As of October 22, sugar production for the second crop was 70,574 tonnes, just over half of the revised target of 137,764 tonnes with just about six weeks grinding left and signalling a likely significant fall in output compared to last year.
After a poor first crop output this year of 56,821 tonnes, which was roughly 23,000 tonnes down from its target of 80,270 tonnes, GuySuco was hoping for a much better second crop but this does not appear to be materializing.
In April this year, Errol Hanoman, GuySuCo’s Chief Executive Officer had told Stabroek News that the “drought had a severe impact on the [first] crop” but he was happy that the recent rains had brought some relief.
According to Hanoman “Now that the rain has started, it would augur well for the second crop, which is expected to begin in mid-July. He is confident that the projected target of 159,000 tonnes would be achieved.
That target of 159,000 tonnes has since been quietly reduced to 137, 764 tonnes and this figure is also now seriously in doubt which means that the annual production this year will fall far below last year’s output of 231,071 tonnes. The original target for 2016 was 239, 513 tonnes.
Coming at the end of the first full year of GuySuCo under the APNU+AFC government-appointed board and management, the output will raise further questions about whether reforms and measures to boost production are working. The announcement by GuySuCo in January this year that sugar will no longer be grown on the Wales estate has cast a further pall over the industry as hundreds of workers fear that they will be forced to find new jobs.
According to figures seen by Stabroek News, for the week ending October 22, no estate met its target and the industry on the whole was below its expected output by 3,016 tonnes. The Rose Hall estate achieved only 51.87% of its target.
The Skeldon estate which has been a huge financial drag on GuySuCo for a number of years produced only 5,067 tonnes in the first crop and thus far in the second crop it has produced 15,215 tonnes. When it was first conceived, Skeldon was expected to produce around 110,000 tonnes per annum,
The Albion estate, as in previous years, is the top performer. It has so far produced 31,632 tonnes of sugar and has registered a tonnes per cane/per sugar ratio of 9.8.
Price
Meanwhile, private cane farmers are hoping that the price they receive for sugar would increase so they can remain in business.
GuySuCo’s Finance Director, Paul Bhim recently told Stabroek News that a total of 234,428 tonnes of sugar was sold in 2015 at an average price of US$358 per metric tonne.
Of that, 160,436 tonnes was sold to the European Union (EU) while the other 46,000 tonnes was shipped to the Caricom market.
Sam Persaud Knights, a private cane farmer and chairman of the Cane Farming Marketing Co-op, said that sugar was sold at a price of $58,000 to the EU in 2015, compared to the $72,000 they received the previous year with a reduction of $14,000.
This, he said, is a big blow to their business because the cost of production is very high. He believes that the current price is way too low and if there is no increase, “sugar is dead. Who would produce sugar at $58,000 per tonne.”
He added: “Right now we are not even breaking even. When you take out the expenses to pay transportation, labour, fertilizer, chemical and husbandry practices, you have to take money out of your pocket. Right now we are just creating employment for workers.”
Three years ago they were earning $105,000 per tonne of sugar. During that time, they were also having fair trade premiums of $12,000 for each tonne of sugar, bringing the cost up to $117,000 per tonne.
In 2014, the price reduced to $72,000 per tonne “and we lost the fair trade because sugar got cheaper on the World Market so nobody is buying premium sugar…”
According to him, “The bulk of the sugar (60%) goes to the EU, and that is a very low market right now, with US$328 per tonne.”
He said they are earning much more from the local sales [but those markets are smaller], than from the EU and the Caricom markets.
The US price, he said, is the highest, “about US$650 but that is a smaller market with 25,000 tonnes of sugar going there.”
Knight pointed out too that “there are some value-added packaging but the problem right now is marketing strategies. We have to do a lot more with the marketing strategy…”
He added: “The Caricom and the local markets are the same under the Common External Tariff and the Caricom Single Market and Economy.”
The EU market, which had a price cut, is the main market and they had a “preferential treatment which ended unilaterally so the government does not have a say. The entire African, Caribbean Pacific group of nations, numbering about 74, are affected by the price cut.”
A GAWU official told this newspaper too that the sugar price is expected to increase a little this year because there has been a shortfall in production.
“There is a deficit in the global sugar market, so where the supply exceeds demands, the price would go up,” the official told this newspaper. “That would be influencing the increase in the price.”
He pointed out that the increase is projected to “hold until next year, which would also be another deficit year.”
The shortfall in the cane has been impacted by the El Nino phenomenon as well as the political instability and problems with the economy in Brazil, which saw a fluctuation in its currency.
The official said too that has been “one of the reasons that has forced producers in Brazil and other parts [of the world] out of business.” As a result, “Brazil has closed about 40 sugar factories over the last year or two.”
