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SIA owed $500 m

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SIA owed $500 m

Sugar Industry Authority has problems collecting from two manufacturers

BY ALPHEA SAUNDERS
Senior staff reporter
saundersa@jamaicaobserver.com

Thursday, February 07, 2019

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The Sugar Industry Authority (SIA) says it is owed approximately $500 million in industry taxes for the 2016/17 crop year to present.

The SIA is fully funded by the cess on sugar produced annually, which is provided for under the Sugar Industry Control Act. The funds go towards providing regulatory and research services to the industry, CEO George Callaghan explained in a Jamaica Observer interview yesterday.

He said the SIA has also had to dip into its reserves to make up for the shortfall created by the non-payment of the cess by two manufacturers, which he said did not pay at all for the crop year under review. The CEO noted that the SIA is totally dependent on the cess to finance its annual budget, as no funding is provided by the Government.

According to the SIA’s annual report and audited financial statements for 2016/17, which were tabled in Parliament on Tuesday, its income fell from $567.2 million to $559.3 million. The authority sought to try to close the gap by, among other measures, reducing its expenses from $517.5 million to $474.6 million.

Callaghan said the 2016/17 budget totalled $505 million, the same amount as the cess that should have been collected. “The budget and the cess are the same,” he emphasised. The CEO said the authority has been in negotiations with the factories which are owing, but that there has been no progress.

“We are allowed under the Act to take them to the court and sue for the payment [but] we have sent them a demand letter… and have been negotiating a settlement but we have not been able to [collect],” he stated.

Callaghan said other actions that could be taken by the SIA is the withdrawal of services, but that the main recourse is legal action.

Meanwhile, the SIA is reporting that for the 2016/17 crop year, local sales of raw sugar declined by seven per cent compared to the previous crop year, a reduction of one per cent more than the simultaneous drop in sugar exports. This translated to 43,824 tonnes of raw sugar sold locally, a reduction of 3,564 tonnes.

“It is important to note that 2,000 tonnes of brown sugar was imported to replace sugar inventories damaged as a result of flooding,” the SIA pointed out.

However, production increased by six per cent, from 82,855 to 87,978 tonnes, while the price paid to growers and manufacturers per tonne moved from $56,051 to $71,895. Just over $44,575 was paid to growers, and $27,320 for sugar manufacturers. This represents an increase of 28 per cent over the previous crop year.

At the same time, 34,967 tonnes of sugar valued at US$17,172,000 was exported, a decrease in volume of eight per cent. According to the breakdown, 24,136 tonnes valued at US$8.7 million was exported to the European Union, while 11,222 tonnes, valued at US$5,158, was exported to the United States. The remaining 4,745 tonnes, worth US$3.2 million, was exported within the Caribbean Community and other markets.

The SIA, for the period, paid out $1.3 million in compensation to its six-member board of directors, and a total of $37.3 million in salaries and benefits to senior executives.

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