With every passing day, it is becoming increasingly clear this People’s National Congress-led coalition Government is either absolutely clueless about the sugar industry, which was the raison d’etre for this country’s existence, or else it is determined to destroy it. The latest announcement by Colvin Heath-London, presumably in his role of Chairman of the Guyana Sugar Corporation (GuySuCo) – where he is presumably tasked with turning around the rump Corporation – rather than as head of the Special Purpose Unit (SPU) tasked with selling off the three estates that have been already closed – conclusively proves this.
The State-owned Chronicle reported his assuring “GuySuCo to return to profitability in two years” by following a “strategic plan that will guide spending of $30 billion that was raised via a syndicated bond recently. The first fly in the ointment was when Heath-London revealed that the plan – which is to be presented to “the Ministry of Agriculture and the Government level’ – was “still being concretised” and he and his team still have not met with the Guyana Agricultural and General Workers Union, the Union from which he expects to get ideas that will “cross fertilise” his own. How can Heath-London possibly promise a two-year turnaround in this still inchoate and fluid scenario?
But it was his response to questions in other sections of the press on his decision to reopen Enmore Estate to produce molasses for Demerara Distilleries Limited (DDL) that exposed Heath-London’s absolute ignorance about the nuances of industry he now totally controls. He had to temerity to suggest that the last stage of sugar production, when the crystals are separated from the molasses, is the most expensive, and as such, the cost of the molasses – containing all its original sugar content – that Enmore will sell to DDL is not very significantly higher than the cost of ordinary “strap” molasses. Firstly, the savings on the retention of sugar is at best 10 per cent of total costs.
Secondly, the ratio of sugar to molasses at extraction is approximately 2.5: 1. Meaning the 1100 tons of “molasses with sugar” produced in Enmore’s first week contained 785 tons of sugar and 414 tons of strap molasses. But with the total prior cost of production (minus 10 per cent) being incurred and the opportunity cost of the sugar at US$300/tonne (present market price) versus strap molasses at the last quoted price of US$93/tonne, the selling price of the “molasses with sugar” will have to be at least US$250/tonne just to lose as much as Enmore used when selling sugar to the EU at a higher price. Since this is the reasoning Heath-London is using to rationalise raising GuySuCo to profitability “in two years”, one can appreciate the conclusion stated earlier about the future of the industry.
The “un-fertilised” ideas that Heath-London floated up to now to turn around the rump sugar industry at this stage is based mainly on two new initiatives – co-generation of electricity to sell to the national grid and the production of “Plantation White Sugar”. After the heated debates we have been having in the press about the inability of GPL to absorb power generated by wind turbines to the grid, it will be useful if he can inform the nation whether GPL has given him the assurance they will deliver a Power Purchase Agreement (PPA) for electricity that will only be produced for less than half the year when bagasse is produced during the “sugar grinding” season.
On the “Plantation White Sugar” front, Heath-London should know that the market in the Caribbean Community (Caricom) he is counting on to kick in with a 40 per cent tariff, might just be a “bird in the bush”. While Caricom’s Council for Trade and Economic Development (COTED) has asked the Sugar Association of the Caribbean to conduct regional consultations with manufacturers who use refined sugar in their manufacturing processes, in the largest market Jamaica, the Industry, Commerce, Agriculture and Fisheries Minister, Karl Samuda had to assure them no decision will be made without agreement from members of the manufacturing sector because of the extra costs of processing Plantation White.
