated somewhat.
The high cost of producing sugar in Barbados is a major negative factor in the industry. Inputs, labour, transportation, and the repayment of finances to lenders in the banking sector have been highlighted as areas which affected the industry. This has become a major impediment going back to the 1990s.
Data from several studies done on the industry have found that Barbados had reached the stage where income paid by Europe for local sugar was less than the cost of production. In one such report, it was shown that whereas Europe was paying $1 100 ton for sugar from the African, Caribbean and Pacific (ACP) countries, the cost of producing sugar in Barbados was in the vicinity of $1 500 a ton.
Other impediments like the increasing amount of canes it took to make a ton of sugar, and harvesting extending into the rainy season, created problems.
Sealy told this newspaper that the persis-tent rainfall, which was drenching the country, was very welcomed by cane farmers since it allowed for both the planting of new canes for the crop of 2022 and for growing existing plants, which are to be harvested next year. The equation, however, is for a period of sunshine to ripen the canes.
A drive around the country up to last week revealed that canes are in a better condition than what was the case a few short years ago. They are sturdy and they are showing growth and it begs the question whether crop time next year will see increased sugar output.
So as Barbados presses ahead with its sugar sector, there has to be major changes like the introduction of technology in the production process and other measures to make it worthwhile. Government has come to the rescue of the industry with financing as was the case long ago. The country therefore waits to see the results.