When the European Union brought down the gauntlet in 2005 during the reform of its sugar regime, then-exporting sugar economies were put on notice that the situation not only in Europe but in their own countries as well was about to change dramatically. They could reform and refit themselves, or quickly find they were without a sugar industry at all.
Some countries responded quickly, others more slowly, some more drastically and some with rather immediate financial help from the EU’s own pocket. Seven years later, it appears that Barbados may finally be getting a move on with the reforms it so desperately needs. But if it continues to just talk, and not do, it could soon find itself among the many new sugarcane graveyards spread throughout the world.
Already sugar production has fallen to just 23,000 metric tonnes of raws per year, with its two remaining sugar mills in dire straits. The government announced last fall that it would renovate the Andrews Sugar Mill in St. Joseph over the next two years so that it could produce sugar more efficiently and boost molasses production while also providing electricity to the national grid. The other mill, Portvale, would help shoulder the load while renovations at Andrews were under way, but by 2013 it would be shuttered all together.
That all sounds well and good, but it’s quickly becoming apparent that the government spoke before it found the money to undertake such a massive turnaround, let alone in such a short amount of time.
A key reason for getting the local sugar industry back in order is not for sugar necessarily, but for the rum industry. Roughly 85% of the rum produced in Barbados is “bulk rum”, sold to other countries for blending in higher quality rums. Under the Barbados Investment and Development Corporation’s Rum Expansion Programme, the government instead wants to see the industry boost the quality of its rums so that it can take advantage of higher value markets, create and benefit from better branding, and make a name for itself like some of its other neighbours in the Caribbean.
As sugar production has fallen over the past few years, as has molasses production, forcing rum producers to import molasses in order to distill. But that level of imports has gotten so high of late that the country risks losing trade benefits from marketing its “own” rum because in the end, it’s not really it’s own. So for rum trade to continue under preferential market schemes, the amount of its “own” molasses needs to increase significantly, and quickly.
Sugar isn’t to be forgotten, of course, just perhaps a reliance on raw sugar exports in Europe that no longer pay as well as they used to. With plenty of local and regional demand for white sugar, and demand with good premiums for specialty sugars like demerara in other international markets, there’s an opportunity for sugar for sure. The country only exports about 3,000 tonnes of specialty sugars a year at the moment, but could easily boost that with a new super-powered mill.
There’s talk of ethanol too, for their domestic market, in theory from bagasse, which requires commercial roll out of second-generation production processes which aren’t quite there yet. If the Andrews mill is renovated to distill ethanol from juice a-la-Brasilienne rather than compete with the rum producers for molasses—which would really defeat the purpose of this focus on rum—then it’s thought that local ethanol blending could help reduce oil imports significantly while boosting foreign exchange reserves.
Yet despite promises of US$100 million in renovations to Andrews mill and talk from the government about ways to improve sugarcane production in order to create an overall industry that is more modern and efficient, there are complaints by local farmers and politicians alike that talk isn’t transpiring into action. And that’s where Barbados risks losing out on its last opportunity to boost both its sugar and rum quality, production and export, or fade out all together.
Perhaps it shouldn’t be surprising that the Chinese are interested to invest in, and likely take over, whatever becomes of the future Andrews mill. With the US$600 million made available by the China Development Corporation that could be used toward the sugar renovation project, the Chinese could quickly implement the upgrades the mill needs as COMPLANT is doing in Jamaica.
Using Chinese investment would certainly fill that funding hole the government has found when it went looking to do the Andrews retrofit, but as with Jamaica, handing Barbados’ only remaining mill over to the Chinese runs the risk of them doing what they want with the sugar and molasses, rather than the national strategic goals that the country has in mind for the revitalisation of its sugar industry.
That brings the discussion back to how to move forward. The Parliament is currently debating the annual appropriations bill, which in theory has funds for sugar renovations in it, but certainly doesn’t have the entire US$100 million needed. Reforming the government-owned Barbados Agricultural Management Company that runs Andrews and Portvale is estimated to cost US$136 million alone. The Andrews project will then have to require outside investment, if not from the Chinese then from the Europeans, since the Brazilians are too fixated on trying to dig themselves out of their own under-investment trap.
No doubt the Inter-American Development Bank could and would step in to help out who ever steps up, but who’s going to even go that far?