SIRI_Presentation - Ministry of Agriculture

Report
Jamaica’s Sugar Industry beyond 2010
by
Derek W. Little
Sugar Industry Research Institute
BACKGROUND
I am an Agronomist, Sugar Technologist, Extentionist
and occupy the post Head of Extension Services
Department S.I.R.I. Apart from 3 months working with
the Ministry of Agriculture my entire working years,
thus far, has been with the Sugar Industry.
The title “Jamaicans Sugar Industry beyond 2010” is
important. It is important because the deliberations
that we are engaged in and the decisions to be taken
will determine what we do tomorrow, next year and
hence forth.
From an objective perspective, I do believe that I can
add a little light to some of the issues being discussed.
In this context, therefore the views expressed are
mainly my own as I see them.
This perspective of the Jamaica’s Sugar
Industry outlines recent trends in production
as an indicator of the industry’s now situation
as it seeks to re-position itself in a competitive
sugar cane environment.
This presentation outlines briefly:
Production/Productivity

Turn Around of the Guyana Industry

Some Causative Factors of the Jamaican Decline

Industry Regulations

Research and Development

Technology Transfer

Critical R & D Issues

Concluding Statements
PRODUCTION TRENDS
Jamaica’s Sugar Industry has been at the crossroads
for a number of years. Not only has it been at the
crossroads but production has declined considerably
over the last several years, which threatens its
sustainability.
Production over the last 10 years (2000-2009) for
instance averaged 163,890 tonnes sugar but ranged
from a low of 124,570 t in 2005 to 216,869 t in the year
2000. While the production in 2005 was the lowest in
some 40 years, the 2010 production now rivals the
120,218 t produced in 1937.
PRODUCTION TRENDS cont’d
Cane milled averaged 1,812,081 t but ranged from a
low of 1,334,579 t in 2009 to 2,237,176 t in 2001. The
cane sugar ratio tc/ts and JRCS averaged 11.06 tc/ts
and 10.27 JRCS respectively, while the industry
average cane yield was 58.9 tc/ha.
Over the past 10 years there has been a gradual
decline in cane area cultivated and a corresponding
decline in area harvested annually.
PRODUCTION TRENDS cont’d
From a total of 35,814 ha harvested in 2000 the figure
for 2009 was 26,296 ha. That difference amounted to
some 9,500 ha.
At the average sugar yield of 5.32 ts/ha some 50,540 t
sugar disappeared. Based on the 2009 sugar price
this amounts to a loss of earnings of some US $ 26.0
million.
PRODUCTION TRENDS cont’d
The industry’s present levels of production cannot
support or sustain the existing infrastructure and
organizations. If production is to remain in the
range of 140,000 t sugar, then one-half of the existing
infrastructure has to go. If production is to be
doubled to produce 250,000 - 300,000 t sugar or its
equivalent by processing over 3.0 million tonnes
cane, the present infrastructure and operational
management cannot manage that transformation as
is.
PRODUCTION TRENDS cont’d
It will require significant plant upgrade, investments
in machinery and equipment and the right
management in the fields and factory to make this
possible.
While the industry is being referred to in the
collective sense, some sections have been upgraded
and operating at high efficiency levels.
However in general terms this industry has been on
the decline path for quite some time and while this
presentation will not give the details of who can do
what, the real plan to halt the decline, sort out the inefficiencies and then increase production is yet to be
unfolded.
GUYANA’S SUGAR INDUSTRY
The Guyana Sugar Industry which experienced a
similar decline to Jamaica’s is perhaps a model for us
to examine. Guyana’s production declined from some
300,000 t in the 1980’s to a mere 130,000 t in 1990.
One person was given the charge to turn that industry
around.
The turn around of that industry with investment and
effective management, production was raised to over
300,000 t by 1999. As it was put then the turn around
of the Guyana Sugar Industry was no miracle, they
returned to basics.
GUYANA’S SUGAR INDUSTRY
000)
(ts 000)
1999 (ts
1980–-1999
production
Production
1980
350
300
250
years
1998
1996
1994
1992
1990
1988
1986
1984
1982
100
1980
200
150
GUYANA’S SUGAR INDUSTRY
- - -The basics - - -
 Good Agricultural Management
 Proper Factory Maintenance
 Right Institutional Framework
 Professional Management
 Supplemented Local Management
with targeted support and inputs
How will Jamaica’s turn
around
process
be
driven?
The Answer – I do not know!
Some Causative Factors in
Jamaica’s Decline

