Molasses shortage points to negative impacts of downsizing sugar – former Minister
– says effect devastating to small farmers too
By Samuel Sukhnandan
Recent reports that there is a shortage of molasses in the country as pointed out by Demerara Distillers Limited (DDL) which said that it had to import 14,000 tonnes of molasses last year for its rum operations, points to a shortfall in the sugar industry.
This is according to former Agriculture Minister Dr Leslie Ramsammy who told Guyana Times on Monday that the admission by DDL that they imported molasses at a significant cost is not surprising. Rather, he said it confirms the Opposition’s warning that the closure of sugar estates will have costs way beyond the temporary subsidy Government was making to the industry.
“Unfortunately, the costly import of molasses is only one of the incalculable loss Guyana is experiencing from the downsizing of sugar. Further, the increased cost to DDL means Guyana suffers from reduced tax generation and an increased deficit in the international trade balance because our export is reduced and our import continue to increase,” he explained.
The former Minister said when import increases it places undue pressure on the foreign currency dependency. “Because DDL must spend foreign currency for import, they compete on local market for foreign currency, driving cost of foreign currency up. This means that the foreign currency shortage is further amplified and the foreign currency exchange moved upwards.”
But DDL is not the only business affected. Dr Ramsammy noted that molasses is extensively used in stock feed and the reduced production of molasses is increasing the cost in the livestock industry. “This latter impact is devastating to small farmers,” he told this newspaper.
The former Minister noted too that the downsizing has led to an almost instant death of the fledgeling molasses bottling initiative started in 2013. He recalled that there was a growing market for bottled molasses and Guyana not only started to make bottled molasses available in Guyana, but the country had started to export to New York.
He said, “The downsizing made this aspect of the diversification of sugar products come to a screeching halt. Very importantly, the downsizing also stopped perhaps the biggest initiative in diversification of sugar products – the ethanol production. The prototype plant was established in Albion and was designed to use molasses for production of ethanol”.
This plant, he said, has been abandoned and he believes that the closure of the prototype ethanol plant was due to the pressure of molasses scarcity that forced companies like DDL to import molasses. “Of significance, this is just one of the negative impacts of downsizing and closure of sugar. Because of the pressure of meeting contractual obligations to the European Union (EU), the dramatic reduction in sugar production is now causing pressure on sugar availability.”
Dr Ramsammy said Guyana is beginning to see the increased cost for one pound of sugar in local supermarkets and groceries stores. “This will only get worse but represents the tip of the iceberg. Local manufacturers are complaining of the availability of sugar from the Guyana Sugar Corporation (GuySuCo),” he told Guyana Times.
According to him, when one takes these significant impacts in the downsizing of sugar and add to the cost of drainage and irrigation for residents and farmers in the closed estates, the cost to Guyana is far more costly and excessive than a temporary subsidy to GuySuCo.
“This does not even take into consideration the massive cost for unemployment of more than 7000 sugar workers and the loss of an additional 4000 jobs related to sugar in the closed estates. If the downsizing has such huge impact on a large company like DDL, imagine what is happening to small entrepreneurs and to the livestock farmers.”
Another important lesson the former Minister said he hopes the Government can digest is the report that DDL considered bidding for the Enmore factory and estate but because they have dismantled large parts of the factory and scavenged so much from Enmore, the capital investment will be too high and that is why they decide not to.
“It is what will make the resuscitation if Wales is so difficult? In the case of Wales, it will not be simple to reopen it, as they has promised. Wales will likely be starting all over. I believe that A Partnership for National Unity/Alliance for Change (APNU/AFC) are ensuring that the closed estates cannot be easily restarted and that the close of the rest becomes the goal,” he added.
The Guyana Agricultural and General Workers Union (GAWU) has said that the downsizing of sugar has had a negative impact on communities countrywide, but more particularly, those located in the major sugar belts. Aside from that, not only has it added pressure on families and households, but production has fallen significantly and so has exports.