The recent policies of Tate & Lyle substantiate the idea that W.I. export cane sugar involves certain risks. The company has covered itself by getting into the European beet sugar business. They have bought interests in the largest French refinery and also Belgian, Italian and German companies. Moreover a vice-chairman of the company has written that if the cane sugar refining has to come to an end they shall seek an outlet for (their) energies in the production of sugar from beets. Meanwhile the competitors of cane sugar have been making substantial in-roads into the market for sugar. Beet sugar is well known. What is less well known and what is causing some concern among the largest cane sugar producers is that while per capita consumption of sugar is growing negligibly, consumption of sugar substitutes is increasing rapidly. Moreover the existence of these substitutes must in effect set a limit to which the price for conventional sugar can go and also clear the market. The most dramatic gain by sugar substitutes is that made by corn sweeteners (dextrose and corn syrup). In the U.S. between 1956 and 1963, corn sweeteners increased their share of the market from 11% to 14.2% having increased at the rate of 45% (i.e. up to virtually 2m. tons) compared with only 11% for sugar.

It is evident therefore that the true social returns are considerably smaller than the private earnings of about £18m. What it is, we are eagerly waiting to hear. Upon it will hinge what figure we get for income per man, income per acre and income per unit of capital invested. I suspect they will all be very, very low. Even a purely private calculation-which let me hasten to add is quite inadequate-shows the following. Between 1954 and 1966 the annual private returns to the sugar industry increased by about £6m. Over that same period the total profit of sugar estates amounted to about £17m. of which probably £12m. were put back into sugar. At the same time the labour used was considerably reduced. But with non-labour cost rising at a considerably faster rate than labour cost the total unit cost of production went upward. It is evident without further consideration that the incremental social output-capital ratio must have been rather low without any compensatory positive employment effects.

There are ways, however, in which the private and social return could have been made higher. Firstly, the income of many of the factories could have been improved. We have had in Jamaica an utterly shocking state of affairs where in 12 of the 18 estates, 1960-65, the actual investments on capital improvement were substantially less than depreciation charges. It is scarcely surprising that 8 of the estates had costs of production above 46 per ton and only 5 had costs as low as £37.11 to £39.13 per ton. Secondly the two immediate by-products, molasses and bagasse, have very valuable economic uses for animal feeds, synthetic clothing, pulp and paper and sugar itself has a wide range chemical usages. These possibilities are yet to play an important part in the economics of the industry.

Thirdly, West Indian participation in shipping and refining is appropriate (the Mordecai report is, I believe, silent on these points). The Sugar Manufacturers Association claimed in a letter to us that the cost of freight to the U.K. and the U.S.A. is for account of the buyer and the sellers are not advised of it. The freight to Montreal amounts to £2.11 per ton; to Toronto £3.3 per ton. Freight to the U.K. probably exceeds this. The value added of shipping must therefore be running to something like £1.5m to £ per year on Jamaican sugar alone. Tate & Lyle handles the marketing of the entire Jamaica and Trinidadian export crop. The sugar is shipped in boats owned by Royal Mail Lines Ltd., and by Sugar Line Ltd. All the sugar exported to Canada in 1967 was carried by Sugar Linc Ltd. Sugar Line Ltd., is a subsidiary of Tate & Lyle Ltd. With respect to refining which is virtually a monopoly of Tate & Lyle in the U.K. we might note that the price of refined sugar 10 the U.K. is now £72 a ton-£25 per ton (i.e. 56~10) more than the price paid the West Indies for manufactured sugar.