Re-Engineering the Small Planter-Estate Owners Nexus

Future of the Cane Industry

The sugar industry, as we have known it to date, is a thing of the past.

No access based on quotas and negotiated prices to our preferential market – the European Union (EU) as from 2017 – is a situation which the industry has practically never faced in its more than two and a half centuries of history. The choice of SudZucker as our partner in the promotion and distribution of our sugar (sugars?) in Europe at the expense of Tate and Lyle is another defining moment in the breaks-from-the-past that we are going to witness, going forward.

There have been some debates over the deadline of 2017 when prices are expected to fall to Euro 400 per Ton as compared to the Euro726 it fetched in 2012. It is being suggested that a misreading of the content of the Report of the European Commission of last December has led to some confusion about the calendar of its implementation. This is why, it is being said, some and not the least of the actors, seem to have been caught with their pants down when it came down to reality. All this is really rather futile when compared to the enormity of the tasks that await those responsible for charting the road ahead.

In the circumstances one thing which we certainly cannot afford is to waste time, energy and resources fighting the last battle. The deadline having been once postponed from 2015 to 2107 and the whole EU institutional process having been completed, it would be silly to direct resources to trying to have a further extension.

The Premise

Having said that, and if we may be excused for stating the obvious, it would seem that the starting point on the way forward is for a SWOT analysis of the industry to be carried out in the light of the new circumstances, both local and external. Some of the threats and weaknesses are glaring and may even seem overwhelming. A sharp cut in prices and no guaranteed quotas can indeed seem debilitating to participants in the industry who have never experienced anything even remotely similar. And yet we must not underestimate the strengths and opportunities.

The Knowledge Capital acquired by the industry over the last two and a half centuries is the most prominent among those. We will be well advised to invest even more on growing this capital and this for three reasons. First, it is an existing asset, consisting not only in expertise in crop research but also in engineering technology and management methodologies, which is easily transferable. Second, it is an exportable product which will be in demand in the context of international efforts for food security, especially in Africa. Third, the future of sugarcane production revolves around the maximization of the use of cane products which has already seen the establishment of co-generation plants (bagasse/coal) and production of ethanol from molasses by existing players of the industry.

Future developments, especially in the context of a resource-stressed world coming under the threat of global climate change, hold great promise for those who can master the science of transformation into areas such as the so-called cellulosic ethanol – fuel produced from bagasse or the leaves, husks and other organic waste from sugar cane production. There have been cases, as in the St Kitts Islands or in Trinidad, where faced with a similar situation to the one we are in today, some nations have taken a deliberate decision to simply abandon or neglect the industry in favour of alternative sectors.

We take the view that the weight of this Knowledge Capital in the economic DNA of Mauritius is so vital that it would be near-folly to take the route of abandonment and decay. For let there be no mistake about this: the share of the industry in GDP does not reflect its actual importance in the national economy especially in terms of its social or environmental impact. This leaves us with no other alternative than to envisage the complete overhaul of the industry while capitalizing on our assets and experience. In short, we must be careful not to throw out the baby with the bath water.

The Players

The concept of Small Planter Community may sometimes seem incongruous and of little “scientific” validity in social science terms. For the purposes of this article, the small planter community groups all non-corporate owners of plots under cane cultivation ranging from less than five acres to more than 500 acres. Yet there is a commonality of interest among those planters which has organically grown out of the historical development of the industry and defies the definition by numbers.

The political history of the small planters is one of constant shifts between collaboration and conflict with the sugar estate owners. A condition explained by the fact that they are both part of one system which they are determined to preserve while simultaneously having conflicting interests as regards the appropriation of added value all along the production and distribution chains.

The NEXUS of the equation, however, remains the system of remuneration on a fixed revenue-sharing basis between sugar estates/factory owners on the one hand and planters on the other. The corollary to this arrangement being, of course, the centralization of marketing and distribution of proceeds through the Sugar Syndicate. The small planters for their part are further “locked” into this system through an array of regulations regarding land use.

Absent these arrangements the planter would be engaged into a purely mercantilist relationship with the factory owner. This would of course have damaging consequences for the future of the industry including serious questioning of the rationale for regulations which “incentivizes” the planter to grow and deliver sugarcane to the factory. Already there has been considerable loss of cane production resulting from small planters’ disaffection due to low incomes and other practical problems.

If we admit that maintaining the fixed revenue sharing formula lies at the heart of the survival of the industry, then a direct consequence is that finding a fair and equitable sharing ratio is critical to the future. It needs to be totally reengineered so as to reflect the new features of the cane industry.

Transparency in revenue accruing from the new lines of activity and a revaluation of their contribution to the same is a necessary condition for the continued participation of small planters in the system. In other words since there is a consensus that the industry after all deserves to be preserved, it is this all important nexus which needs to be safeguarded.

* Published in print edition on 28 February 2014