The nation’s two sugar production companies, the state-owned Barbados Agricultural Management Company (BAMC) and the private Barbados Sugar Industries Limited (BSIL), are to be merged in a public-private sector partnership, the Government has announced.
The two agricultural enterprises will be among the first to be restructured under the Barbados Economic Recovery and Transformation (BERT) programme to restructure statutory corporations.
As a result, the amount of subsidy currently given to the BAMC is to be slashed in about half as of next financial year, said Minister of Agriculture and Food Security Indar Weir.
In the 2017/2018 Estimates, the BAMC received $25.23 million in government funding, with a forward estimate of the same for the 2018/2019 financial year.
Following a tour of St Nicholas Abbey on Friday, Weir said he would be seeking to reach an agreement for the BAMC and the BSIL to “morph into an operation where you have limited shareholding by the government of Barbados, the public of Barbados is given an opportunity to own shares and the BSIL becomes shareholders as well”.
The privately-owned BSIL looks after the interest of the private sugar cane farmers and is generally not a revenue-generating entity.
“I feel that greater efficiencies can come if we get the sugar industry completely managed and operated through the private sector,” Weir told reporters, while insisting that it was time the sugar industry formed closer linkages with the manufacturing and tourism industries.
With the amalgamation of the two entities the sugar industry would be diversified and create more job opportunities, Weir declared.
He said the merger had to take place simply because under the current International Monetary Fund (IMF) agreement the BAMC would not have the luxury of getting the “large subsidies that they were accustomed to”.
“If we are going to be shaving off close to $12 million in subsidies to the BAMC, then we have to find a way to be able to bridge that financing gap. And the only way for us to do that is for us to move at a nimble pace to put in place an operation that replaces what we currently have and one that transitions the entire industry into [one] that is totally owned by Barbadians but totally supportive of a rum industry that is trending in the right direction,” he said.
The agriculture minister said he was also satisfied that Barbados was “on to the right track” and it was now a matter of getting all parties to agree to the pending changes.
Stating that the plan is to have the two entities merged within the next three to five years, Weir said he had already asked new BAMC chairman Winston Best to look at the possibility of speeding up the transition.
“We have to transition from the level or the yield of sugar production that we are currently getting. It is estimated that over the next three to five years we should be close to that objective in terms of yields to the level of approximately 20,000 to 30,000 tonnes. For us to achieve that over the same three to five years, that transformation process where we morph these two entities should also be taking place,” he added.
“By 2023 we should be well on our way to making sure that all of this is in place. What I do know for sure is that by 2019/2020 we are going to have to find that additional financing that the BAMC will not be getting through Government anymore. Therefore, it is absolutely mission critical for us to be able to turn this project around quickly so that we can achieve the objective that we have laid out for the sugar cane industry,” he explained.
While insisting that there was “no space” for Government in areas where the private sector could “perform those duties and do them better”, Weir maintained that Government would continue to provide an enabling environment.
“We must create the platform for people to get involved and avoid any monopoly involved in this,” he said, adding that it is time the country create sugar, rum and other by-products of the sugar cane.
Weir did not address the issue of private cane farmers being owed millions by Government, but said the cut in subsidies would not affect them or next year’s sugar cane harvest.
“The government is still committed to the support it is giving to the farmers and of course we have to maintain that until we get this entity in place that will completely take government out of this space and allow for them to take over the industry and run it,” he said.
Government recently paid some of the millions owed to the private sugar cane farmers and negotiations are ongoing for further payments to be made, Barbados TODAY has learned.
Director of St Nicholas Abbey, Larry Warren, described the merger plan as “refreshing” news.
“I welcome your very precise and clear terms in setting out the future of the industry for us . . . the private sector will step up, like we [St Nicholas Abbey] have in a very small way, to your direction,” said Warren.
In turn, the agriculture minister said he was pleased with what St Nicholas Abbey was doing with its rum production.