The nation’s private cane farmers appear to be looking forward to reaping the sweets of Government’s proposal to enter into a public-private partnership (PPP) with them.
The leader of the private estates, who are under the Barbados Sugar Industry Limited (BSIL) banner, said a partnership with the state-owned farms of the Barbados Agricultural Marketing Company (BAMC) is the only way the sugar industry can survive.
“Definitely it is a very positive step forward for sure because I think this is the only way that the industry can survive and also significantly reduce the subsidies that are needed annually,” BSIL Chairman Mark Sealy told Barbados TODAY, stressing that, the proposal is not for a merger.
“As I understand it, the Government is interested in a Government private-partnership with the major shareholder being the private sector. Who are the shareholders on the private sector side is yet to be determined. But there are a number of different stakeholders. But I think it is a very positive move,” the private cane farmers’ spokesman told Barbados TODAY.
Sealy said the BSIL has already put together a strategic plan which speaks to a similar structure considering that the current “high” subsidies being paid by Government to BAMC and private farmers are unsustainable.
Following a tour of St Nicholas Abbey last Friday, Minister of Agriculture and Food Security Indar Weir said he would be seeking to reach an agreement for the state-run BAMC and the privately-owned 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 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 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.
While conceding that the PPP arrangement was an “extremely complicated” process and that plenty of work has to be done, the BSIL chairman believes that its strategic plan would work in substantially slashing subsidies.
“I think it is definitely the way forward. It will definitely improve things substantially. Having said that, this is an extremely complicated business challenge…and we have put forward a plan with sugar, syrup and energy which we believe can significantly reduce the subsidies. But there is a lot of work to be done to get to that level and there would have to be a transitional period,” he suggested, while citing Weir’s proposal of between three to five years.
Weir had also said the partnership had to take place simply because under the current 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.