Caribbean's bittersweet new reality

New EU subsidy cuts will cripple island sugar industries created centuries ago to serve European markets.

Robert Clarke, the gray-haired managing director of Worthy Park Estate, one of Jamaica's most productive sugar plantations and factories, looks out from the mill over his 9,000 acres of sugar cane in the valley and frowns.

It's a hot, late afternoon and workers in blue overalls are cutting and transporting the last canes of the day to the factory. Here, other workers in hard hats water, grind, heat, and cool the cane as it makes its way down conveyor belts, in and out of vats, and through temperature-controlled pipes - finally spilling out the other end as raw brown sugar.

Clarke scoops up a handful of granules. His family has owned and run this plantation since 1918, buying cane from some 2,000 local farmers as well as directly employing 700 others. Clarke loves the place. "But it's over," he says with a shrug, "... this is all about to come to a grinding halt."

Last month, in response to pressure from the World Trade Organization, the European Union (EU) adopted reforms of the sugar subsidy system, which has, for years, artificially kept prices three times higher than world market levels. As a consequence, it seems Jamaica, along with most other sugar-producing Caribbean nations, may soon have to do without what has long been their economic life's blood and the very reason they came into existence as colonies.

EU will cut sugar subsidies July 1

Sugarcane cultivation was introduced to Jamaica by the Spanish in 1520, but really prospered under British colonial rule, as Europe developed a taste for the sweetener to go along with the tea coming from China. By the 18th century, Jamaica was one of the world's biggest sugar producers.

While the industry went into a decline after slavery was abolished here in 1838, it still accounts for 36 percent of the country's agricultural exports, bringing in $75 million a year, and employing 38,000 people directly, and over 100,000 all together, almost all in rural areas, according to the Planning Institute of Jamaica.

The EU reform, which comes into force July 1, will see the guaranteed price for sugar cut by 36 percent over four years, and markets opened to imports from the world's poorest countries.

At present, the price paid for a ton of unrefined brown sugar is $630 dollars. By the end of 2010, the set price is expected to be $402.87.

"The margin will be too low, the price paid to cutters will be too low, and no one will work," says Karl James, general manager of Jamaica Cane Products Sales Limited, the body that collectively markets Jamaican sugar. "It will cripple our industry."

Rural Jamaicans, already among the poorest in the country, warns Clarke, will lose their income base and drift to the cities and tourist areas - where, without work or opportunities, crime will beckon.

At present, Jamaica has one of the highest per capita crime and murder rates in the world. Other farmers, suggests Clarke, will be tempted to turn to cultivating marijuana, an illicit crop already widely grown here.

"There is always a feeling in Jamaica that everything will be OK - but it won't be OK," he says. "We feel a sense of betrayal. What the Europeans are doing to us is immoral - they are killing us. It's a death sentence."

The Caribbean Community (CARICOM) leaders have assessed that next year alone the sugar-producing countries stand to lose about $100 million. The largest regional producer, Guyana, where sugar exports account for almost 20 percent of its GDP, and income from tourism is far less than in other CARICOM countries, will be hardest hit, and stands to lose $40 million a year as a result of the reforms.

Belize, Barbados, and Trinidad and Tobago will also be affected, while St. Kitts and Nevis, in anticipation of the reforms, already closed their sugar industry after more than 360 years of production - a move which saw national unemployment rise from five to 14 percent.

The changes echo what took place in Cuba in 2002 when the government made the difficult decision to cut sugar production in half. Like many of the English-speaking Caribbean islands, sugar had defined Cuba's economy and relationships to key trading partners for much of the island nation's history.

Cuba's socialist government profited handsomely from a sugar-for-oil trade with the Soviet bloc, which for decades bought sugar from the country at well over the market value. Losing its massive Soviet subsidy, combined with global market pressures in the 1990s, meant that Cuba's sugar industry could not survive without downsizing dramatically.

But still, says Clarke, all is not lost. "We have not totally thrown in the towel," he insists, heading over to his year-old, $6 million-dollar rum distillery just down the valley from the mill.

Worthy Park Estate, like many other sugar plantations across the Caribbean, is looking into diversifying into the likes of molasses and rum, both made from sugar cane. The new distillery here produced 200,000 liters of alcohol for export to Scotland this year, and Clarke intends to expand the output to 2 million liters within eight years.

Eventually, he says, he will bottle the drink himself, selling it to tourists, and possibly packaged together with a bag of Jamaican sugar. He has other plans as well - setting up a spa in his valley, for example, or giving high-end tours of the distillery and plantation. "We have no choice but to try something else," he says.

What about ethanol?

Jamaica's government, meanwhile, which owns five of the country's seven sugar plantations, has presented an action plan to diversify the industry, including moving into the production of ethanol, an alternative fuel made from sugar cane. Brazil, the world's largest sugar producer and exporter, as well as a leader in the production and use of ethanol (three-quarters of the cars now being produced in Brazil have "flex-fuel" engines, capable of running on either ethanol or gas) is sending experts to Jamaica this month to offer advice on the viability of this option.

Cezar Amaral, Brazil's ambassador to Jamaica, says he sees "tremendous prospects" for increasing productivity of the sugar industry here to a point that ethanol production would be profitable. The world market for ethanol has grown from 28 million liters in 2000 to 49 million liters last year, according to the Brazilian government.

Potentially, if done right, argues Tamsin Ayliffe, head of the Jamaica office of the British Department for International Development (DIFD), the EU sugar reforms could end up as positive for the region, with Caribbean countries eventually developing more robust, diverse economies. But, crucial to such a success, she stresses, is sufficient economic aid.

According to DIFD assessments, $301 million a year would be necessary to offset the economic and social hits from the sugar cuts. But EU member states have suggested the fund start at $154 million in 2007 and peak at $202 million in 2013, sums Denzil Douglas, prime minister of St. Kitts and Nevis, has called "paltry."

"There is a grave concern in the Caribbean region. We need to get a fair deal," Mr. Douglas told reporters last Thursday during a CARICOM lobbying trip to Brussels to press for more aid. "We need urgent assistance to avoid huge social upheaval in our countries," he pleaded. "This is no sweet time."

Ms. Harman is Latin America correspondent for the Monitor and USA Today.

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