Inability to adequately maintain Government owned
factories

Inadequate field maintenance due to lack of
resources

Impact of Hurricanes as well as other extreme
weather conditions in some years

Sharp rise in inputs especially fertilizers and other
agricultural chemicals. High cost of electricity as it
affects Irrigation
Some Causative Factors in
Jamaica’s Decline cont’d

High cost of production coupled with low cane and
sugar yields
Inability to carry out the requisite annual
replanting to take advantage of the newer and
potentially higher yielding cane varieties. Over the
last 10 years the annual replanting of run down
fields fell short by over 50%.
________________________________________________

Has strong sectorial interests weaken the industry’s
collaborative potentials to carry the industry forward?
Industry Regulations
Sugar industries worldwide are regulated. Regulation
is required to facilitate the relationship between the
growers and the millers.
Examples; The South African Sugar Association
(SASA) is constituted by a Sugar Act. The Act
provides for an Agreement to regulate those who
grow sugar cane and produce sugar and associated
sugar products. The Sugar Act has been amended
from time to time.
The South African Sugar Industry
Agreement covers the following

Administration of cane production.

Co-ordination of the supply of sugarcane to the mills.

Dispute resolution structures.

Disposal of the raw sugar available for export by SASA
on behalf of the industry.

Pooling of proceeds from the sale of sugar and molasses
and the division of the net proceeds between the growing
and milling.

The calculation of the price payable for cane deliveries

The imposition of levies to cover the cost of the
administration of the industry by SASA.

