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By Peter Webster
“A fool and his money are soon parted.” – Thomas Tusser
“Where ignorance is bliss ‘tis folly to be wise.” – David Lehman
“There are none so blind as those that will not see.” – Edmond Burke
Forty years ago, a Caribbean political leader challenged the private sector to invest more in their country and, after a few months, complained bitterly that the “private sector” had not responded. This in a country where the private sector had been battered for years, almost to extinction, by socialist policies that had depleted its capital and without capital there is no private sector.
We currently have a similar situation in Barbados, where the Government wishes the private sector to take back the sugar industry that the Government took over in 1971 and proceeded to bankrupt through bad management, excessive taxation and legislation of wage rates that were higher than the industry could afford. The fact that many are now trying to “muddy the water”, twist the history to suit their own purposes and generally do not want to accept the documented history of the sugar industry in Barbados does not change anything. It is what it is. The precipitous decline of production starting in 1971 with the resulting loss in economies of scale is testament to that.
The International Society of Sugar Cane Technologists stated in 2008 that the smallest financially viable sugar industry in the world was 12, 000 hectares or 30, 000 acres. Yet some in Barbados expect to have a financially viable sugar industry in Barbados with less than one quarter of the size needed to achieve the required economies of scale for financial viability.
The reality is that the Barbados sugar industry currently being managed by the Government of Barbados, is producing less than 8, 000 tons of sugar annually at $4, 000 per ton and selling it at the market price of $2, 000 per ton – financial folly! At the same time, it is selling its molasses to the favoured rum industry at almost $100 per ton, less than the imported price. The Government has been able to do this simply by subsidizing the sugar industry’s losses using taxpayer’s money that is also needed elsewhere. So what magic wand does the private sector have that would change all of this?
Has the Government rescinded all the legislation that gave it control over the industry and allowed it to dictate wages and tax the industry to bankruptcy? Where is all the capital to come from to revitalize this industry? And why would anyone in their right mind invest hard-earned savings/capital in such a risky, loss-making venture without the prerequisite assurances?
Round and round we go…
Peter Webster is a retired Portfolio Manager of the Caribbean Development Bank and a former Senior Agricultural Officer in the Ministry of Agriculture.
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