GuySuCo needs to be diversified, not downsized

Sugar woes

By Jarryl Bryan

In one of the few times he has publicly addressed the issue, Guyana Sugar Corporation (GuySuCo) Chairman Dr. Clive Thomas recently defended the “downsizing” of the sugar industry by pointing to the possibilities of a regional Common External Tariff (CET) and United States markets.
But according to Financial Analyst Dr. Peter Ramsaroop, an Economic Advisor to

the People’s Progressive Party (PPP), this is a plan fraught with implications for Guyana’s economy. He emphasized that what Guyana needed was an ambitious diversification plan for GuySuCo, and the PPP had conceptualized such a plan prior to 2015.
Dr Ramsaroop questioned the quality of advice the coalition Government has been receiving, noting that advice like Thomas’s recent utterances are long on theory and short on practicality.
“Dr. Thomas continues to demonstrate his lack of working business management (knowledge). His advice to Granger and the Government has essentially torpedoed the entire economic situation in Guyana, with rippling effect not just on people’s well-being, but it has affected numerous other industries.
“Sugar needed to be managed in its entirety, with diversification as proposed by the PPP in (its) 2015 – 2020 (proposal). A well-thought-out plan had been started prior to 2015 in order to ensure a successful diversification transition by 2020. The PPP/C had planned a minimum investment of G$20 billion for the viability of the industry,” Ramsaroop revealed.

Mechanization
Ramsaroop explained that the PPP’s plan entailed investing in the continued

modernisation of the existing factories; investing in sugar refinery and distillery facilities; generating more packaged and specialty products; and increasing mechanisation of the industry in a bid to boost production.
It is understood that, with mechanisation, jobs would not necessarily have been cut, but rather job specifications would have changed and new opportunities for workers would have been created. This also runs counter to the Government’s contention that the PPP had no plan for the industry.
“We actually needed to grow more sugar cane with a goal of 400,000 tons by 2020. The key — which Dr. Thomas failed to understand — is not just about lowering the cost of the remaining estates, but about what a diversification plan would have done for the industry. Our goal was to expand packaged sugar to 50,000 tons by 2020, and expand the production of bottled molasses as a commercial product for the local and international markets,” the financial expert disclosed.
“In addition, the goal was to expand the Albion Ethanol Plant to produce up to 50,000 liters of ethanol per year, and to be able to use other substrates, including

cassava,” Dr Ramsaroop explained.
“The economic downturn in our economy is directly linked to the bad advice that Dr. Thomas has given, and the failed policies of the Granger Government,” he charged.
In an interview with the state media, Dr. Thomas, an economist, had claimed that the three estates Government would leave operating — Albion, Blairmont and Uitvlugt — can still make a positive contribution to the economy, and be competitive.
“We are hoping that, in the end, it can produce what we call plantation white sugar, which we can sell to the other CARICOM region, and have a Common External Tariff (CET) which will protect the sale in that market,” Dr. Thomas was quoted by the media as saying.
A CEF is a multilateral arrangement between a group of countries where the same customs duties regime, import quotas and other trading barriers remain constant. It is supposed to sustain and protect the profitability of trade within the group.
Dr Thomas expressed hope that a CET, combined with the limited access Guyana has to the United States market and Guyana’s own domestic market, would make GuySuCo profitable. He spoke of the possibility that Guyana could secure a price of between 25 and 28 (US) cents per pound of sugar. At present, the world price for sugar is 14 US cents per pound.
“We are hoping to drive the cost down to that level in these three remaining estates. With the most productive estates being utilised by us, we will get a better price and (be able to) lower cost,” an optimistic Dr. Thomas was quoted as saying.
Already, the closure of the estates and the sacking of workers is having an effect on the economy, and even Government has acknowledged this. Blaming missed production targets from sectors, including sugar, Finance Minister Winston Jordan recently announced a downwards revised economic growth target.
Jordan said the economy was expected to grow by 2.9 per cent, having failed to meet the revised growth projection of 3.1 per cent for 2017. The initial projected growth of the economy was 3.8 per cent, but this was revised by midyear to 3.1 per cent after the economy had grown by only 2.2 per cent by July.
Sugar output in Guyana fell by nearly a quarter from last year, with close to 140,000 metric tonnes being produced in 2017. This is the lowest output in over two decades.