Control of pests and diseases in sugarcane.
The Punjab Sugarcane
(Regulation of Purchase and Supply)
Act, 1953
The Punjab Sugarcane (Regulation of Purchase and Supply)
Act 1953, covers a wide area of responsibilities as attached:1. Sugarcane Control Board.
2. Appointment of Cane Commissioner.
3. Determination of “Occupier” for purposes of this Act.
4. Appointment of an agent.
5. Licensing of Purchasing.
6. Duties of an agent.
The Punjab Sugarcane
(Regulation of Purchase and Supply)
Act, 1953
7. Penalty for contraventions not otherwise provided
for.
8. Estimate for quantity of cane required by factory.
9. Survey of area.
10. Power to declare varieties of cane to be unsuitable
for use in factories.
11. Prohibition of distribution of certain kinds of
seedcane.
12. Purchase of cane in assigned area.
13. Purchase of cane outside the assigned area. Cont’d
The Punjab Sugarcane
(Regulation of Purchase and Supply)
Act, 1953
13A. Payments.
14. Maintenance of register.
15. Tax on the purchase of cane.
16. Institution of proceeding.
17. Bar of suit or other proceedings.
18. Power to make rules.
19. Repeal of the Sugarcane Act, 1934, and the Sugarcane
(Punjab Ammendement) Act, 1943, and saving. Cont’d
The Kenya Sugar Board
In Kenya the Government provided comprehensive
directions to enhance development of the sector. The
Kenya Sugar Board (KSB) is a public body set up by the
Sugar Act of 2001 as follows:Regulate, develop and promote the Sugar Industry.
Co-ordinate the activities of individuals and
organizations within the industry.
Facilitate equitable access to the benefits and
resources of the industry by all parties.
The Kenya Sugar Board
A sugar development levy of 7% of the market price
is charged by the Kenyan Government. This covers
Cane
Development
Infrastructure,
Factory
Rehabilitation, Grants to Research and KSB
Administration.
JAMAICA’S SUGAR INDUSTRY
The role and function of the Sugar Industry
Authority of Jamaica is not much different from
those mentioned. If you don’t have anything to
regulate then you do not need anyone to manage it.
I can assure you however that it is much more
difficult to regulate the Jamaican Industry than
those mentioned elsewhere.
RESEARCH and DEVELOPMENT
Research and development remains high on the
agenda of sugar industries and research institutions
across the globe.
A look at two (2) research institutes – South Africa
and Mauritius show strong reliance on Research
and Development as well as Technology Transfer.
South African Sugarcane
Research Institute (SASRI)
“SASRI’s emphasis on technology and information
transfer is evident from the close link between
Extension and Research Services.
Through the
combination efforts of both research and extension
staff, SASRI has maintained its position as the
foremost African sugarcane research institute”.
The primary objective of its Extension programme is to
promote the communication of research outcomes at
SASRI to all stakeholders in a useful and meaningful
manner, to enhance industry productivity and
sustainability.
Mauritius Sugar Industry
Research Institute (MSIRI)
“Research and development will be a necessary
accompaniment to reform the Industry to enable it to
be competitive and sustainable and to retain its
important role in the national economy. Through
successful brainstorming exercise, representatives of
stakeholders in the industry were given the
opportunity to participate in the elaboration of a
Research and Development Plan for the Institute for
the period 2005 – 2009“.
Mauritius Sugar Industry Research Institute
Board & Advisory Committee:
Members MSIRI Board – 12 members
Members Research Advisory Committee = 4
Members Research Advisory Sub-Committee – Agronomy = 8
Members Research Advisory Sub-Committee – Biology = 8
Members Research Advisory Sub-Committee – Sugar Technology = 8
Each committee also includes the senior staff of the sector
SIRI’s Research
and
Development
SIRI produces a Work Programme and Budget
annually. This is subjected to restriction, constriction
and hence limits the potential of the Institute to
produce. In the past SIRI invited stakeholders to
contribute to the development of its work programme
but benefited from very little response. Instead there
is critical comment on some issues from time to time
but generally a failure to take interest in what should
be the focus.
There is no doubt that the industry’s 2% cost could be
better shared by stakeholders but on any book in the
world there is a cost for Research and Development
and technology transfer through Extension Advisory
Services.
SIRI’S EXTENSION SERVICE
The Extension Services Unit (ESU) represents the
important link between the Institute, Cane Growers
and the Manufacturing Sector of the Sugar Industry.
It is the medium through which research findings of
the Institute or other new ideas are translated into
improved agronomic practices. The practice or the
innovative ideas are often used to influence
management decisions towards greater production
and productivity.
The approach is to identify
problems, find the solutions, provide information,
guide implementation and analyse the results.
SIRI’S EXTENSION SERVICE cont’d
SIRI Extension which was formally established in 1975
was a recommendation out of the Mordecai
Commission that saw the need for Technical Advisory
Services to be made available to cane farmers instead
of the trickle-down way in which technology was
reaching the farmers.
Today cane farmers benefit from SIRI’s Research and
