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Sugar industry was doomed to fail: the truth behind Caroni’s closure

Part 1 of this column by Raffique Shah was published on Wired868 on Wednesday 20 July.

Trinidad and Tobago, as a very inefficient producer of sugar, relying heavily on preferential prices for the commodity from Britain, and later the European Union, should have scaled back sugar production from the 1970s when the industry’s losses mounted year after year, soon to reach uncontrollable levels.

Photo: Trinidad and Tobago citizens march for racial unity on 12 March 1970. (Courtesy Embau Moheni/NJAC)
Photo: Trinidad and Tobago citizens march for racial unity on 12 March 1970.
(Courtesy Embau Moheni/NJAC)

A better option would have been to focus on food production on both large, mechanized farms and smaller, family farms, even if it meant government having to lend support through subsidies and/or incentives: most successful food producers, even developed countries, do that.

But no government wanted to be accused of targeting Indians, who formed approximately 90 percent of the 9,000-strong workforce and the 6,000-odd independent cane farmers who cultivated and sold their produce to Caroni Ltd.

In 1970, when Government acquired 51 percent of Caroni from the British manufacturing giant Tate & Lyle (which retained 49 percent and continued to manage the company), Caroni incurred a loss of TT$4.6 million. By 1975, when Government bought out Tate & Lyle’s shares, losses had spiralled exponentially, with the State having to inject hundreds of millions of dollars by way of loans and subventions.

Why? Many people might ask: after all, sugar was still profitable in Guyana, St Kitts and Jamaica, and even more so in Brazil, India, Australia and many African countries.

The answers to that question are complex. At the core, in my view, was the reality that T&T was an oil-based economy, and when the first oil boom of the mid-1970s sent salaries soaring, those who laboured in very harsh conditions in the sugar industry could not be left behind. Their unions battled and won for both workers and farmers significant increases in 1975.

Photo: Late former Prime Minister Patrick Manning. (Copyright CNC3)
Photo: Late former Prime Minister Patrick Manning.
(Copyright CNC3)

However, productivity did not improve: in fact, it went into the opposite direction. Yields per acre dropped drastically, from 30-plus tonnes to below 20. Pests like froghoppers ravaged the fields. The use of herbicides and insecticides became universal, with all their negatives. Poorer cane quality resulted in the conversion of cane to sugar (tc/ts) to rise from eight to as high as 13. Wild fires were rampant, further affecting cane quality.

By 1992, Caroni had accumulated debts amounting to approximately TT$2 billion. Patrick Manning as prime minister decided to act decisively. He appointed a Tripartite Committee (unions, management and UWI experts) to formulate strategies to save Caroni as a diversified agricultural enterprise.

In the 1980s, the company had already ventured into rice, citrus and livestock, none of which had proved to be profitable. Also, several other experts had examined the company and made recommendations to turn it around: John Spence (1978); Frank Rampersad (1980); Eric St Cyr (1984); and Lloyd Rankine (1991).

Based on the Tripartite Committee’s report, the Manning government wrote off Caroni’s $2 billion debt, giving the company a new, debt-free start.

Photo: And yet somehow it happens so often.
Photo: And yet somehow it happens so often.

Here’s what happened: Caroni incurred annual operating losses of TT$175 million in 1996, TT$246 million in 1997, TT$305 million in 1998, TT$223 million in 1999, TT$349 million in 2000 and TT$367 million in 2001

Government’s support (subventions/loan guarantees): 1996-TT$349 million; 1997-TT$124; 1998-TT$190; 1999-TT$808; 2000-TT$388; 2001-TT$188; and 2002-TT$579.

Caroni’s cost of producing raw sugar, compared with selected countries in 1995 (it would have grown worse afterwards), in US cents per pound: T&T-25; Barbados-40; Guyana-15; Jamaica-20; Australia-9.6; Fiji-12.

So, by the turn of the century, Caroni was going nowhere very quickly, or maybe more aptly, the cry from the plantation was “backward ever, forward never”.

Some people swear it was worth saving for its foreign exchange earnings. Let me deal with that one time, as my brethren would say: in 1996, a pretty good year, it earned US$40 million. At an exchange rate of 6.3, the equivalent in TTD would have been $252 million. But in spite of that, Caroni’s loss was TT$175 million and government support was TT$349 million. You figure out what those 40 million US dollars really cost us!

Photo: A Caribbean Airlines plane prepares to land. (Copyright Lyndon Thorley/Planespotters.net)
Photo: A Caribbean Airlines plane prepares to land.
(Copyright Lyndon Thorley/Planespotters.net)

Caroni was on an irreversible slide, and not even the key stakeholders could muster the will to save it. From management to cane cutters, labourers to cane farmers, the feeling was once the oil dollars flowed they would be paid. And if government wanted to turn off the tap, it would pay big bucks in severance packages—which it did.

