Dear Editor,
As a frequent reader of your “Letters to the Editor”, I came across a graph. And instinctively, I thought, “Oh Gaad, Gampat at it again!” I scrolled to the signature line and saw it signed by “Dr. C. Kenrick Hunte, Professor and Former Ambassador.” So, I decided to read the letter titled, “GuySuCo must reduce its cost of production to competitive world market price levels to turn its loss making activity into a profitable venture.”
Guyana produces the “champagne of sugars.” The fragrance, the clarity, and size of the crystals differentiate our Demerara sugar from the “kaanta stuff” that is sold on the world market as Demerara Sugar. Our sugar has terroir. For us to let sugar in Guyana die; is analogous to France allowing the champagne industry to die.
Now to Dr. Hunte’s letter: First, he states, “…GuySuCo sugar is already more expensive than imported sugar, it is plausible to expect that the importation of sugar would be a better deal for consumers.”
The answer is a resounding no! Using the Dr. Hunte’s chart, around 1981, the world price for sugar plummeted below the EU subsidized price. Now let us recall that period: Guyana’s economy was in a freefall, foreign exchange was scarce; the government responded to the crisis by engaging in arbitrage. It bought cheap Latin American sugar for our local market and sold the Guyana produced “good stuff” to the EU. At the consumer level, the quality could not compare. A teaspoon of that Latin American crud transformed a cup of tea into swill!!!
Second, Dr. Hunte posits, “GuySuCo’s economic problems in the sugar industry have multiplied with the termination of the preferential European Union (EU) sugar price; that is, a subsidized sugar price that was higher than the world market price.” It was the initiation of the EU subsidies which was the major contributor to destruction of Guy-ana’s sugar industry; the EU subsidized the industry to be inefficient. GuySuCo made money because of the differential between its cost of production and the EU price. The profit was then diverted to other area of the economy – bauxite, the UMDA/UMRP etc. The government neglected to invest in the goose that laid the golden egg. The result: dilapidated factories, poorly maintained fields, etc. Guyana lost the opportunity to bring the cost of production way below the world market price.
Third, Dr. Hunte states, “…in order to turn this loss making activity into a profitable venture, GuySuCo must reduce its cost of production to competitive world market price levels, which ranges between US$0.13 per pound of sugar in 2018 to a projected US$0.17 per pound of sugar in January 2025.” Dr. Hunte the industry will break even if Guyana produces sugar at the world market price. To profitable run sugar, Guyana must produce way below the $0.13USD/pound. This will have to take into consideration the massive investment that will have to be undertaken, the repayment of principal and interest on the loans that will be required to resuscitate the industry.
Fourth, Dr. Hunte describes the task ahead for the industry as a “significant efficiency challenge.” The problems besetting Demerara’s sugar are myriad: (a) Political-Is the government willing to divest the industry? (b) Labor-will the unions accept that the current wage structure in the industry renders it unprofitable. Sugar worker will have to take a massive pay cut to return the industry to profitability. (c) Societal-are Guyanese willing to have private firms have control of large tracts of arable land?
Not contented with just dry analysis, one must offer a solution.
I am willing to take this loss incurring industry off the government’s hand. Minister Zulfikar Mustapha-you have a firm offer: I am willing to buy the sugar industry for a token $1.00.
Sincerely,
Roger Ally
Fort Lauderdale
