A Sugarcane Industry

Dec 14, 2008 Features / Columnists, Ravi Dev

---

One of the problems with attempting to analyse and comment on the operations of the sugar industry is the relative opacity of information on those operations, even though the industry is supposed to be “owned and operated by the people of Guyana.” There is a dearth of information in the public sphere on both the performance and plans of GuySuCo.

For instance, the corporation has not yet issued its annual report for 2007. In a world where quarterly reports for corporations are routine, this is almost criminal behaviour.

On the web, one can already find out the yields for the Mauritian cane fields for the month of October. Does GuySuCo have the comparable figures available at this time, even for its own managers?

Regarding the plans for the industry, there was a Strategic Plan unveiled in 1998, but which has been revised several times in the intervening decade — primarily to deal with the changing global environment for sugar. The administration has done itself a disservice by not bringing the nation up to date on these changes.

From the onset, there was an unequivocal declaration that the experiment to diversify the industry into “other crops,” as was attempted by the previous administration in the 1980’s, was not going to be replicated. (Diversification of agriculture is going to be facilitated in new lands that are being made available to investors.)

The lands for sugar, as a matter of fact, were going to be increased in Berbice, and there was going to be a diversification within the industry: co-generation of electricity from bagasse for sale to the national grid; alcohol production from a new distillery, and a refinery for producing white sugar.

There was going to be the packaging of some sugar for the retail trade – initially at Blairmont — which could increase its value immensely. Most recently, we heard of the possible production of Ethanol.

The fact that all these expansions were going to take place in Berbice, against the World Bank’s obdurate insistence that the Demerara Plantations be shut down, made us fear for the future of the latter entities — and the eight thousand workers who would be thrown onto the streets.

As we said last week, however, the decision by the administration to locate the packaging plant for retail sugar at Enmore (using EU funds) appears to “put their money where their mouth was,” and it behoves all Guyanese to back them in this decision.

From this perspective, the strategy for the industry appears very sound, and the focus has to be on its execution. We hope that the recent frantic moves by the US and European Governments to save their car manufacturing plants, by pumping taxpayers money into them so as to avoid the “social costs” of closure, will convince the World Bank to adopt a less doctrinaire position on the matter of the Demerara Plantations. Guyanese “social costs” are no less painful: we are all human beings.

We believe that those plantations can be made viable within a regime that more clearly articulates the de facto change in strategy from a sugar industry to a sugarcane industry. The change is more than semantic.

At the most mundane level, it stresses the fact that all the end products – sugar (bulk and packaged; raw and refined), electricity, alcohol, ethanol — depend on sugar cane being supplied, and therefore its production must be given the central role in any future strategy. For instance, in the Skeldon Sugar Modernization Project (SSMP), the impression was given that in the US$180 million investment, somehow, the factory alone was going to save the industry.

Even though there is a hiccup with the commissioning of the factory, this is temporary, and the factory’s cost will only be justified if we produce the requisite sugarcane at the lowest cost. Each ensuing product from the sugar cane can then be applied towards the cost of its production – not just sugar.

In addition to the above-mentioned product mix from sugar cane, we suggest that the production of biogas be made standard at all sugar factories – including the ones in Demerara.

Molasses and bagasse are not the only waste products in the production of sugar from sugarcane — the wash and press-mud are extremely rich in methane or biogas – which can be extracted and bottled for commercial sale, or for providing fuel to the fleet of vehicles used in the sugar cane cultivation. The vehicles would have to be slightly modified.

A month ago, DDL announced that it was installing a bio-gas plant to extract methane from the wash produced in its distillery.

This technology is not an insignificant one, and it forms the basis of Europe’s strategy to reduce its dependence on gas from Russia. There would be huge savings for our sugarcane operations, resulting in a drop in unit costs.

The generation of electricity from bagasse ought to be seen not simply as a subsidiary operation from the production of sugar, but as an economic enterprise on its own merits.

Mauritius embarked on this road since the mid-eighties, and ten out of its present factories have co-generation capabilities that, by 2004, exported 240MW of electricity to the national grid: this is about equal to our entire generating capacity (226MW).

There are plans to further consolidate their factory operations and increase the quantity of co-generated electricity for export. For the Demerara Plantations, the co-generation potential would be augmented if the present four factories in East and West Demerara were consolidated into two – one in each sector.

This would make redundant only some of the factory workers, who could be employed in the co-generation plants and other plants that will be proposed. If the power generation is evaluated from its own capabilities, some of the Type III lands in Demerara that give such poor yields for sugar cane could be converted into fuel cane that are hardier but generate more fibre and thus more energy in power generation.

Unlike the sugar cane, the fuel cane can also be harvested in sub-optimum weather since sunlight to maximise sucrose content is not a factor: the number of available days in the wetter Demerara Plantations could then be increased, lowering unit costs. (To be continued)

---

---