Dear Editor,
I refer to a letter in the Stabroek News of May 2, 2017 from Dhanraj Singh and Stephen Kissoon, both economists, captioned ‘Further downsizing of GuySuCo is poor policy and would lead to one of the worst economic crises in our history.’ I agree that it would not be advisable, but there is more than a little truth to the following statement: “Most Guyanese would agree there are real problems affecting GuySuCo, including production challenges, low productivity, high cost of production, lack of competitiveness, and arguably the worst forms of management corruption.” I don’t agree with them that expansion is part of the answer, since until and unless we can mechanize this industry it will never be competitive. Every attempt at modifying our field layout for mechanization has met with disaster because GuySuCo has never hired a world class specialist to spearhead this process through laser levelling and proper field design for inter-row tillage and mechanical harvesting, and appropriate mechanical field equipment selection, etc. The 90 ft cambered bed with cane planted along it has been a disaster for them; it is why GuySuCo should not be in charge of its own diversification. It fails to grasp the complexity of diversification and so it is not competent to do it, and must therefore hire outside experts to spearhead the process of each area to be diversified. They insist on using existing staff whose competence is questionable at best for sugar, but hopelessly inadequate for diversification to other activities; it is why it has never succeeded in diversifying.
MoGas (gasoline) imports to this country for 2015 were 1.267 million barrels. I am estimating that a barrel is the universal 42 gallons, so we imported around 53 million gallons of gasoline to this country in 2015 (latest annual GEA report available) and today it could be more; 10 % of this amount would be 5.3 million gallons. The total price CIF Georgetown for this 53 million gallons of gasoline was US$104,212,712. If we could replace 10% of this gas locally it would represent a foreign exchange saving of US$10.4 M/annum. But where would we find the 5.3 million gallons of gasoline?
Based on a low estimate of 26 tons of cane per acre, and 22 gallons of ethanol per ton of cane grown, because this is for ethanol production and not sucrose production, the milling of the leaves (being also sugar cane biomass) is as important as the cane stalk, and an acre would yield 22 x 26 = 572 gallons ethanol per year. Note: http://grist.org/article/biofuel-some-numbers/ where we see the following:
Ethanol and Biodiesel Yield per Acre from Selected Crops
Fuel Crop Fuel Yield (gallons)
Ethanol
Sugar beet (France) 714
Sugarcane (Brazil) 662
Cassava (Nigeria) 410
Sweet Sorghum (India) 374
Corn (US) 354
Wheat (France) 277
Biodiesel
Oil palm 508
Coconut 230
Rapeseed 102
Peanut 90
Sunflower 82
Soybean 56
(author’s estimate)
As far as biodiesel is concerned, we know that we can grow oil palm and coconuts here, so making a substitute for diesel is still an option in time. But note that palm oil is the most important plant for biodiesel production.
Even though the caloric value of ethanol is less than gasoline when burnt, it sells for around the same price; in fact in the US I believe that it sells for more, since as an octane booster it raises the octane of the gasoline it is mixed with, burns cleaner and is renewable. If US$104,212,712 bought around 53,000,000 gallons of gasoline as stated in the GNEA 2015 annual report, it means that the CIF price for gas bought, cost us around US$104,212,712/53M ie around 2 US per gallon. The duty on gas I am told is around 50%, so the selling price for gasoline in Guyana in 2015 would have been US$2 + 1.2 = US$3.2 per gallon.
Let us use US$3 as the price for a gallon of fuel grade ethanol. Now it is well established that you can put as much as 10% ethanol in the gasoline without modifying a car’s engine, and in fact the engine will work better since the ethanol is cleaner burning and boosts the octane of the entire gasohol mix, so the GNEA which is the only entity authorized to sell gas in Guyana, will by law begin selling this mix of ethanol and gasoline to the local distributors. To do that, however, they will need 5.3 million gallons of the stuff and it will have a value of 5.3 M Gal x US$3/Gallon = US$15.9 million per year for GuySuCo. I am assuming that the government is enlightened and serious about resolving this issue, and will allow the ethanol to get the maximum price, since it will be saving us having to find US$10.4 million per year in foreign exchange, and there could be no import duty on ethanol fuel made here. I am also assuming that the unions will be more cooperative; they must acknowledge that they have helped to kill the golden goose, so now they must face the consequences with the rest of us.
