Caribbean sugar producers want 40 percent tax on imported beet sugar

BERT WILKINSON | 11/22/2018, midnight
Over the decades, rising production costs, the collapse of a market protection system in the European Union and increased production ...
Sugar Pixabay

Over the decades, rising production costs, the collapse of a market protection system in the European Union and increased production of beet sugar in Europe have all worked to undermine sugar production in the Caribbean, with several countries opting to abandon the sector altogether after more than 300 years.

Of the more than a dozen that had been producing sugar over the centuries, only Guyana, Belize, Jamaica and Barbados still battle to keep their money-losing industries afloat, even as industry players lobby regional governments to impose high import tariffs on crystals entering the regional market. Trinidad and St. Kitts were the last to quit after 2005. Guyana, which had always been among the largest producers, recently closed three of its six estates and sent home approximately 5,000 workers, citing rank unprofitability of the state-owned sugar corporation and dwindling international markets.

In the past week, the umbrella Sugar Association of the Caribbean formally asked the ministerial Council for Trade and Development to slap a 40 percent tax on beet sugar from Europe and other markets as a protectionist measure in favor of Caribbean raw sugar production and sales.

The SAC made its pitch in a paper to a meeting of trade ministers at regional headquarters in Guyana, arguing that higher prices for imported beet sugar would push consumers into buying raw, normal brown sugar.

“It is a critical time for sugar in the CARICOM region,” John McLachlan, a SAC director out of Belize told the ministerial session. “There remain significant challenges confronting the industry, which in our view can become viable if the necessary issues are addressed at the political level, so that sugar production can find a place in the market.”

A year ago, the EU opened up its market to anyone who wants to sell raw or beet sugar in its free trade area, dealing a major blow to dozens of countries in the African, Caribbean and Pacific group of countries or former colonies that had been allowed to operate with a protected market in their favor. That group had since the mid-1970s enjoyed duty-free access to the EU, guaranteed prices and fixed quotas, but the region has had to adjust and sell its production domestically rather than to a once very lucrative area for its raw bulk sugar.

The SAC contends that unless governments slap a 40 percent import duty on third-party sugar, the four remaining operators will still struggle to sell what they produce as the larger Western countries benefit from subsidies from their governments and could easily dump cheaper sugar on an unsuspecting Caribbean market, shouldering out domestic production.

Current annual exports to Europe are now under 100,000 metric tons, compared with more than 500,000 a decade ago. The remaining sugar producers appear to have been slow to act in reducing raw, bulk sugar production and converting some plants to produce white refined sugar for the confectionary and other markets. The first major blow to the ACP group came around 2005, when the EU cut export prices by 36 percent, signaling that the days of protection for sugar from the former colonies were coming to an end.