Rum industry has reached tipping point
Chairman of the West Indies Rum and Spirits Producers Inc. (WIRSPA) Dr Frank Ward warns that the region’s rum industry has now reached the tipping point as a result of subsidised rum from the United States Virgin Islands and Puerto Rico flooding the markets.
Ward issued the caution last night during a Caribbean Rum Producers meeting at the Accra Beach Hotel and Spa, Rockley, Christ Church.
Describing the current trade practices as simply “unfair”, Ward noted that WIRSPA had been working with regional governments for the past two to three years to effect a solution.
“I think the time has come, given the fact that some of our companies are now beginning to struggle, certainly in Barbados, we cannot wait much longer and I am urging the governments to start making concrete steps to engage with the US administration to effect a solution that is fair and reasonable,” he said.
“We are supposed to be operating in an environment which promotes free and fair trade,” he added, pointing out that “subsidised product from wherever cannot be considered to be promoting free and fair trade.
“In our region we subscribe to the rule of democracy, the rule of law and property rights. We do almost everything that is expected of us as countries to participate effectively in the global system whether it is on the political or on an economic level.
“I therefore see no reason why we should not demand that the same consideration be given to us. It needs to be taken into account that we are small countries with very little policy space to manoeuvre,” Ward added.
While insisting that action needed to be taken in a very short space of time, he said some rum companies were already cutting back on production as a result of the market conditions.
“That does not bode well for the company or the wider economy. You must remember that rum is by and large export driven. It is a significant earner of foreign exchange. If you cut back on production, you cut back on exports, then you will cut back on the availability of foreign excahnge.
Based on figures I have seen exports of rum from Barbados decline because we cannot compete with what is happening in the world,” Ward said.
The rum chairman also cautioned that one of the biggest challenges facing the Barbados rum industry was the cost of raw materials, such as molasses, which now had to be imported because of a decline in the acreage under sugar.
“Barbados imports most of the molasses that we use and we do so at a cost. We buy on the world market and we have to pay in foreign currency. The price of molasses has quadrupled over the years and then quality has declined,” noted Ward, adding “you cannot make rum without sugar cane juice or molasses”.