Sugar farmers, who are said to be owed about $15 million in incentive payments for the 2015 crop season, should be paid within another two weeks.
Minister of Finance Chris Sinckler said today the subsidized payments were due to be made to the Barbados Agricultural Management Company (BAMC) by next week and farmers should receive them, at the latest, by the following week.
He explained that Government would be making a draw down from its current bond with the Trinidad-owned ANSA Merchant Bank, and those funds would go towards settling BAMC’s arrears to the farmers, as well as assisting them with preparations for the 2017 sugar crop.
As for the 2016 harvest, which is scheduled to begin the second week of March, Sinckler said he would not be surprised if the total yield fell below the anticipated 10,000 tonnes, given the recent drought and “slow payments” to farmers.
However, he said Government’s goal was to get the liabilities for the previous year’s crop cleared and “work our way through with what little we can get from this year’s crop with those issues, but really to start from 2017 to have an increased production line going forward.
“That is to coincide with the restructuring we are doing with the new multi-purpose factory [at Andrews, St Joseph]. We are expecting that we should have that financing concluded this year within the next few months, hopefully, and once that is in place, and then all the regulatory permissions are given, construction can start,” the Minister of Finance said, noting that construction was due to commence in 2017, with the factory due to become operational by 2018.
Sinckler also told journalists his ministry had made finances available for upgrade of the island’s only operational sugar factory at Portvale, St James.
“I believe they have brought in a couple new boiler systems to get them ready. There were some challenges but I am told by the BAMC that the factory, in spite of that, will be ready on time. So we are happy about that and hopefully we can get through this crop season without any major challenges, breakdowns or whatever the case may be as we might have had in previous years,” he said.
Describing the sugar industry as a fairly costly enterprise, the Minister admitted that it was not profitable and that current returns did not reflect the cost of production.
“Therefore there is a deficit and what has happened over the years, not just under this administration because this has been going on for a little while, is that the Government has been sourcing debt financing to assist with the subsidization of that,” he said.
“We have now reached the level where the debt service cost for the sugar industry, BAMC and all of the other entities involved, has now gone in excess of $60 million per annum. It is a significant amount of money and obviously that is not sustainable. And that is why we are doing the restructuring project,” explained Sinckler, warning that there were no more “super profits” in the industry anymore.
Therefore, he said, a focus on efficient ways of producing sugar was critical, as well as “targeted sugar enterprise” to allow farmers to make a “decent” recovery on their investment.
In that regard, he said careful studies would have to be carried out to determine if the island should move away from producing bulk sugar, go into specialized sugar production, identify other markets for better returns, and whether to satisfy the local sugar demands first before exporting.
“So all of those are questions that have to be dealt with in terms of the reform of the sugar industry. You may say that we are late in doing that reform. Yes, I think we are late to some degree, but I still think it can be salvaged and quite successfully in the context of this market and that is what we are working on,” said Sinckler.