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[posted on 19/5/06]

National Budget 2006-2007 

Joint Memorandum of the sugar industry

The Mauritius Chamber of Agriculture, the Mauritius Sugar Syndicate and the Mauritius Sugar Producers’ Association have submitted a Joint Memorandum to the Deputy Prime Minister and Minister of Finance & Economic Development in the context of current pre-Budget consultations for 2006/07.


The main issues raised concern the urgency of pursuing reform in the sugar industry, the need for a more coherent national energy policy, adequate financing arrangements to support the industry’s projects and investment requirements, and improving the general legal and regulatory framework for employment.


The Joint Memorandum highlights the urgency for an effective and timely implementation of the comprehensive set of strategies contained in the Multi-Annual Adaptation Strategy (Action Plan 2006-2015).  The Action Plan, which was approved by the Cabinet last month, received contributions from all stakeholders of the industry. The ultimate aim of the plan is to transform the local sugar industry into a more cost-efficient and competitive sugar cane cluster.  It reconciles further the intents of planters, the pro-poor dimension of proposed social plans and the new business thrust for revenue enhancement (new product mix, optimisation of co-products, co-generation of energy, research and eventually, ethanol from sugar).


Another matter of major concern for the industry relates to the national energy policy. Mention is made in the Joint Memorandum that the key strategies that will integrally sustain the Action Plan, and will enable the survival of the sugar cane industry, will be rendered feasible under the express condition that new cogeneration plants be set up next to the milling operations. Given the organic link between sugar cane and energy, the three institutions are thus proposing that Government actively promotes and clarifies its national policy on energy.


The memorandum also underscores the urgent need to develop alternative sources of funding to support the industry’s projects and investments. Indeed, given the high level of indebtedness of the corporate sector, the huge investment required to implement the Action Plan (of which 87% need to be made prior to the year 2010), it is proposed that a process be triggered between Government and the industry so as to agree on the principles of a Special Funding Facility for sugar, whose implementation modalities could be worked out in the context of the 2006-2007 National Budget.


The Joint Memorandum also recalls once again the need for revenue enhancement and cost reduction measures in order to alleviate the financial burdens of the industry, through namely (a) the reduction of the Global Cess by implementing the measures recommended by the 2004 Task Force on Service Providing Institutions and (b) the review of the price of sugar sold on the local market.


Finally, it is proposed that the legal and regulatory framework for employment be reviewed and improved to enable SME’s and independent/self employed workers to operate in a more conducive and secure environment.  It is expected that the closure of 7 sugar factories and the implementation of a second Voluntary Retirement Scheme (VRS 2) would result in some 7,200 employees leaving the industry in the forthcoming years.