Local manufacturers’ rejection of a 40 per cent tax on refined sugar imported into the region reflects a limited understanding of market requirements, according to the Guyana Sugar Corporation (GuySuCo) which says that its planned white sugar product will meet the standards required by the manufacturers.
In a statement yesterday, GuySuCo said that it has taken note of the concerns of the Guyana Manufacturing and Services Association (GMSA) relative to production and supply of white sugar by regional sugar producers, such as GuySuCo and the Belize Sugar Industries Limited. It highlighted that its production of plantation white sugar will bring a host of benefits.
Stabroek News recently reported that the GMSA has rejected a proposal floated to apply a 40 per cent Common External Tariff (CET) to refined sugar entering the Caribbean Community.
GuySuCo is seeking to produce plantation white sugar and it recently said that it and other sugar producers’ groups representing sugar producing countries in the region had discussed applying the 40 per cent CET now only applied for non-regional brown sugar entering the regional market, to all sugars, including white sugars.
In rejecting the proposal, however, the GMSA had warned that refined sugar-dependent companies could be forced to close and jobs could be lost. Among other things, the GMSA had argued that plantation white sugar and refined sugar are not the same and this could impact negatively impact their products. According to the local manufacturers’ body, properly “refined” sugar can be used to produce quality foods or beverages, while utilising plantation white sugar would result in products of an inferior quality.
In responding yesterday, GuySuCo said that the GMSA’s rejection of a 40 per cent CET on refined sugar “reflects a lack of depth of understanding of the market requirements and classification of a range of sugars that are refined by annexing or standalone systems to sugar factories.”
The statement said that plantation white sugar is an acceptable consumer quality sugar, and, like refined sugar, because of its high purity and microbiological stability, is one of the safest products on the market. According to GuySuCo, most of the white sugar that is deemed “refined sugar” imported extra-regionally from Guatemala and Columbia, and used by local and regional manufacturers, is actually plantation white.
“It is very important for manufacturers to note that neither sulphitation nor bleaching will be involved in the process for producing white sugar by GuySuCo. Rather, GuySuCo would employ a re-melting process of sugar produced, that involves successive boiling and recrystallisation with Plantation White Sugar boiled from the highest purity of available ‘A’ remelts,” GuySuCo said, addressing a key concern raised by the local manufacturers’ body. It added that this is essentially the same process followed in refineries and the process enhances the quality of sugar.
The GMSA had
previously also argued that franchise owners, including Coca-Cola and PepsiCola, will not permit franchisees to use sugar not approved by them and had sought to indicate that plantation white sugar would not meet their standards.
However, GuySuCo said that bottlers’ standards are different “but not elusive,” and GuySuCo will work with soft drink producers on the requirements of including in its processing, a declorisation plant and corresponding equipment to meet those requirements. “There is already a precedent from a successful collaboration with the Belize Sugar Industry Limited and the Coca-Cola franchise in that country,” it pointed out.
GuySuCo also underscored that grades of sugar are produced in response to market requirements. It noted that substitutes in the food industry have universally dominated markets, including corn sweeteners that have been treated as replacements for sugar but this has not caused a reduction of quality of consumer food products.
Meanwhile, the sugar corporation also pointed to a number of other benefits from its planned white sugar manufacturing. It said that local manufacturers would benefit from a reliable supply and more ready access to white sugar. “As a part of its medium to long term planning, GuySuCo is maximising on Guyana’s geographic positioning to develop its business to provide reliable brown and white sugar and molasses, even during periods of high risks in the Caribbean as was seen in 2017 after the hurricane season, which saw local manufacturers being impacted negatively,” the statement said.
It added that there will be foreign exchange savings. “From GuySuCo’s perspective, the ability of local manufacturers, as well as the country to save much needed foreign exchange, will be greatly enhanced since the local demand of 20,000 tonnes of white sugar can be supplied by GuySuCo. The other 30,000 tonnes of GuySuCo’s planned annual white sugar production of 50,000 tonnes will be supplied to the regional market which will also save foreign exchange regionally,” the statement said.
Referring to a report regarding negative external shocks, GuySuCo added that its decision to pursue the production of plantation white sugar is also premised on the fact that as one of the largest businesses in Guyana, it is essential that it include into its reorganisation programme, factors to mitigate external shocks and accordingly, import substitution is appropriate.
It also pointed to findings from a study, ‘Substitutability of Plantation White Sugar for Refined White in Industrial Processes’, done by LMC International on behalf of the Sugar Association of the Caribbean in January 2019, which stated that: “It is clear that a CET is required to sustain the sugar industry in the Caribbean. The current situation where the CET is applied to brown sugar only, has distorted the market encouraging end users to demand duty-free refined sugar even if it is not strictly required for their product”
GuySuCo said that it appreciates the underlying factors, as well as the anxious tone of the GMSA in its statements to the press, and assured that it and other Caribbean sugar producers have been addressing opportunities for the requirements of the region’s industries in response to the major market adjustments that have arisen since the European Union announced the repudiation of the Sugar Protocol, which from October 2009, removed price guarantees which impacted adversely on the sugar industry and markets of African, Caribbean and Pacific States.
“As shifts continue in the global, regional and local markets, GuySuCo has to become more and more flexible and agile and place more emphasis on the demands of the domestic industry. The corporation appreciates that the white sugar it produces will have to satisfy the quality requirements of all of its customers,” the statement added.
