Cane Payment System - SIA

The Jamaican Sugar Industry is almost 500 years old and has, to some extent, managed to keep pace with changing technology, even if productivity has sometimes lagged. A new cane payment system, based on factory gate cane sampling and analysis, in place since 1991, marks a major technological leap. With this innovation farmer and factory are provided an equitable share of the Industry’s earnings based on their respective costs of production while ensuring a reasonable return on investments. In addition, the farmer who supplies good quality cane is rewarded while the factory is induced to maximise efficiency.

Once understood, the system quickly gained acceptance as both farmers and manufacturers recognized that progress was largely in their own hands. The serious producer saw at once that vastly increased levels of testing and timely availability of information were providing an instrument by which cane quality could be measured almost on a load by load basis. Compared with an average of some 10% of canes previously tested, core sampling sharply increased testing to 60% in the first year, rising to 76% by 1995. It is useful therefore at this stage to review five years’ experience of operating this system.

Cane quality is measured and reported as the Jamaican Recoverable Cane Sugar (JRCS) and is the function of pol in cane, fibre % cane and the purity of press juice.

Of these three factors, pol % cane has the most significant effect on JRCS. Factors having the greatest effect on pol % cane seem to be harvesting weather, crop duration and time between harvesting and sampling. In the 1994/95 crop, 1% pol changed cane price by some $160/t.

Every 1% change in fibre causes a 0.2% movement in JRCS. Levels in excess of 16% should be of concern and are an indication of excessive extraneous matter content as true cane fibre rarely exceeds 14%.

Dirt, stone and other extraneous matter are classified as fibre. At the average cane price of $1029.54/t in the 1994/95 crop, and an average extraneous matter content of 10%, cost to the grower would have been some $105/tc. Dirt and stone also cause costly repairs, increasing production cost to factories. In the 1994/95 crop 1% fibre changed cane price by $32/t.

Low purities are mainly due to a varietal characteristic, harvesting immature cane, high levels of suckers and tops and cane staling. After reaping, the percent reduction in cane price due to purity drop from Day 2 to Day 6 typically follows a pattern: 12, 10, 17, 25, and 29% respectively.

Declining quality, from a JRCS of 10.22 in 1991/92 to 10.04 in 1994/95, Table I, would have resulted in reduced cane price had there not been increases in sugar price. Note that where JRCS exceeds the standard, the grower gets the full benefit of the extra sugar (as factory efficiency does not affect the price of cane).

Factories are expected to be able to recover at least 91% of sugar determined, by the core labs, to be in cane. This figure of 91% is the standard Factory Recovery Index (FRI) set for all factories. Farmers’ payment is based on this minimum 91% level of efficiency. Where factories extract more than 91% of the sugar the additional proceeds derived go entirely to the factory.

In practice, FRI = TS/TRCS where:

TS =Tonnes 96̊ sugar produced (including sugar equivalent sold to distillery)

TRCS = Theoretical Recoverable Cane Sugar

As factories pay for 91% of sugar in cane, regardless of whether it is extracted, they must minimize losses that may occur in the cane yard, milling, in filter cake, in molasses and undetermined process loss. Standards set for these losses, if surpassed, result in higher FRI. Since 1991 the Industry has seen steady improvements in FRI moving from 85.13 to 86.29, 87.18, 90.75 and 91.77 in consecutive years. Sugar lost in each area of operation and effect on the FRI are as follows:

The standard for cane yard loss is set at 4%. Table II shows a reduction from 8.94% in 1991 to 2.79% in 1995. This could be viewed as a gain of 2,679 tonnes sugar in 1995.

The target for milling efficiency depends on the fibre value. Despite being one of the Industry’s weakest areas, milling has improved with estimated sugar loss declining from 2.30 in 1992 to 0.90% in 1994 but inching up again to 1.26% in 1995, Table III.

The most efficient area of operation has been in the extraction of sugar from filter cake, although there is still room for improvement, Table IV.

Undetermined process losses in 1995 were reduced to approximately 55.0% of 1994, 33.9% of 1993 and 24.4% of 1992 levels, Table V.

Sugar losses in molasses in 1995 were reduced by 743 tonnes below 1994 levels and continued a trend of reduction from previous years Table VI.

The total of 4772 tonnes sugar lost in 1995 was 18.21% of the 1991 level. This significant improvement was a result of better management in all areas, except perhaps milling. Over five years, some 88,280 tonnes valued at $867.77M were lost, equivalent to 7.09 units of FRI, Table VII.

It is clear that the new cane payment system is contributing to increased productivity and greater efficiency. Growers have accepted the system and are now making efforts to deliver canes to factories within the specified 72 hours with the least possible extraneous matter.

Factories have improved the FRI by almost 7 points in five years, taking the average above the 91% standard, for the first time, in 1995. Management is now using available information to increase both the field and factory efficiencies.

If a purpose of the new cane payment system is to improve productivity in the Sugar Industry then this is being achieved. The confidence displayed in the system by farmers and manufacturers indicates that each appreciates the fairness and accuracy it embodies.