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omitted to make, that certain of the estates have not ceased to be carried on at a profit, and will continue to show a profit even on the present year's working, notwithstanding the, exceptional circumstances of the hurricane. There should also be added the fur- ther qualification that other estates are oscillating within a narrow range of alternate profit and loss, and that, even in the case of certain of the estates with a consistently adverse balance sheet in recent years, the losses are not fairly to be attributed to the depres- sion of sugar prices or other unfavourable conditions applying to the industry generally. The physical conditions of production vary greatly in Mauritius, and these variations of soil, elevation, and rainfall may have the effect of widely different commercial results as between estates under the same ownership and management. The most important variations, however, are not in the physical but in the financial conditions of production. Although it may be true that only those estates which enjoy well-favoured physical situations can hope to prosper until world prices improve, there are certain estates answering to this description which are now not prosperous: The plain truth of the matter is that the chief malady from which the Mauritian sugar industry is suffering to-day is not low prices but high indebtedness In some cases the source of the indebtedness may be traced to the boom year of 1921 when sugar prices rose to the fabulous height of £90 a ton, and a number of estates changed hands on extravagant terms of purchase which, when prices fell as suddenly and unexpectedly as they had risen, and land prices sank as rapidly to their normal level, involved a legacy of mortgage charges out of all proportion to the real value of the estate. In other cases the lure of boom prices led to the extension of sugar planting to land which would not normally have been regarded as suitable for the purpose. Some of this land has now fallen out of cultivation, and most of it will be abandoned when the last ratoons have been cut, but much of the loss incurred will remain as a charge on the rest of the estate. The cases in which advantage was taken of the boom-year profits to clear off out- standing indebtedness and to replace outworn factory machinery by more modern and efficient plant appear to have been compara- tively few. A considerable part of the profits is said to have dis- appeared in purely private expenditure and some of it to have found investment outside the Colony. In the result, when the brief era of abnormal prosperity had passed, the majority of the estates were in a no better position, and some of them in a quite definitely worse position to meet the lean years to come than if there had been no boom period.
6. The great bulk of the burden of debt which weighs down upon the Mauritian sugar industry is not due, however, to the exceptional circumstances of the boom year but must be ascribed to the inherent weakness of the traditional financial system on which the majority
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of the estates still continue to be run, a system which has produced several similar crises in the past, so that its distressed condition under the unexampled strain caused by the recent succession of bad-price years need not be a matter for surprise. Before discussing the main features of this system a word should be said as to the general organization of the industry as regards ownership and management: The principal unit of organization is what is known as an estate, which is an area of cane plantation with its own factory. The number of factories was 227 in the year 1854 and has since diminished steadily. In 1909, the year of the Royal Commis- sion's Report it had fallen to 65, and it is now only 42. Each factory serves a number of other plantations than the one to which it is attached. These non-estate plantations vary greatly in size. Some of thein may be larger than the estate plantation; others, mainly held by Indians, amount to no more than small plots of two or three acres. The extent of land held by sinall Indian cultivators now amounts to about 40 per cent. of the total area of cane cultiva- tion, but much of it is of inferior quality with a low yield of sugar per acre. Canes, other than those grown on the estate plantation, estate are known as planter's canes as distinguished from canes. They are acquired by the estate factory by purchase either for money payment, or, more usually, on terms of a division of the sugar product, one-third being retained by the factory and two- thirds going to the planter. Many of the smaller planters are them- selves workers on the estate plantation and are often dependent upon the estate for financial assistance in the cultivation of their own plots. We have heard no suggestion, however, that this dependence of the small upon the large cultivator is abused by the latter, or that the arrangements for purchase of the small planters' canes by the factory are unfair to the weaker party. On the contrary it is in the interest of the factory that the small cultivator should improve the quality of his canes, and every encouragement and assistance possible is readily given.
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7. We now turn to the system under which the estates them- selves, and the large plantations, are financed, which we think cannot better be described than in the words of the following extract from Sir Francis Watts' report, with its inset reproduction of a much quoted passage from the report of the Royal Commission of 1909 :-
"It may not be out of place here to make clear the method of financing planters in Mauritius, for the present financial stringency is making itself felt in that interests are high in accordance with the indebtedness and risk attached to the business financed,
"A few estates are not encumbered in any way by mortgages and are financed by their own working capital. Other estates are slightly encumbered with mortgage or other debt, and are financed by the banks or brokers, commonly known as a bailleur de fonds; and lastly there are estates which are heavily mortgaged and also indebted to the bailleur de fonds.
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PUBLIC PECORD OFFICE
I will u ilu
Reference -
C.O.882/12
PUBLIC RECORD OFFICE, LONDON
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