I lament its demise because I felt it could have been transformed into the biggest food-producing entity in the region, using the same oil dollars to put it on a firm footing.

I share the sentiment too that state-funded entities such as URP and CEPEP should be either made productive or shut down the way Caroni was. Ditto for Caribbean Airlines, which has long been a burden too heavy to bear.

The sugar workers and cane farmers have survived Caroni’s closure, with many of them thriving in its aftermath. Surely others can, especially those who enjoyed free education and are professionally qualified, and those who acquired skills.

About Raffique Shah

Raffique Shah
Raffique Shah is a columnist for over three decades, founder of the T&T International Marathon, co-founder of the ULF with Basdeo Panday and George Weekes, a former sugar cane farmers union leader and an ex-Siparia MP. He trained at the UK’s Royal Military Academy Sandhurst and was arrested, court-martialled, sentenced and eventually freed on appeal after leading 300 troops in a mutiny at Teteron Barracks during the Black Power revolution of 1970.

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22 comments

  1. Doomed to fail? The sugar industry had failed eons before Caroni was actually shut down….the company had been operating 1950s business practices in the 21st century…like everything else, its closure and management of assets and property have been grossly mishandled….

  2. And their attorney is …..?!

  3. Don’t know of the ‘rigged globalism’!!! Caroni is a straight case of poor management and the failure to mechanize the sugar industry due to the objections lead by the sugar cane workers union representatives, who knew that machines will not pay union dues, and deprived persons aspiring to public office… it is that simple!!!.

  4. Very interesting. I’ll like to have the Bios of.the UWI students who wrote that report. The reason being, I did a simple exercise in a class in 2013.

    There were students, 60 of which were indo trinis. 50 from south Trinidad.

    The question was a simple location model for a business. The decision was to choose a location between Lavantille, Chagaunas and Sangre Grandie.

    The data supplied made Lavantille the CORRECT choice. Of the 60 indo trinis in the class, they all did the calculation CORRECT. 52 of them went on to Choose Chagaunas as the best site and justified it in their own peculiar way, even though the economic and demographic data said otherwise.

    So again, Bios of the writers.of this report please.

