Taxpayers might have to cough up $540 million to help in the production of sugar for the export market this year.

Minister of Agriculture Dr Christopher Tufton told Parliament yesterday that the Government has entered into an arrangement with an overseas entity for the production of 79,000 tonnes of sugar. He said Swiss company, Eridania, would prepay US$15 million (J$1.3 billion) for the production of the sugar, which they will purchase at a minimum price of €335 (J$41,540) per tonne.

Jamaica and Eridania would share the estimated €30 million gross profit.

Tufton said the estimate for the production of the 79,000 tonnes of sugar is US$21 million (J$1.9 billion).

The minister told Parliament the taxpayers' input would be "a very significant difference from the $4.1 billion that the taxpayers had to fork out to subsidise the industry last year".

However, there is a possibility that taxpayers might still not pay to keep sugar alive or to produce sugar this year.

Restructuring arrangement

"If the divestment process is concluded long before we reach the stage where there is going to be the need to deliver that 79,000 tonnes," Tufton said, "if that is in fact the case, it will provide for us a restructuring arrangement which will avoid the Government coming up with that $5 million-$6 million."

Government sold the St Thomas Sugar Estate and the Trelawny Sugar Company for a total of $180 million and is in the process of divesting itself of the responsibility for the other loss-making entity.

Yesterday, Opposition Spokesman on Finance Dr Omar Davies said the projections for the 79,000 tonnes at US$21 million suggest that it would be about 10 cents per pound, down from 26 cents per pound. He said that despite the efforts to produce sugar more efficiently, it is difficult to see how production cost would fall so low.

However, Tufton said he anticipated that the cost of producing sugar was going to be "significantly less". He said the ongoing restructuring of the sugar factories will mean a more efficient operation.

daraine.luton@gleanerjm.com