Sugar Sector: For a fairer distribution

Editorial

At one time, sugar was the predominant economic activity of Mauritius. In the circumstances, it was normal that sugar received our prime attention in view of its overriding socio-economic implications. Colonial governments and, after them, those that followed after independence, gave their highest attention to the fortunes of this largely export crop. Thus, when the commonwealth Sugar Preference came to an end in 1974 with Britain’s accession to the Treaty of Rome, our politicians negotiated the Lome convention to create the necessary opening and privileged access principally for our sugar to the European market. The sugar sector benefited due to this arrangement from a guaranteed export quota in the European Union at much above world market prices.

Things have been changing. Economics Nobel Laureate Prof James Meade correctly diagnosed in the 1960s the precariousness of the sugar-dependent economic model in the face of rising demography. In the 1980s, the economy started diversifying: textiles and tourism started gaining ground. In the 1990s, EPZ exports exceeded by far sugar export earnings. A decade later, sugar became third only after EPZ and tourism in terms of export earnings, and it has gone tumbling down ever. Today even though sugar production remains one of the major activities of Mauritius, its economic weight in terms of earnings, and even more as regards employment, has steadily declined compared to other sectors that have emerged.

Common sense dictates that if new sectors of economic activity are going to contribute an ever-larger share in terms of national production and employment generation, it is those sectors that deserve to be given a further fillip. Or, to put it differently, if new offshoots are to be generated from a sector that no longer plays the key role it has played for centuries, those offshoots should receive financial resources, subsidies, benefits, privileges, whatever, provided they become the springboard for greater economic mobility of the various members of the population than has been the case with so many years of protection of the sugar sector alone. Accordingly, if energy production is to be privileged at guaranteed prices at the expense of consumers, all stakeholders should participate in the project in a better-balanced model of overall economic development.

For years, succeeding governments have given a series of concessions to the sugar sector. These range from the elimination of the sugar export duty, that was intended to recoup for general economic development a small part of the political price obtained for sugar under Lome, to cheap loans granted by the Bank of Mauritius for the modernisation of the sector whereas it is not the central bank’s vocation to land to the private sector. Did the sugar sector requite by generating more employment and/or output?

Quite the contrary. Workers were and are being laid off under the Voluntary Retirement Scheme and, later, under the Early Retirement Scheme. Total annual sugar production has gone on shrinking and has never again come close to the records nearing 700,000 tonnes of yesteryears. Whenever there has been scope for shifting to other lines of production, such as energy production, only a handful of investors have taken hold of them to the exclusion of the numerous other stakeholders of the sugar industry. There must be a reason or reasons why, despite all the support extended by succeeding governments to the sugar industry, the latter has failed to reciprocate in terms of higher levels of employment or total production, or a wider platform of shareholders in its new ventures so as to be compatible with a fair and equitable sharing of gains.

Mauritius Times and its collaborators have been arguing at length that under various schemes, such as the IRS being developed by the large sugar estates, the resulting windfall gains due to soaring prices arising from land conversion could have been employed to support targeted economic development for the benefit of the nation as a whole. Nothing has materialized from this source. Others will therefore have to fund the infrastructure, skills base and transformation of the island to the position of a City State capable of attracting the best international investments and enabling Mauritius to eventually act as a hub of global production.

Others will equally have to meet the cost of investment in human capital despite the burden represented to such investors by a rupee that has rapidly depreciated down the years. It is this continuing unfairness of the situation that has come under public scrutiny. It has nothing to do with ethnicity. It is a purely economic argument which says that the way things are being done since a very long time should now change so that the population is not forever maintained as the beast of burden.

It would be important at this stage for decision-makers to bear in mind the required element of fair redistribution of the benefits of development to prevent the equation from becoming lopsided again. Thus, projects like the development of Mauritius as a seafood hub should be grounded into wider share participation by the public. The Land Based Oceanic Industry, when it is to emerge, should also involve a wide public participation. The latter should in that case receive financial assistance as may be needed to facilitate participation in the shareholding.

There is no need to maintain the sugar industry at the core of national conflicts, controversies, discords of various sorts, as has been the case over such a long period of time. Perceptions should change in favour of the sector as a fairer player on the economic scene than it has been the case so far.

Backed by published facts and figures, this is in fact the core thrust of the articles that have appeared in this paper in the past few weeks, namely that the fallouts from the diversification

into non-sugar sectors (energy, distillery, land conversion) should have been more equitably distributed. Without politicising or ethnicising the issue, this could have been done by shareholding structures which are the basis of large scale economic activities. Similarly to the shareholding to the tune of 36% in SIT by the small planters, the state could have taken the lead in extending this by legislation to the non-sugar sectors mentioned earlier.

And it is still not too late for this to happen – which would be a feather in the cap of the government since we are clearly in pre-electoral mode now. This would consolidate the support to – and by — the small planter community, and not make it appear as if it is only an issue for the Opposition, which was present at the Small Planters meeting at Octave Wiehe auditorium on Sunday last. For this is about Small Planters and not about politics, although if through easing their economic burden there is a political dividend that surely would be justified for whoever took the lead.

For a start, besides the shareholding issue, there is nothing that prevents the state from extending the same benefits and waivers generously offered to the large sugar sector to, equally, the small planters who are abandoning their lands. These too can thus be made available for residential purposes, and perhaps even for renewable energy production in selected regions. And by the same token, the state should revisit the cap of renewable energy imposed by the CEB – which is an obvious contradiction of the country’s energy policy, which aims to go renewable to the maximum in line with international and environmental standards.

In the meantime, it is up to the small planter community to persevere with and even step up its lobbying, since they are doing it for a cause that can have a wider impact with both economic and social benefits – and thus good for the country as a whole.


* Published in print edition on 9 November 2018

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