Compare sugar in Mauritius

from w
With Krishnamurthi's proposal a hot talking point in Fiji I would like to make some comparision with another small island nation with a major crop - sugar. I had been watching a very funny travel program - Pilot Guides where a young guy travels to unusual places and I noticed the sugarcane fields and predominance of people of Indian background. Another indenture story there I expect. Mauritius is a similar country to Fiji - about the same size, same major industry and they also are having difficulties. Here's what they are doing about it. (from 2006)
MAURITIUS-ECONOMY: Helping the Sugar Industry Regain its SweetnessBy Nasseem Ackbarally

PORT LOUIS, Nov 9 (IPS) - The Mauritian government has embarked on a campaign to transform its sugar industry as international sugar prices plunge, leading to a loss in the country's foreign exchange earnings.

Sugar prices are projected to drop by 36 percent in the next three years. In response, Agricultural Industry Minister Arvin Boolell has been trying to convince large and small farmers, factory owners and institutions in the sugar industry that they have no choice but to reform their practices.

Boolell is pushing for a reduction in production costs while encouraging economies of scale. He hopes to achieve the latter by clustering together small farms to improve productivity.

At the same time, the government is promoting the production of electricity from bagasse, a residue from cane, and the production of ethanol which is combined with petrol for use in vehicles.

"There is need for a national crusade to save our industry," says Boolell. "We have been losing about four billion rupees (about 125 million dollars) annually in foreign exchange because of price cuts."

On average, the industry has previously contributed around 306 million dollars in foreign currency annually.

Today, Mauritius exports about 505,000 tons of raw sugar to the European Union under a preferential trade arrangement, about 30,000 tons to the United States and some 54,000 tons of other kinds of sugar products to buyers in European countries.

The government has made it clear to producers that, internationally, the sugar market is no longer a seller's market but a buyer's market. This means that buyers dictate the prices.

If the industry fails to perform and to become competitive, adds Boolell, Mauritius's competitors will take over. The sugar industry, which has been the backbone of the Mauritian economy for decades, will collapse -- although exports will continue to contribute foreign exchange for several years into the future.

The government is also concerned about the 60,000 people who are still earning a living directly or indirectly from the industry.

Therefore, it plans to maintain the sugar industry while promoting alternative products related to cane production. In previous years, only sugar was produced from cane and the electricity generated from bagasse was just enough to run the sugar mills.

Since 2002, the industry has been producing electricity for the country's national network. Currently, it provides about 40 percent of the total electricity consumption on the island, using bagasse combined with charcoal imported from Mozambique.

With next year's opening of a second electricity station, presently under construction in the south of the island, between 60 and 70 percent of electricity will be generated from bagasse and charcoal.

The molasses created from the sugar during the refining process is being used to produce ethanol. A distillery called Alcodis has boosted its annual ethanol production from a few million litres to 30 million litres for the export market.

Ethanol is also being blended with petrol for running cars on the island. Another distillery will be commissioned soon.

The other initiative is to centralise and modernise sugar factories to reduce their numbers from 11 to a maximum of five in the next few years. To make this possible, a voluntary retirement scheme was launched for workers older than 50. So far, about 8,000 workers have taken up the offer.

A related idea is to cluster together the 28,000 small farmers who produce about 30 percent of sugar to make them more productive. "The future of the industry depends on these small farmers as the big sugar estates have already reached their maximum in terms of productivity," says Guirdharry Jugessur, a small farmer who is also president of the Mauritius Cooperative Agricultural Federation.

Small farmers are utilising 21,000 of the 72,000 hectares of land under cane cultivation. Their products range from sugar to electricity to ethanol.

Already launched, the clustering project aims to regroup plots of land of up to 10 hectares into larger plots of 20 hectares or more. The idea is to enhance economies of scale in cane and sugar production. The targeted land area is 12,000 hectares.

This scheme involves the mechanisation of all practices, including cane harvesting, irrigation and land preparation. The fields will be replanted with cane varieties with higher yields. All the inputs, including fertilizer, herbicide and cement, will be provided free of charge.

The expected increase in cane and sugar yields is around 20 percent, whereas the cost of production will decrease by 20 percent.

Small farmers will have to commit themselves to keeping their land under cane for one crop cycle of seven years. The ownership of the individual plots in the regrouped area will be maintained during the first seven-year crop cycle.

Sugar has been associated with Mauritius for 367 years and has shaped the history and culture of the island. Covering more than 40 percent of the surface area of the island, this industry has made the island state what it is today.

For many years, the island has benefited from a high price for sugar under the preferential trade arrangements with Europe. The price for sugar was three times higher than the price on the world market. The revenue has been used to diversify the Mauritian economy into tourism, textiles and financial services.

But, Boolell insists that Mauritians "should stop looking back. We have to move forward and change our mindset. We need everybody in this industry to not only save the sector but to transform sugar into green gold." (END/2006)