An Obituary For The Sugar Industry

as we have known it todate

In this article we shall endeavour to recap very briefly some of the historical aspects which are important in order to understand our present predicament.

We hope it will be useful to young students of history.

After many trials and errors the French colonists started cane cultivation on an “industrial” scale in the mid-18th Century. Since the conquest of Mauritius by the British in 1810 (during the Napoleonic Wars), was always dictated by strategic rather than economic reasons, the first British governors seemed to have been more than happy to go on with the established and tested burgeoning sugar industry. Significantly from these early days the industry was to be an exercise in political partnership – the landowners, who had been given generous concessions by the King of France, provided the capital and entrepreneurship; the Colonial government provided infrastructure and ensured that there was adequate supply of labour (after the abolition of slavery in 1835, indentured labour was imported from India) for the industry’s expansion and the Imperial government provided (with some interruptions) a protected market. Through booms and busts, the industry maintained a steady growth and consolidation over the next two and a half centuries.

The modern history of the industry after 1945 starts with the devastating effects resulting from the Second World War but surprisingly enough with no effects on its institutional structures. The four established pillars were the Chamber of Agriculture (founded in 1853) – from the outset, a semi-political body with responsibility for negotiations with the Colonial government and increasingly the Imperial government; the Sugar Syndicate (1919), a central marketing organization; Commercial Banks centred on the provision of short-term crop finance in line with the needs pattern of the industry (faisance-valoir) through an elaborate system of brokers. The Colonial government for its part set up the Sugar Cane Research Station and College of Agriculture providing research and higher education geared towards the needs of the industry.

1946-1953 witnessed a period of boom as the modern foundations of the industry were being put in place accompanied by the first rumblings of class contradictions. Income to individual planters grew considerably; acreage under plantation increased by 26% and sugar production rose by 76%. The same period witnessed a series of political developments as a result of class struggle and agitations started by the Labour Party since its founding in 1935 coupled with the mass movements led by the Bissoondoyal brothers among the rural population.

In 1943 shots were fired by some individual factory owners, leading to the death of workers on strike. In 1948, as a result of mass mobilization, the Constitution of Mauritius was amended for the first time since 1884; franchise was extended from 12,000 to 71,000; the Governing Council was replaced by the “Legislative Council” in which for the first time the elected members outnumbered the official members. The Labour Party returned 13 members out of the 19 elective seats in elections held in 1953. A process of rapid constitutional developments ensued, leading to Universal Adult Suffrage in 1958, internal self-government in 1967 and Independence in 1968.

A few noteworthy factors which would significantly impact and define the nature of the evolution of the sugar industry in Mauritius need mention.

First, a distinct characteristic of the industry is the fact that it bore all the features of plantation economies (monocrop export economies based on exploitation of mostly imported labour) which were the hallmark of agricultural development models in most colonies. A major difference from the classic case of plantation economies, however, was that the means of production were owned by locals – the plantocracy – with the result that profits from the industry were not systematically being captured by foreign companies or absentee landowners. Instead it was being either consumed or re-invested by the local landowning classes.

Second, the intermittent operation of a system of morcellement started around the 1870s under British administration (given the later turn of events, one wonders whether this did not originate from the “dirty tricks” department of the Colonial Office against the plantocracy) resulted in the creation of a sizeable class of planters, mostly from the descendants of indentured labourers who would act as a buffer between the plantocracy and the estate proletariat. The emergence of this “small planter class” later provided the groundswell of support for the Labour Party which led Mauritius to its independence – to which we shall come later. As for the descendants of slaves who were “freed” in 1835, the vast majority seem to have opted, or more precisely been forced to opt out of the system by a diverse set of circumstances following the abolition of slavery. This historical moment might go a long way towards explaining the plight of “creoles” in Mauritius, most of whom were thus, at the outset, excluded from the mainstream and sole economic architecture of the island.

