Sugar Industry: Ten Years and 1.2 Billion Rupees Later

The whole history of the industry and the political environment in which it has evolved militate against any solution for its present conundrum to be envisaged on the back of the labour force

In a recent interview in the local press, Ms Marjaana Sall, the Ambassador of the European Union in Mauritius, pointed out that during the past eight years from 2010 to 2018 Mauritius had obtained 300M Euros (Rupees 1.2 Billion approximately) from the European Union in the form of budgetary support for economic reforms and restructuring to improve the country’s competitiveness. The bulk of this sum, she added, went towards the sugar sector “in order to prepare it for the post Sugar Protocol era” and the inevitable fall in sugar revenue which would inevitably follow the ending of this “preferential treatment” for Mauritius sugar on the European market.

The Mauritius sugar industry has always been a “protected” industry ever since the British colonization period down to the post-independence days when the Commonwealth Sugar Agreement was finally substituted by the Sugar Protocol after the United Kingdom joined the then Common Market. It was therefore always going to be tough for the industry to rid itself of this legacy which defined the contours of the industry from labour relations to “partnership” with the government as well as the peculiar rural/social stratification so pervasive of “plantation” economies around the world.

To come back to the comments from Ms Sall regarding the billion or so rupees provided by the EU which have purportedly been “invested” in the reform and modernization of the industry, it is not being facetious to ask: “What have we got to show for all this money?” The obvious answer is indeed hugely depressing.

From 2010 onwards, the “modernization and restructuring” efforts have resulted in a constant decline of the sugar industry characterized by a fall in the volume of sugar produced from 452,473 Tons in 2010 to 386,277 Tons in 2016. As for the acreage under cane cultivation, it has come down from 62,100 H in 2010 to 55.560 H in 2016. After having been the largest employer of the country for a very long time, the number of employees in the industry had declined to 6,316 in 2016 following the centralization of sugar production around four mills.

In effect, for all the talk and the money invested, what we have got is a rationalization of the industry which is a far cry from the promised transformation usually summed up in the now familiar expression of transitioning from the “sugar industry” to the “cane industry”. Observers of the industry consider that this apparent myopia is principally a result of deep internal contradictions among the owners of milling companies and other big players of the sector.

Faced with a price of sugar of MUR10,000 per ton for the latest crop and a cost of production generally estimated to be around MUR17,000 per ton, there is now a hue and cry about the seemingly inevitable “death” of the industry. The usual suspects are on the battle front again for even more money to be invested in its rescue. The latest figure which has cropped up is an amount of MUR1.3 Bilion with a report of a technical committee to boot. In view of the recent experience, one will be excused for asking whether this is not pleading for another case of putting good money after bad?

The approach of the Joint Technical Committee has been laudable. It has identified the parameters of a future successful industry with an objective of 400,000.000 Tons of cane production (roughly 400,000T of sugar and presumably a volume which Mauritius can hope to sell on the international markets) and worked backwards on how this can be profitably achieved.

Unfortunately the report of the Joint Technical Committee has one serious fault line. It has been unable to escape the trap of going for what may seem to be the easiest solution whenever there is a need for turn-around in an industry or a firm – cutting costs starts with a slashing of what are considered to be “undue privileges” of the labour force.

Are we to understand that for an industry which was producing around 550,000 tons of sugar at the end of the last century with a labour force, which was nearly three times the present numbers, the share of the cost of labour under the proposed new scheme which aims at a production of 400,000 tons could be a key factor of success or failure? Certainly not after the 1 Billion of investment in “modernization and centralization” and the accompanying drastic reduction in the number of employees.

Ths proposition regarding the suppression of purported “privileges” of the labour force of the sugar industry is even more surprising if one considers that the authors should have been aware that in itself this recommendation would render the whole exercise inoperational. The whole history of the industry and the political environment in which it has evolved militate against any solution for its present conundrum to be envisaged on the back of the labour force.

For simplicity’s sake, let us agree that given the historical and political context in which the industry has developed, the labour force is entitled to its fair share of the millions if not billions which are being proposed for securing the future of the industry. There is indeed a precedent in the way in which the docker’s contribution to the development of the port industry was rightfully compensated at the time when the port was “modernized”.

 


* Published in print edition on 8 June 2018

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