Sugar Technology On-line News

EU INDICATES ITS INTENTIONS

In the middle of December the EU issued an important document on the future of the CAP : IP/02/1892. In it there are proposals to cut farm-good tariffs by 36%, export subsidies by 45% and 'trade distorting' domestic farm support by 55%. The document tries very hard to defend what the EU is doing and is full of quotations from Commissioners. The only trouble is that it does not even mention sugar.

During a visit to Zambia, EU Trade Commissioner Pascal Lamy is reported to have stated that the EU will abolish the sugar quota system by 2008 with a steady increase in the amount of sugar permitted in under the EBA initiative.

MAURITIUS

Mauritius has revised downwards its 2002 sugar output forecast to 521,000 tonnes, citing adverse climatic conditions that had affected the island. The Chamber of Agriculture said the reduction was the result of extensive damage caused by a cyclone earlier in the year as well as the bad weather that had prevailed since. This again underlines the island's difficulties in satisfying its very large EU quota but in the light of the previous article, perhaps this doesn't matter in the medium term?

KENYA

You will have seen that Kenya has a new government but you might not have seen sugar coming into the foray before the elections. During the hustings, the party of President Mwai Kibaki vowed to ban imports of cheap sugar in order to sort out the country's struggling industry. It will be interesting to see how the new government copes with taking the reins after Moi's party has been in power for so long. Maybe a case of "deja vu all over again"?

CHILE

Following our note last month about IANSA it was reported on the wires that Chilean agricultural co-operatives were interested in buying Ebro's share of the company. The stories also reported that the company's earnings were down 19% in the first nine months of the year.

IMPERIAL HOLLY CONTINUES TO DIVEST

Imperial is now selling off some of its brand names. Diamond Crystal Brands, one of the companies inherited from Savannah, has been sold. The company packs for the catering industry. The advantage to Imperial is that the buyer has agreed to buy the majority of its sugar requirements [presumably more than the Diamond Crystal demand] from Imperial for the next five years.

More importantly, in the same announcement the groups stated that that it will consolidate its cane sugar refining operations to its Gramercy, LA and Savannah, GA facilities, discontinuing sugar refining operations at Sugar Land, TX. The company will continue to run distribution and packaging operations at Sugar Land and will continue to operate its headquarters activities there.

DOMINO STRIKE

Workers at Domino's Baltimore refinery went on strike in early December following a failure to agree a new labour contract. At this stage it looks as if it could be a long strike with neither side willing to give ground.

JAMAICA

The government has announced that the Sugar Company of Jamaica's Hampden Sugar Factory is to close with immediate effect. The Minister of Agriculture said that the factory lost J$ 450 million [US$ 9 million] last year and would need J$ 400 million worth of investment for it to achieve a "minimum level of efficiency". With the closure of Hampden, SCJ's Long Pond factory has been gearing up to cope with the cane from Hampden as well as its own cane. Whether it will be able to do so after such a poor performance last year, marred by frequent breakdowns, is open to debate.

AUSTRALIA

The new, government imposed sugar levy will have taken effect in Australia by the time you read this. However, the Cane Farmers Association members across North Queensland have unanimously agreed to each pay Aus$ 20 ["less than a carton of beer" was the Australian perspective] to fund an economic study into the impacts of the reform packages. The study will be undertaken by three academics who do not think the reforms, funded from the levy, will be beneficial to the industry.

In another move, a Queensland government report on the sugar industry has recommended major changes if the industry is to avoid collapse. The report recommends removing the cane production area system [letting growers shop around for the best price] and overhauling the compulsory bargaining system. If these reforms went ahead and the current pool price remained at Au$270 a ton, the report predicts that industry profits would rise to $338 million per annum and an extra 3400 sugar jobs would be created by 2006. Tellingly, the growers are not happy with the report and have urged the state to avoid blindly endorsing it.

One announcement made last month seems directly related to all this: the formation of a 'Co-operative Research Centre' for 'Sugar Industry Innovation through Biotechnology'. One aspect of its work will be to enhance sucrose production using sugarcane molecular biology but it will also aim to provide value added products such as bio-fuels, pharmaceuticals and biodegradable plastics.

KINYARA CHAOS

The Government of Uganda seems to have changed its mind over the sale of Kinyara during December. Regular readers will remember that the original thinking was to sell 21% to the public with 10% each going to workers, growers and Booker Tate. The government was to retain the remaining 40%. The latest thinking seems to be to sell the company to a 'core investor', thereby 'robbing' the workers and growers of their shares. There is no mention of what company might be the core investor. The new arrangement is reported to be taking six months to set up.

OLD BOSS AND NEW

December saw a return to the reins for Billy Patout, not long retired from his company's sugar business and an announcement from T+L that, as they had not found a replacement for Larry Pillard, Simon Gifford [the Finance Director] would act as the CEO pro tem. Welcome home Billy! Good luck Simon!

T+L FLASHBACK

Tate and Lyle also announced a project to produce xanthan gum by fermentation in December. The only question is whether this is December 2002 or December 1976 when it first announced plans to develop a project to produce xanthan gum by fermentation. That project, a joint venture with Hercules Powder, was built but never entered production.

The group also announced two sales during December:

• United Molasses' North American companies have been sold; [The sale of UM as a single entity was cancelled earlier in the year.]
• Interests in two factories in Guangxi province were sold for $5 million to private investors.

There can now be little left to sell - or can there?

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