Susan Gordon, Business Reporter
Peter McConnell on the Worthy Park Estate in St Catherine. The sugar factory is in the background. - File
Jamaica will make it a conditionality of the divest-ment that sugar lands be made available to private estate owners.
But Agriculture Minister Roger Clarke was careful not to sell it as a done deal while signalling that Innswood was unlikely to be available.
The finalisation of lands to be made available and in what quantities appears contingent on negotiations at the table once government decides who it will entrust its sugar business to, having already gone through one failed sale in the 1990s.
Doubtful
Worthy Park Sugar Estates was already doubtful it would get the land promised at Innswood, though manager Peter McConnell said it was fundamental to his estate's future if it were to expand for scale to offset pending price reductions paid by Europe for sugar.
"The only way we could survive is by getting the land," McConnell told the Financial Gleaner.
At present, Worthy Park produces an average of 25,000 tonnes of sugar per annum on its 11,000 hectare estate.
Last year, the company which accounts for 15 per cent of locally produced sugar, said it was promised by former Prime Minister P.J. Patterson, lands on the Innswood Estate in St. Catherine.
Innswood's acquisition would be a strategic move for Worthy Park, because of its proximity.
But the planned divestment of the Sugar Company of Jamaica's holdings, announced in May, has tripped up McConnell's plans.
"Everything is now in limbo," he said.
Clarke said that while the successful bidder was expected to set aside some lands for the private growers, namely Worthy Park and Appleton Estates, those at Innswood may not be in play.
Housing
Portions of the Innswood estate have been designated for housing, while about 5,000 acres (2,000 hectares) - valued of $75,000 per acre - will be included in the divestment package.
"All of this is up in the air," said Clarke, referring to the under-taking given to Worthy Park.
The property at Innswood, which Clarke said is valued at $375 million, would be worth more to government as part of the divestment package.
Worthy Park's offer for the property was less than 40 per cent of the value Clarke quoted.
Over a year ago, the private estate, located in Lluidas Vale, St. Catherine, indicated it was urgently in need of an additional 1,400 hectares of land to produce sugar at costs that were internationally competitive.
World market prices for sugar, quoted in U.S. dollars, have been trending up as the American currency weakens against other hard currencies, climbing from 19.62 U.S. cents per kilogramme (about 9 cents per pound) to 37.54 US cents/kg (17 cents per pound) for the first quarter of 2006.
Worthy Park produces sugar at 18 U.S. cents.
The additional Innswood land, according to Worthy Park director Gordon Clarke, would reduce the company's output cost to 15-16 U.S. cents, more in line with European Union prices which, he said, are currently below U.S. 18 cents.
Expanding
McConnell said in an earlier interview with the Financial Gleaner that the cost of expanding the estate would have been dependent on acreages acquired.
The projected cost of the expansion was $10 million for every 250 acres or $140 million for the entire 3,500 acres (1,400 hectares) needed. Infrastructure would have added $200 million.
Based on the $375 million estimated value of the Innswood lands, Worthy Park projected to get its 1,400 hectares, worth some $262 million, from Government for almost 50 per cent less.
Worthy Park has leased land elsewhere, in Bog Walk, St. Catherine, but getting the land at Innswood would reduce the transportation component of its costs.
