The news that the European Union has finally released the ,500,153,527 to the sugar industry that had been withheld, because President Donald Ramotar had exercised his legal constitutional option of proroguing Parliament, is welcome. But it illustrates the realities of the international regime in which small countries like Guyana have to operate.
When in 1975 sugar prices had spiked to historic highs, Europe had offered a price to the African, Caribbean, and Pacific Group of States (ACP), which included Guyana, lower than the then price for all our sugar under the Lomé Convention. This was agreed to in writing to continue “in perpetuity”. When prices later fell, Europe insisted on referring to the price in the agreement as a “preferential price”, since it was higher than the world market price. No one bothered to mention that the said “world market price” was a residual price since most sugar was traded through bilateral agreements.
The Europeans benefited from the Lomé price because they pegged it to what they paid their farmers for their beet sugar – and in effect offering the latter a massive subsidy. But as world trading regimes changed in tandem with the interests of the EU – to increase production of isoglucose (fructose) from corn and to impose EPAs on the ACP, in 2006 the Europeans unilaterally slashed the price of sugar from the ACP by 39 per cent. This is what plunged our sugar industry into a tailspin after the slow recovery from the PNC regime that made sugar production shrink from 350,000 tonnes in the 1960s to almost half of that by the end of the 1980s.
During the PNC years, the politicisation of management of GuySuCo and a levy imposed from 1975 during the years of the “preferential prices”, scooped off the profits of the industry, which could have been used to modernise the industry. Countless billions were transferred into the Consolidated Fund to subsidise Government spending in other areas.
It was a plus for Guyana that as early as 1998, GuySuCo crafted a Strategic Plan for the Corporation to cut its costs from an average of US 25 cents/lb to below the world price average of US 25 cents/lb. Part of the plan was to concentrate sugar cane production in Berbice where soil and climatic conditions were more suitable and inter alia to replace the Skeldon factory, which was the oldest in the industry. The International Monetary Fund (IMF), with which Guyana had signed a Structural Adjustment Programme (SAP), prohibited any spending on the factories and this inhibited increased efficiencies from improved processing.
The plan foundered for three other reasons: the exodus of skilled personnel from the industry and country, the seemingly fatal problems with the Skeldon factory and, of course, the European unilateral price cut. The EU did initiate a compensation scheme called the “Accompanying Measures Programme”, from which the funds mentioned above emanated. According to the EU, “For the period 2007-2013, the Sugar Programme indicative envelope for Guyana amounted to €143 million thereby protecting 20,000 jobs. The EU supports the Guyanese sugar industry with the aim to bring about sustainable improvements in the competitiveness of the industry and of the non-traditional agricultural sub-sectors.”
Apart from the EU monies being absolutely insufficient to compensate Guyana for the loss of revenues, the Government did not utilise all of it within the industry, which then continued in a seemingly downwards death spiral. It is, therefore, very ironic that there are complaints from some quarters about injecting funds into the industry – especially after a million Commission of Inquiry (CoI) offered suggestions for bringing back sugar into a viable industry. Instead, the Government has shelved the CoI’s Report and evidently signalled its intentions on the sugar industry by closing the factory at Wales at the end of this year; in effect, dooming sugar cultivation there.
Sugar should not be used as a political football and it is imperative that the Government and the Opposition sit down to avert a social crisis of gargantuan proportions.
