Gaskin says move to produce molasses economically unfeasible

GuySuCo’s reopening

The plan agreed by Demerara Distillers Limited (DDL) and the Special Purpose Unit (SPU) of the National Industrial and Commercial Investments Limited (NICIL) to have the Guyana Sugar Corporation (GuySuCo) produce molasses for the company’s operations is not economically feasible.
This is according to outspoken commentator and economist Ramon Gaskin, who says the undertaking will only profit the company in the end.
His comment comes in light of the recent disclosure by SPU Head Colvin Heath-London that DDL and the Unit had entered into an agreement wherein DDL was to advance the SPU in a collaborative effort to produce the molasses that it wants. DDL has a shortfall of more than 27,000 tonnes of molasses.
Heath-London said GuySuCo was hoping that operations at both Enmore and Skeldon would be able to meet this shortfall. He noted that the DDL would be advancing monies to cover the costs for molasses production, which they would collectively use to produce the sugar by-product.
Gaskin said based on his understanding, DDL is getting molasses from GuySuCo at 50 per cent of the actual cost. This may be the main reason why the company pushed to have the agreement signed so as to cover the remainder of the year.
Asked whether it was feasible to reopen the estates to produce molasses, Gaskin said, “It is not feasible. DDL was able to convince the Government that they really need molasses badly and they must reopen the estate just to get molasses. But if you look at DDL books, DDL has over $10 billion worth of stock. DDL could shut down for a whole year and still have rum in the bond,” he explained.
While Gaskin did not want to say more on the issue, he added that he believed GuySuCo must be able to state the cost for operating these estates to produce molasses and whether they were operating at a loss. The economist maintained, however, that it did not seem feasible to reopen the factory to produce 1000 tonnes of molasses per month, when in fact GuySuCo was producing 70,000 tonnes per year for the same company.
“In my opinion, they are subsidising DDL. DDL made $4 billion in profit last year. But I am not sure that they (DDL) are paying market value for the molasses. And they tied up that deal, because the new people there wouldn’t necessarily allow that to continue,” he explained. He also argued that even with the reduced estates, they would still not be able to produce 70,000 tonnes of molasses annually or 6000 tonnes monthly.
Since the thousands of workers have been fired in the downsizing of the sugar industry last year, DDL, the producer of world-renowned and award-winning El Dorado rums, has complained bitterly over this move. Together, the three remaining estates – Uitvlugt, Blairmont and Albion – are projected to produce a total of 52,000 tonnes of molasses this year. However, DDL’s molasses requirement for 2018 alone is 70,000 tonnes.
The company had been exploring options, and was even contemplating importing molasses to sustain rum production to meet its increasing local and international demands.
Nevertheless, as a long-term solution to this challenge, the company had submitted an Expression of Interest (EoI) to NICIL and to Government for the potential purchase of the now closed Enmore Estate. This would have allowed the company to have a guaranteed steady supply of molasses.
In early March, DDL said it would be partnering with the SPU and Government to restart the Enmore Estate, and almost 200 workers have been rehired to start operations to produce molasses.
It was reported, too, that over 190 cane harvesters have been employed to harvest some 4300 hectares of sugar cane at Rose Hall, so that it can be used by Albion to also produce molasses for DDL.