The Hindu Business Line : An island and a crop in transition

With the European Union having to toe the WTO line and cut subsidies, Mauritius' earnings from sugar exports are set to drop by over a third, an outcome that could jolt its economy. The government strategy is to mechanise cane farming and cut production costs even as it tries to turn the mono-crop economy into a cyber island. Does this mean the famed sugarcane that has withstood the Indian Ocean cyclones for the last 300 years will be felled by the winds of globalisation, asks K. Venugopal, who was recently in Mauritius.

The Mauritian government is keen to transform the sugar island into a cyber island with efforts such as the Cyber Tower (below).

IT WAS a business that began 365 years ago. Dutch seafarers rounding the Cape of Good Hope, on the southern tip of Africa, on their way to Asia and the Far East had landed on the island of Mauritius that the Arabs in the 10th century and the Portuguese in the 16th century had chanced upon. They were captivated by its safe port and luxurious vegetation that was nurtured by regular, tropical rainfall. Even the wildlife seemed harmonious, indeed so timid that one species, the dodo, went extinct because it could not defend itself from the hunting instincts of the European invader.

The Dutch may have exterminated the dodo and wiped out the forests of ebony on the island, but they then introduced a crop that would sustain the population economically for centuries to follow: Sugarcane. As the story goes, they did so not so much for the sugar, but for the molasses that would yield arrack to sustain them on their voyages.

The French East India Company, which took control of the island in 1715, institutionalised the cultivation of cane and assigned tracts of land to Franco-Mauritian farmers who, even years after the British took over the colony, managed to control the farmlands and the mills that processed the sugar.

Even today the Franco-Mauritian companies hold sway over the majority of the sugar mills and the estates. Sugar remains Mauritius' most important agricultural produce; cane is grown on one out of every three square km of the island; some 7 per cent of the population is employed to produce it. The association with Europe continues: Much of the 550,000 tonnes of sugar produced annually eventually finds its way to Europe under a preferential trade arrangement.

What is guaranteed is not just the quantity the European Union will buy, but the price as well. Mauritius gets the same price for sugar as European farmers do: Euro 523 ($675) per tonne of raw sugar, virtually three times the international market price. The French connection clearly still brings in exceptional returns to the islanders.

Up to now, that is, for the cosy arrangement is about to unravel. The European Union is giving in to pressure from the World Trade Organisation to cut subsidies to farmers and, starting this July, the price it pays its farmers for sugar will drop; in tune with that, the price it pays for Mauritius sugar will drop by 25 per cent and by a total of 37 per cent by 2007. It will be a $100-million loss of income that could jolt the Mauritian economy

"We must safeguard our interests," says Mr Mrinal Roy, Chief Executive Officer of the Mauritius Sugar Syndicate, the industry apex body that is responsible for the marketing of all the sugar produced in the island. "We will be lobbying hard to see that the cut (in price) is put off."

It is not that the industry and the Government did not know that trouble was brewing. The cost of production was rising disconcertingly over the years, and by 2001 was as much as $400 a tonne — twice the international price. That was when the Government embarked on a structural readjustment plan that aimed to pare the costs by introducing mechanisation on the farm, reducing labour and consolidating sugar mills. From 21 mills in 1984 the number of mills has been brought down to just about 10. The target is to bring it down to seven or eight. Some 8,000 workers on the farms have been retired. All these to reduce the production cost to $280 a tonne by 2008, although everyone knew even that would not make the industry competitive in the global market — the current price being around $220 a tonne.

The task of facing up to global competition is viewed with some concern, even resignation. Mr Hansraj Ruhee, Director, Ramphul Group, which grows sugarcane on over 300 hectares, says that his company was effecting major changes in agricultural practices. The type of cane used was similar to the one grown in Australia. But he points out that some of his land is in a hilly region and does not allow full mechanisation.

Yet, the most intractable question is what to do with the labour displaced from the farm. Several thousand jobs have already been lost and many more will be. The Government's facilitation has been through a rule that lets sugar estates convert their marginal land to residential or tourist use. Simply donate some land to the Government, and earn the right to re-zone twice as much area without charge. Sugar estates are jumping at the offer.

Located astride the highway connecting the island's international airport to the capital Port Louis some 50 km apart, this parcel of land became an early convert to the new plan. Its owners gave up land to the Government and sold twice as many on the market for residential or commercial use; the move was profitable as residential property prices are several times that of land zoned for agriculture.

This is the land on which stands the Ebene Cyber City, a 12-storey "intelligent" building with 45,000 square metres of space for information technology companies. This complex, which was formally inaugurated by the Indian Prime Minister, Dr Manmohan Singh, on April 1 was designed and built by Indian companies with a line of credit from India. It represents the new aspiration of the 1.2 million islanders and the transition they wish to make.

Many more sugarcane land conversion deals are under way; proceeds from them will go partially to pay off the workers displaced. Yet the concern for the Government is how and where to find them alternative employment.

The Prime Minister, Mr Paul Berenger, is keen to transform his sugar island into a cyber island with efforts such as Cyber Tower. As he said in a speech a year ago, his dream is that "every single family in the country will not only own a computer but also have one of its members working in the ICT sector". The question is whether his Government can do enough to make that happen and do it quickly, and he would be the first to acknowledge the need to upgrade human skills.

Asking farmers to diversify into other crops is another idea that the Government has contemplated. But, as Mr Mrinal Roy points out, the island has taken to this mono-cropping not without reason. "Tell me," he says persuasively, "which crop can you grow that can stand up to cyclones every season?"

Sugarcane is one that has stood up to the stream of cyclones from the Indian Ocean for the last three hundred years. Will globalisation fell it in Mauritius?

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