“Instead of pouring more money into sugar, the Government of Barbados would be better served letting the industry die a peaceful death, as St. Kitts did in 2005.”
“This massive investment in the sugar industry defies logic and sours an otherwise prudent budget.”
“Sugar is so intrinsic to their national identity, however, that Barbadian taxpayers apparently support this fiscal profligacy.”
Mary Kramer, US Ambassador to Barbados, January 27, 2006
WikiLeaks just released a massive new treasure trove of US Embassy Bridgetown previously secret cables.
We’re looking at many of them in our article WikiLeaks: Massive release of Barbados US Embassy documents. You can help too by going to WikiLeaks Embassy Bridgetown page and digging in!
But we’re going to post this cable on its own because it makes for very interesting reading.
Considering our current economic situation, Barbados Labour Party supporters will jump right on this cable as vindication for Owen Arthur’s financial expertise. Aside from the sugar criticism, Ambassador Kramer gives a glowing report of Prime Minister Owen Arthur.
I don’t know about you, but I think that Ambassador Kramer was correct about our sugar industry: we might as well throw money into the sea than to keep flogging that dead horse.
Some quotes and then the full cable after the break…
What US Ambassador Kramer thought of Owen S. Arthur and his January 16, 2006 budget
“1. (SBU) Summary: Barbados Prime Minister Owen Arthur presented his government’s 2006 economic and financial policies in a January 16 speech to parliament. PM Arthur pledged to lower energy costs, cut taxes, boost pensions, and prop up manufacturing. Most of the budget seems practical and will not greatly increase the country’s debt (around 88.0 percent of GDP). The only major imprudent expenditure is a US$150 million investment into the island’s unprofitable sugar industry. End Summary.”
“With the parliamentary opposition in disarray (septel), a confident PM Arthur announced tax cuts, incentives to reduce energy costs, increased government investment in the sugar industry, loosened foreign exchange controls, and investment incentives.”
“4. (U) Barbados has prudently kept its government spending in check over the past few years, and Arthur said the fiscal deficit for the 2005-2006 fiscal year (ending in March 2006) will likely be just 1.7 percent of GDP, less than the target of 2.5 percent of GDP.”
“7. (SBU) According to a senior Bajan official, PM Arthur, an economist by training, cloisters himself away from his officefor several weeks to focus on the national budget, even refusing to meet high level visitors. (Note: General Craddock of SOUTHCOM visited during Arthur’s budget preparations and the Prime Minister declined to meet with the General. End Note.)
8. (SBU) At the Embassy’s Martin Luther King Jr. reception, Dr. Marion Williams, Governor of the Central Bank, hinted to EconOff that she did not agree with many of the Prime Minister’s measures to liberalize foreign exchange controls.”
“Wasting Money on Sugar
9. (U) PM Arthur announced plans for a US$150 million facility including a 30 megawatt power plant and sugar cane processing facilities…
… Even at 523.7 Euros/ton, Barbados loses money on every ton of sugar it exports. According to Erskine Griffith, the Barbados Minister of Agriculture, the Barbados yield ratio of 21 tons of sugar per acre of sugar cane is, “the lowest of any sugar producing nation.” Griffith went on to say that producers in Brazil get up to 80 tons per acre…
…(Note: Guyanese sugar products are also imported in large quantities
to produce “Barbadian” rum. End Note.) Barbados cannot protect its local sugar market from CARICOM competition, given the free movement of goods provisions of the CARICOM Single Market and Economy. The government apparently will depend on nationalism to induce people to pay twice as much for local sugar as imported sugar…
11. (SBU) This massive investment in the sugar industry defies logic and sours an otherwise prudent budget. The cost of producing sugar on a small island with high labor costs and limited mechanization is astronomically higher than in Brazil or other major sugar producers. Barbados is probably
one of the least efficient sugar producers in the world and cannot compete within CARICOM, much less on the world market.”
“Instead of exporting bulk sugar to the European Union at inflated prices, Barbados will be selling its sugar domestically at inflated prices. Sugar is so intrinsic to their national identity, however, that Barbadian taxpayers apparently support this fiscal profligacy.
12. (SBU) The true purpose of the US$150 million investment is not to protect the environment or to reduce energy costs, but to give sugar a future. If Barbados were serious about protecting the environment and reducing its energy import bill, then the country could more cheaply accomplish both these goals by importing sugar cane ethanol from Brazil.
No matter what use for sugar cane Barbados comes up with, almost every other sugar producing country can grow it cheaper, harvest it cheaper, and process it cheaper. Instead of pouring more money into sugar, the Government of Barbados would be better served letting the industry die a peaceful death, as St. Kitts did in 2005. End Comment.”
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