Post Independence Developments

At the time of independence, in 1968, the marketing and export of sugar from Mauritius was governed by the Commonwealth Sugar Agreement (CSA), established in 1951, between the United Kingdom as importer and a number of exporting Commonwealth countries. It was in 1968 that the CSA was given Indefinite Duration – a concept worth noting as it would come back to haunt later developments in future agreements and negotiations.

On 1 January 1973, the UK joined what was then the European Economic Community (EEC). Prior negotiations on the conditions of entry between the UK and the EEC had been very tough and Mauritius, like all other Commonwealth sugar exporting countries, was caught in a terrible suspense. On 14 May 1971, the Brussels Agreement signed between the UK and the EEC, included the following statement: “the enlarged Community will have as its firm purpose (aura à coeur) the safeguarding of the interests of all countries referred to above and whose economies depend to a considerable extent on the export of basic products, notably sugar”.

Lord Rippon (Conservative) and lead negotiator for the UK came out declaring that the UK had obtained “bankable assurances” with regard to the Commonwealth sugars. To which John Mendelson, MP of the British Labour Party, replied with this now famous jibe: “It is a sell-out advertised as a breakthrough.” Representatives of the local sugar industry in London would have been more supportive of the latter comments.

Matters were to stay there until 1975 when the Sugar Protocol (SP) was signed between the European Community and a group of African, Caribbean and Pacific nations (ACP). The SP finally and effectively translated the UK commitment to its Commonwealth suppliers into a commitment from the EU. According to Art (I) of the Protocol, it is of indefinite duration and cannot be changed unilaterally.

Mauritius was particularly active throughout the negotiations within the group of ACP/Commonwealth sugar producers. The determination and vision of such people as Prime Minister Sir Seewoosagur Ramgoolam and then Minister of Agriculture Satcam Boolell allied with the brinkmanship of representatives of the sugar industry under the able leadership of Sir Guy Sauzier ensured that Mauritius obtained a guaranteed export quota of 490,000 out of a total of 1,400,000 metric tonnes allocated to the ACP countries.

To fully appreciate what happened between 1971 (when the Brussels Agreement was approved) and 1975 (when the Sugar Protocol was signed), one need to go back to 1974. While the world sugar market was very sluggish from 1965 onwards with prices generally lower than production prices among the main producers, 1974 saw a sudden exponential boom, with speculative trades feeding on a failed crop in Cuba. Prices multiplied by nearly six times. Refiners in Europe panicked and pressed their governments to secure long term supplies of raw sugar. With world price hovering around Pounds 400 per tonne in 1975, the signatories to the Sugar Protocol were offered a long-term arrangement at a price of Pounds 260 per tonne. The choice was between vision and opportunism. Mauritius chose the former.

A large part of the political economy of post-independence Mauritius is determined by the constant struggle between different classes and subgroups to appropriate a larger fraction of the “preferential” rent obtained by Mauritius through the SP. Grand coalitions, the rise of working class consciousness and its subsequent manipulation, the breakdown of the 1982 MMM/PSM government can all be somehow traced down to the question of appropriation of rents from the industry. Diversification into tourism, the second pillar of the national economy, was prompted by the channelling of profits from the sector. But most important of all the most critical factor to the success of the Mauritius economic model – the distinctive Public-Private sector partnership was a direct outcome of the historical development of the industry.

The end of the Sugar Protocol and the present threat of substantial decrease in prices of sugar imported into the EU put a definite end to the model which has so far stood the test of time – over two and a half centuries. Not only is it being challenged by external forces but even internally some of the important players – Medine and Omnicane among others – are sceptical about the functioning of the erstwhile institutions of the industry and are clearly thinking ahead along transformational changes in their future developments. If ever the overused phrase – paradigmatic change — could be applied to a situation, then we would suggest that such is the case here.

The Sugar Industry is dead! Long live the Cane Industry!

* Published in print edition on 21 February 2014