Extension Services in new cane varieties, soil analyses
for fertilizer recommendations, testing of agricultural
chemicals and a host of other services available to both
estates and farmers.
SIRI’S EXTENSION SERVICE
cont’d
The Extension Services Unit offers services as follows:
- Land surveying, land-forming, reblocking, field layout,
canal and drain layout.
- Establishment of nursery areas and procurement of seed
cane for growers.
- Leaf and soil sampling as part of the Fertilizer Advisory
Service.
- Conduct Training Sessions in general cane husbandry.
- Conduct investigations in factors affecting cane and
sugar production.
SIRI’S EXTENSION SERVICE
cont’d
- Monitoring of Loan Programmes provided through SIA
- Promotion and Expansion of new commercial sugar cane varieties
- Monitor Technical Standards as a pre-condition to the disbursement
of grants and loans.
- Assistance in preparation and collection of Cane Yield Data.
- Preparation of Cane Estimates and Cane Production Reports.
- Disease and Pest Control Information.
- Collection of Data relevant to Cost of Production.
- Monitoring of Certified Seed Cane Project.
There is certainly no overlapping of work between SIRI’s Extension
and any other organizations – we collaborate.
The Extension Staff
The Extension Unit is comprised of ten (10) Area
Agronomists ranging in service from 3 to 31 years
averaging 17.1 yrs. If my service is added the average
changes to 19 yrs.
These are persons who have dedicated their careers
and in some ways have committed their working lives
to the affairs of the Sugar Industry.
SIRI’S EXTENSION SERVICE
cont’d
Extension however has the unfortunate position of
being at the forefront of the farmers problems and
so their anger and frustrations are often vented
out at the Extension person, to communicate to
the authorities.
SIRI’s Extension has had its own attritions:
In 1990’s
17 officers
In 2000
down to 11
In 2010
staff members remain at 11.
SUGAR INDUSTRY
beyond
2010
The industry today faces a number of problems which
needs to be addressed. These include:Increasing production costs
Poor ratoon maintenance
Declining productivity
Low returns on production
High levels of debt due to inability to repay
existing loans
Inefficient harvesting and factory operations
Need for increased mechanized harvesting as presently less than
20% is harvested annually
SUGAR INDUSTRY beyond 2010
cont’d
The industry cannot recover from its present
dilemma without a significant injection of well
managed funds.
A good gesture from the EU funding would be to
finance the full replanting required in one year as a
jump start for the industry
or
to provide a one year Ratoon Management Fund
(RMF) to give an immediate boost to cane
production.
SUGAR INDUSTRY
cont’d
beyond
2010
Its interesting to note that based on the 10 yr
production average of 163,890 tonnes sugar the
contributions by factory area were as follows:Frome
31.7%
Monymusk
13.8%
Bernard Lodge
10.7%
Trelawny
6.8%
Appleton
16.2%
Worthy Park
13.6%
St. Thomas
7.2%
SUGAR INDUSTRY beyond 2010
cont’d
Of the total cane production cane farmers
produced just about 41%. Beyond 2010 however
much more cane will be required from each area to
increase the percentages significantly and make the
industry viable and sustainable.
National cane yields have not reached 70 tc/ha
since the 1960’s. Concerted efforts are therefore
required to raise yields by an overall 20 tc/ha.
In 2009 canes harvested were as follows:SCJ Estates (pre-divestment)
547,299 tonnes
40.5%
Private Estates
267,567 tonnes
19.8%
Cane Farmers
536,415 tonnes
39.7%
SUGAR INDUSTRY beyond 2010
cont’d
Beyond 2010 requires that the industry returns to the
basics of cane growing and processing as was done
in Guyana.
Could there be one Driver to execute Jamaica’s
Turn Around Plan as was done in Guyana?
This is the time when the Industry should be
challenging Research and Development to show the
way in its turn around process.
This is the time
SUGAR INDUSTRY beyond 2010
cont’d
Commissioners I just wish to divert for a moment
A figure of $400 mil, has been mentioned as the cost to
the industry for Regulations S.I.R.I etc. I agree, that is
a tidy sum to be taken out of the industry’s earnings,
but I just wish to take the point a little further.
If you relate $400mil to last years production of 126,000
tonnes sugar that equals $3,175/t sugar produced.
If production goes up to 150,000 tonnes that equals
$2,667/t sugar produced.
If production goes up to $200,000 that equals $2,000/t
sugar produced.
SUGAR INDUSTRY beyond 2010
cont’d
What does $2,000/ tonne sugar pay for?
I do not know the details but it includes the following:Some to Administration Costs
Some for repairs, maintenance, operation of Core
Samplers and Laboratory Equipment at factories.
Some for Research and Development
Provides Analytical Laboratory Services
Provides new Cane Varieties for the Industry.
Provides Management Information for the Industry.
Can provide any request for Technical Assistance in
cane growing and processing.
SUGAR INDUSTRY beyond 2010
cont’d
If this industry cannot get back to 200,000 tonnes
sugar within the next 3 years then we can all forget
about it.
But more than that a figure of $173 million dollars has
been mentioned as the cost for running SIRI. From a
production of 200,000 tonnes sugar, this is equivalent
to J$865 per tonne sugar produced.
Can Jamaica’s Sugar Industry
afford a cost of $865.0 per tonne
sugar for Research, Development
and Technology Transfer?
Critical Research & Development
Issues