If we are getting 26 tons of cane per acre and with current technology in Brazil each ton of sugar cane produces around 22 gallons of ethanol, if we need to have 5.3 million gallons @ 572 gal/acre = 9,265 acres of sugar cane land which will make ethanol and not sugar. Now let me pause here and reassure your readers that farmers and the estate field and factory workers will not be affected, since we will still be growing sugar cane as usual and grinding it, but we will be making ethanol from it and not sugar at the factory, I have to make this clear since my last letter on the matter created quite a stir, since people who should know better thought that we would have to grow alcohol trees to make ethanol.
This brings us to the point of understanding the maths of the situation; at a yield of 26 tons of cane per acre and 2 tons sugar per acre @ US$480 per ton sugar, the monetary yield of sugar per acre is US$960/acre/year, so to make US$10.4 million we would need to have 10.4M/960=10,833 acres of cane land; but from this same acreage which is already under cane, were we to manufacture fuel grade ethanol at 10,833 acres x 26 TCA x 22 gal E x US$3/gal = US$18.6 million. So compare earnings of US$10,400,000 from 10,833 acres growing cane for sugar, with US$18.6 million if we grew cane to make ethanol fuel for the Guyana marketplace alone, at a 10% mixture, and a selling price of US$3 per gallon.
Now any person looking at this equation, would have to conclude that it might be worth the effort to investigate this further, and would legitimately be right to ask what is GuySuCo doing? Why is it advising the government so badly? And he/she would be absolutely right. Especially in view of the following additional facts:
- Guyana would not have to find US$10.4 million per annum in foreign exchange to buy gasoline.
- Because the ethanol is being produced locally, the price it can sell at can be set at US$3 per gallon for GuySuCo ‒ 5.3 million gallons @ US$3/gallon= US$15.9 million/year to help them.
- For the factory to produce ethanol, let’s say Enmore/LBI, it will be far less expensive to buy and operate. It will consist of just the mills, the fermentation tanks and the distillery and will use much less energy; therefore the process will be cheaper. In addition it entails much lower ongoing maintenance costs than a factory to produce sugar and molasses.
- High TC/TS which is our biggest problem now, will no longer be an issue with the stop and start nature of current operations due to shortage of labour, so the deterioration of cane sugar or sucrose which happens almost immediately after burning, will not affect ethanol production. Sugar cane biomass including trash does not deteriorate quickly for ethanol production; it can be in the punt for quite a while and not affect its ethanol yield.
- Because distilling the cane juice to make ethanol is so much less energy hungry than making sugar, co-generation of electricity becomes a real possibility due to surplus bagasse.
- In addition work is currently going on, with some success, to convert the sugar cane biomass or cellulose to alcohol. Converting cellulose to sucrose cannot happen, but it means that the cellulose of the sugar cane stalk and leaves is expected to become more important in time to ethanol production; the Brazilians have already done it.
- Finding finance for such ‘green projects’, in view of climate change, could be financed by many agencies/grant aid programmes.
- In time ethanol can power other things; in fact recently a government owned Brazilian company has signed a 10 year agreement to operate an ethanol power generating plant for the Brazilian national grid, ie: “On 19 January 2010, Brazil’s state-owned company Petrobras launched the world’s first ethanol-fired power plant. Situated in the city of Juiz de Fora, in the state of Minas Gerais, approximately 180km north of Rio de Janeiro, the plant generates electricity on a commercial scale using sugar cane-derived ethanol. The plant’s technology, engineering and field support was provided by General Electric (GE). The plant has an installed capacity of 87MW, which is enough to power a city of 150,000 inhabitants. It is connected to Brazil’s electricity grid and has power supply contracts for the next ten years”.
All of this technology is available today from our neighbour to the south, who wants us to give them access to the Atlantic Ocean, and I suspect that they would be only too happy to partner with us for that benefit. GuySuCo has never sent anyone to Brazil, or invited anyone from there to come here to advise us. They are advising the government to close estates, when we have not, in my opinion, explored all of the possibilities and alternatives.
These things are not done by mediocre men with no vision. And frankly if this is not diversification from sugar (sucrose) production, I wouldn’t know what is! I agree that we should not be just closing these estates. Wales has taught us a lot; we must phase in profitable enterprises more suitable to our conditions, as we are phasing out the sugar. Please do not misunderstand me, I am not offering this as a complete answer to our problem, but we must look at it more closely and we have not done so. We certainly can’t have GuySuCo executives in Parliament telling the Economic Services Committee, that this will destroy our rum industry. Furthermore, work is going on in the US and Brazil to convert the cellulose in the sugarcane biomass to ethanol using enzymes, which can possibly double the amount of ethanol from one ton of cane in time. http://edis.ifas.ufl.edu/ae493
Yours faithfully,
Tony Vieira
