Sugar cubes on a saucer. Jamaica will supply its domestic market with brown sugar instead of importing to meet demand.
Jamaica, in response to changing market conditions, is pulling back from sugar exports this crop season, and is, instead, repositioning for a bigger share of the domestic market that has long relied on imports of the sweetener to satisfy local consumption.
It is, for Jamaica, a practical move, to contain its sugar import bill as world prices move to new highs.
"We have projected about 148,000 tonnes for the next sugar crop, and we will be supplying the domestic market from this amount," Karl James, general manager of Jamaica Cane Product Sales (JCPS), the marketing agent for the Sugar Industry Authority (SIA), tells the Financial Gleaner.
The largest estate, Frome, will be the first to start milling, on December 7.
Jamaica imports some 60,000 tonnes of brown sugar annually, mainly from other producing countries in the region, to satisfy local demand.
The 65,000 tonnes of the refined product that the country also consumes would still have be sourced overseas.
"We don't refine sugar here, so we will still have to import refined sugar for the local market," James says.
JCPS previously handled all sugar exports from Jamaica, under the preferential access regime with the European Union that terminated September 30, 2009, but its role is changing with the divestment of pieces of Sugar Company of Jamaica's assets and sugar lands into private ownership.
The JCPS' role, the SIA's Ambassador Derrick Heaven and James both say, is still evolving.
The marketing company will still handle sales of 11,000 tonnes of the sweetener to the United States, and it will likely have some role in the shipping of the 79,000 tonnes of raw sugar that Jamaica has contracted to the Italian-owned firm, Eridania Suisse SA, for an estimated US$37.7 million, from the three factories it still owns - Frome, Bernard Lodge and Monymusk.
Were Eridania to acquire those factories - negotiations are said to be ongoing with SCJ Holdings - it could erode JCPS' role even further.
Assuming the Jamaican factories hit the 148,000-tonne target, JCPS would be able to supply 58,000 tonnes of sugar to the domestic market, after the US and Europe contracts are filled.
Jamaica last hit that target in 2007.
Sugar is now selling below 23 US cents on the world market, coming from a high of 25 US cents in the summer, but future contracts suggest the price could come down from those highs and normalise at 14 to 15 US cents next year.
The jump in price stems mainly from, James says, a shortfall in production from Brazil and India, the top-two producers internationally.
Consumption has also increased significantly in the sub-continent and Africa, further driving up the price.
It is not clear when this sugar shortage will end, but Peter McConnell, general manager of the family-owned, privately operated Worthy Park Sugar Estate says the hike in price is a positive for local producers.
"It is a positive, because we will get more for sugar, but if you look on the history of sugar, it goes up and down, so we don't know how long this will last," says McConnell.
"The figures are indicating that the price for sugar for next year will be similar to this year. This will enable us to export to Europe and the US and benefit from the increased price."
Ambassador Heaven says Jamaica has been looking at ways to benefit from sugar's volatility, from a marketing perspective, but suggests that it might be in the country's interest to stick with the markets it knows.
Best result
"Our approach, presently, is to see where we will get the best benefit and the indications are that supplying sugar to our traditional markets is likely to bring us the best result," he says.
"What we are now subjected to in Europe is more related to market functions rather than a guaranteed price, and the market functions in Europe are going to be influenced by supply and demand," Heaven says.
"At the moment, the equilibrium is not causing a reduction in price and what is going to happen down the road in the immediate future is that we will have a situation on the world stage that demand could exceed supply. All the predictions indicate that the supply situation is unlikely to keep pace with the demand situation worldwide."
mark.titus@gleanerjm.com
Karl James, general manager of Jamaica Cane Product Sales. The marketing company's place in the changing sugar industry is still under review. Ambassador Derrick Heaven says Jamaica is reshaping its marketing strategies in the changing world sugar trade. - Ricardo Makyn/Staff Photographer