  5. Here’s another view from one who was involved:
    Letter: God’s blessings to all
    Published on July 22, 2016 Email To Friend Print Version
    Dear Sir:
    Mr Patrick Manning was not a racist. In fact he spent a great part of his adult life rebutting the narrow provincialisms of some close to him. But, if his decision to terminate Caroni (1975) Ltd was based on an economic decision, it was certainly bad economics. Mr Manning’s flaw came in the form of a bad economic idea, the Master Gas Plan of 2001, which he and his accomplices tried to implement, in his last two terms as prime minister (2001-2010).
    letters_icon.jpg It was the Panday administration (1995-2001) that started the dismantling of Caroni 1975 Ltd. The thinking was that Trinidad and Tobago could not survive the global neo-liberal sugar economy; the end of European preferential treatment and competition from large agglomerative markets in places like Brazil, Australia. The idea was to continue with part of it, the Usine St Madeline factory, which would mill sugar from crops grown by independent farmers in the South and Central districts.
    When Mr Manning took office, he killed the whole hog. He did so despite my intervention, in 2002, with the Caroni Position Paper, a report I wrote with university students, after consulting with 40 forty experts and professionals at the university, a diversification plan for the 77,000 acres of lands, which included keeping Usine St Madeline, and generating diverse products from the cane plant. I had presented 12 copies to Mr Manning’s minister of agriculture, after he requested them, but Mr Manning ignored this. He was onto the Master Gas Plan, the smelter economy.
    In 2005, Miss Yvonne Ashby of Chatham, the granddaughter of African slaves, stood up before the state officials in the community center and warned: “No Smelter! Take your filthy lucre and go! God don’t like stupid!” Did the honourable Prime Minister Patrick Manning, whose baby smelter was, listen? No. He and Petrotrin/PSAEL had no qualms about shutting down the Chatham Milk Farm. For smelter. He did not listen. Warning after warning after warning!
    The intelligentsia of La Brea rose up too. No Alutrint Smelter in La Brea! Did Mr Manning listen? Did he heed the people’s warnings? One morning he moved with devastating hubris and destroyed 1,000 acres of forest, covered over three water-producing dams. Once, he rode into the proposed smelter site on ceremonial business. The people shrieked and cried. He did not carry down his car-glass to give his characteristic gentlemen’s wave. He had no mind for Mr Carter, Denise, Gour, Vine, Healy-Singh.
    The fishermen in Otaheite also rose up. Why did Mr Manning want to destroy their historical fish and shrimping grounds at the mouth of the Godineau River? For an industrial island? Mr Seepersad, the head of the fishing association in the Othheite Bay said no way. Did Mr Manning listen? No.
    Mr Manning sought to attack the Claxton Bay fisheries and mangrove system. For an industrial port. How many fires were lit, tyres burnt, pujas heard? Did Mr Manning listen? To Mr Ragoo and Mr Sooknanan? No.
    Pranz Gardens in Claxton Bay was also placed in jeopardy. One helluva big steel mill not 50 yards from the communities. The women warned. Miss Daisy, Samdaye, Radica. Craig, Ryan, and Stacy. Mr Pooran. They made a temple, Maya, near the site. Gail Rajkumar had to go, for years, to court. The usual charges, resisting arrest, obstruction, using obscene language. Did Mr Manning listen?
    And Carisal. Putting a mega chemical plant on the outskirt of 13 communities. More tyres, placards, camp and site occupation. Messrs Bhola, Rajkumar, Ramdath, Byjou. Neither did Mr Manning or his 2010 prime ministerial successor, Ms Kamla Persad-Bissessar, listen. “Carisal will stop when I demit office,” she told us when we met with her. It was a quip. Panday-esque.
    And Debe to Mon Desir. This too was Mr Patrick Manning’s baby. It was part of his megalomaniac dream of industrialization for the South West Peninsula and the West Coast. The Master Gas Plan. Somebody had shown him, too, a template for Qatar, Kuwait. And he fell for it. In his weakness, passion for the grand. Two highways to Point Fortin, not one.
    And one of them, Debe to Mon Desir, a high-priced embankment, a barrier to the flow of water. A lagoon, a food economy, upon which towns and markets are built, relies on this flow. Did he listen? One month before the General Elections in 2010, his line minister, the Environmental Management Authority recklessly gave a certificate for Debe to Mon Desir. Without doing the relevant hydrological, social and economic studies (Armstrong Report, 2013).
    How many more warnings did prime ministers Patrick Manning and Kamla Persad-Bissessar want? Every single one of the projects above collapsed. Debe and Mon Desir and the entire highway extension project have collapsed. Like the gas to liquids project. If these heavy gas-based industries had been built, where would we have been getting the gas to fuel them? Trinidad and Tobago cannot any longer be competitive in the global energy market.
    What terror, woe, trauma experienced by the communities! I bear witness in the hope that one of his beloved, one of his ardent worshippers, one of his parliamentary successors, will acknowledge, accept, this part of Mr Manning’s work, person, set him free. Four members of the Highway Reroute Movement died in the last few weeks: Srinath Tirbany, Balliram Siew, Katie Norbert, and yesterday, Kumar Samlal. God’s blessings to all.
    Wayne Kublalsingh

    • Interesting indeed… I am starting to wonder what kind of magician Mr Manning was though: One morning he moved with devastating hubris and destroyed 1,000 acres of forest, covered over three water-producing dams. <<< All that in one morning?

    • Of course it wouldn’t have been manning alone but trucks and moving equipment under HIS instruction. Geeze, rolls eyes.

    • Earl Best

      Much as I respect the commitment of Dr Kublalsingh, I have to point out the emotive nature of this very one-sided contribution. And I want to point out that though I hold no brief for Mr Manning, governments sometimes have to make hard decisions in the light of the information that is available to them. Might the smelters not have been the start of the diversification away from the reliance on SALES OF gas and oil that so many lament has never happened?
      We have to be very wary when people present only ONE SIDE of the case; no one can accuse Raffique Shah of doing that here but I wonder, Savitri, about Dr Kublalsingh.

  6. Will they ever do the same to Petrotrin?

  7. It’s a pity that every politician south of the Caroni will continue to believe that it was the PNM’s strategy for economically enslaving the supporters of the UNC.

    He missed out that NFM used to subsidise Caroni through their rice initiative

  8. Ever since my days of Geography at school, we were taught that the sugar industry in TT was uneconomic. It needed to use mechanical harvesters for example which would have put many people out of jobs. They preferred a product that was more expensive to produce rather than to rationalise the industry and make it self-sustaining. We see the result. Can I say TSTT and TTEC in this vein?

  9. The Europeans and the other OECD countries have rigged trade so they alone benefit the most

  10. Not their fault James

    It’s called rigged globalism

  11. Raffique bringing me to tears with all this creamy factual goodness.
    Caroni 1975 Ltd: The gift that keeps on giving.

  12. The world is *addicted* to sugar, chocolate and oil. Yet we managed to make no money on all!! Great leadership!

    • Earl Best

      Besides, James, it simply is not true to say that T&T “made no money” from oil. More accurate is Mr Manley’s comment that the oil money went thru the system “like a dose of salts.”