By Theo Leggett BBC World Service business reporter

Trinidad and Tobago's economy used to rely on the sugar industry

The company, Caroni, has lost hundreds of millions of dollars over the past decade.

The workers who are being laid off will share a redundancy package totalling more than $100m, and will be given opportunities to retrain, or to lease land for their own use.

The deal follows months of politically sensitive negotiations between the government and the workers' union.

The closure of Caroni reflects the declining importance of agriculture in the region's economy, which is increasingly focusing on manufacturing, offshore industries and the service sector.

End of an era

The sugar industry was once a mainstay of the economy of Trinidad and Tobago.

It was established by the region's British rulers in the nineteenth century, and remained a vital factor in its prosperity for over a hundred years.

More recently, though, it has been a burden on the state's finances.

The sector was nationalised in 1975, and since then the government has invested over $1bn in loans and debt write offs.

But Caroni has continued to lose money, and in 2001 a government committee recommended its closure.

The authorities plan to reopen Caroni under a new name next year, although it will be a shadow of its former self, with only 1,000 employees.