The Industry’s Cane Expansion Programme funded
by the EU through the STU of the Ministry of
Agriculture and managed by the SIA with SIRI
Extension is critical to the redevelopment of the
industry.

The Industry’s Cane Testing and Payment System
requires constant explaining and interpretation of
results as is done every year by SIRI Extension who
interacts with farmers through Seminars, Harvesting
Meetings, Newsletters and other methods of
information dissemination. This is critical to the
confidence and integrity of the Core Sampling and
Cane Payment System.
Critical Research & Development
Issues cont’d

The Core Data Programme and Cane Payment
System which are sensitive matters are managed
exclusively by the Computer Department of SIRI.

The Core Machinery and Equipment are serviced
and repaired by the Engineering Department of
SIRI.

The fertilizer management programme for the
industry which entails soil and leaf sampling
conducted by Extension Agronomists, Analyses by
the
Central
Laboratory
and
fertilizer
recommendations by the Nutritionist is critical to
the industry’s cane production and productivity.
Critical Research & Development
Issues cont’d

The Agricultural Engineering Department provides
technical guidelines in Irrigation and Drainage,
Machinery Calibration and recently installation of
Drip Systems for farmers.

The Agronomy Department continues the testing of
a host of cane varieties for sucrose, fibre and
resistance to pest and diseases. In addition provides
guidelines for use of chemicals in weed control as
well as cane ripening.
Critical Research & Development
Issues cont’d

The Central Laboratory is the controller of standards
in analyses provided weekly for sugar, molasses, soil,
leaf, water and cane juice etc.

The Industry’s Code of Practice on Environmental
Issues as well as the industry’s return to green cane
harvesting (GCH) are critical issues to be addressed.

The industry’s cost management activities through
the Annual cane Yield Survey and includes data
collection aided by Extension Agronomists provide
useful information for management decisions.
CLOSING STATEMENTS
The industry’s viability and sustainability depends
on factories being able to start processing early,
optimizing efficiency during peak harvesting
periods, improving operating time to over 80% and
completing the crop in a desirable time frame.
The industry requires national cane yields of 75 – 80
tc/ha. Major players need to be producing close to
100 tc/ha while those with much challenges should
be assisted to move up to 60 tc/ha.
CLOSING STATEMENTS cont’d
The future of the industry begins with halting the fall
out taking place in cane area being cultivated.
In addition to the Agricultural focus of the Research
and Development activities of SIRI much more
research is required to meet the need and
opportunities that lie ahead in value added and new
products.
“For an Organization to survive its rate of learning must be
greater than the rate of change in its external environment”.
Professor Reg Revans
THANK YOU
Presented to the Commission of Inquiry into the Sugar Industry
July 12, 2010
CLOSING STATEMENTS cont’d
The future of the industry begins with halting the fall
out taking place in cane area being cultivated.
In addition to the Agricultural focus of the Research
and Development activities of SIRI much more
research is required to meet the need and
opportunities that lie ahead in value added and new
products.
“For an Organization to survive its rate of learning must be
greater than the rate of change in its external environment”.
Professor Reg Revans

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