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EU gives Guyana $27B cushion to compensate for sugar price cuts

Oct 09, 2009 News

European Ambassador to Guyana Geert Heikens has reacted to statements by the local Agriculture Minister Robert Persaud that Guyana would begin losing US$35M per year from October 1, last.
On Wednesday last, quoting Minister Robert Persaud, Kaieteur News reported that, “Guyana begins to lose US$35 million yearly.”
According to Ambassador Heikens that statement is not accurate and that it might be worthwhile to know that the current price Guyana receives and mentioned in the article €332 is still above the world market price for sugar.
He added,, “I would like to add that the European Commission is making available to former Sugar Protocol countries an amount of €670M, of which € 90 million (US$130M or G$27B) is for Guyana in the form of grants.”
According to Ambassador Heikens the disbursements of the funds are scheduled to take place over four years and according to the conditions annually agreed with the Government of Guyana.
Guyana’s sugar industry entered a critical phase rather quietly on October 1, last as the European Union (EU) effected the last of a phased price cut but according to Heikens some $27B will be made available to the country over the next four years to cushion the impact.
During the Economic Partnership Agreement with the EU the decision was taken to help countries such as Guyana buffer the loss until projects such as the Skeldon Sugar Factory allow the country to compete with global suppliers.
Minister Persaud had said that the impact of the price cuts on the local sugar industry would become much tougher for this country.
According to Persaud, “…Guyana’s main issue with the EU is the price cut and the fact that the EC is not a buyer of last resort. All ACP (African/Caribbean/Pacific) suppliers must now conduct due diligence with prospective buyers to determine which companies they will supply sugar to and with no guarantee of a buyer if the chosen company collapses.”
With sugar imports to EU limited to 3.5M tonnes because of the reforms, sugar trade will essentially be conducted under what is called a Duty Free Quota Free (DFQF) system.
Under the new sugar agreement with EU, Cariforum (Guyana, Barbados, Belize, Jamaica, and Dominican Republic) has a safeguard threshold of 528,000 tonnes, which will be triggered if the overall 3.5M tonnes of imports is delivered at the same time with 1.6M tonnes from former ACP non Lower Developed Countries (LDC).

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