The local rum industry, which brings in close to $120 million a year, but is challenged by unfair competition from foreign producers that are subsidised by their governments, will soon be placed in a much better position to hold its own along side these exporters.
The announcement to provide similar subsidies to Barbadian producers, was made in the Lower Chamber of Parliament this evening by Minister of Finance, Chris Sinckler, during his Financial Statement and Budgetary Proposals.
“The local rum industry has in recent times come under significant pressure from US rum producers who are now the beneficiaries of illegal subsidies, which are eroding the competitiveness of Barbados’ rum and consequently, its market share,” Sinckler pointed out.
“The so-called cover-over subsidies are now having a major negative impact to the extent where local and regional producers are being left with considerable stocks of rum, which they cannot get the rid of.
“Both at the level of CARICOM and domestically, governments across the region, including Barbados, have been petitioning the US government over the distortionary impact which these subsidies are having on the US market for rum.”
He submitted that CARICOM was also preparing for the possibility of lodging a case in the World Trade Organisation to have the offending subsidies removed. Sinckler suggested that this was a process that could potentially take years to resolve, while the local rum industry could face certain collapse.
“Bearing all these things in mind and knowing that local officials are pressing for a negotiated settlement of the issue, we have determined that it has become necessary for us to act to safeguard the future of the industry.
“To this extend. Government will, in the coming weeks, sit again with representatives from the local rum industry, this time, to examine a mechanism that would initiate a similar level of subsidisation for our local rum producers, so that they can remain relevant and competitive in overseas markets.
“Additionally, in order to enable the local rum distillery industry to meet the challenge it now faces and is likely to encounter for the next several years, Government has instructed the Barbados National Oil Company Limited to work closely and urgently with the local distilleries on the introduction of locally produced ethanol into the gasoline sold locally,” Sinckler declared. (EJ)