(Jamaica Gleaner) Sugar officials now acknowledge it will take US$39 million to produce the 79,000 tonnes of sugar forward sold to Eridania Suisse SA from the next crop, and not US$21 million as initially announced.
The disclosure by John Gayle, general manager of SCJ Holdings, came on the same day that sister publication Wednesday Business reported that Eridania’s sugar could cost double the initial estimate.
SCJ Holdings hosted a press conference and tour of Bernard Lodge and Monymusk estates, on Wednesday.
At the US$39 million budget, it would cost about 22-23 US cents per pound to produce the sweetener, the Financial Gleaner estimates.
Jamaica struck a deal with Eridania mid-year for the raw sugar at €335 per tonne, on which it will receive US$15 million as partial, upfront payment on an estimated total of US$37.7 million. While the full payment falls below the estimated production cost, there is a profit-sharing component to the deal that could potentially give Jamaica additional income, if Eridania – which will refine the sugar for sale in Europe – makes more from the value-added product than it costs to manufacture it.
The prepayment leaves SCJ with a gap of about US$24 million to produce the crop – which includes putting 1,500 hectares of land under cultivation – and not US$6 million as told to lawmakers.
To date, Jamaica has pocketed J$180 million from the sale of three factories – Duckenfield in St Thomas for US$500,000 (J$44.5m) to Seprod Limited/Fred M Jones Estate; and the Long Pond and Hampden estates to Everglades Farm, which is owned by the Hussey family. The buyers have already taken possession of the factories.
Eridania, which is said to command 30 per cent of the Italian sugar market, is also in talks with SCJ to acquire the remaining three factories – Frome, Bernard Lodge and Monymusk – said SCJ Holdings chairman Aubyn Hill. The Italians are interested in developing a refinery, Hill said.
SCJ is in the process of readying the three factories for the next crop, and is hoping to wring new efficiencies from the operations. Each sugar payment from Eridania will be pumped immediately into production, the sugar company chairman said in order to avoid pressuring the state’s coffers.
So far SCJ Holding said it has put US$10 million into readying the estates for the crop – some of which has been spent on replanting, J$170 million; irrigation, J$80 million; and harvesting equipment, J$130 million.
Another J$600 million of capital is earmarked for factory rehabilitation, out of which J$300 million will be spent on Frome in Westmoreland to purchase new mill rollers, bearings and trash plated, and other equipment. (US$1 = J$89)
