Is ethanol/biodiesel the vehicle to give the sugar industry a new beginning?

Mar 22, 2011 Letters

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Dear Editor,
Approximately 300 years ago the sugar industry in Guyana was born. It was the venture of the Dutch West India Company and it depended heavily on the African slave labour to harvest the cane.
After the slave rebellion of 1763 and the eventual abolition of slavery in the 1800’s, the African slaves migrated away from sugar cane farming to live in the cities and found other form of employment.
Then came the East Indian as indentured servants to replace the African slaves in the cane fields. I am not ignoring the presence of the Chinese or the Portuguese, but they never really played a significant role in this industry.
Since the abolition of slavery, the cost of production of sugar in Guyana was marginally competitive with the rest of the world. This disparity in production cost along with longstanding labour issues always created a scenario where the sugar industry was always under pressure to drive the cost of production down and the price was paid by the bottom line workers – cane cutters and field workers.
In 1989, the cost of producing one ton of sugar was approximately $400 while the market price for a ton of sugar was also $400. By 1991, the production cost increased albeit slightly, while the price of sugar on the European market hovered around $200. By this time rice and bauxite industries were developed creating competition for the available labour.
Incidentally, around this time the PPP and the PNC were jostling to secure their constituents. The PPP by this time had locked up the sugar workers as the nucleus of their support, especially after the 1947 Enmore massacre of striking sugar workers.
The PPP’s influence over the GAWU union resulted in numerous instances of labour actions during the British and PNC’s rule of Guyana.
Nationalisation of the Bookers Holdings in Guyana by the Forbes Burnham led PNC Government did not make economic sense.
The sugar produced was at the time being facilitated into the European market because of preferential market quota and the Caribbean basin initiative for markets in the USA.
Guyana also dominated the Caribbean market with its brand of brown sugar which was very popular.
Nationalisation was a sure way to guarantee the insecurity of the sugar market. After nationalisation, the newly created GuySuCo lacked the technical expertise to properly run the estates and the finances to carry it through tough times.
Another major blow to the industry was the GAWU strike of 1977 which resulted in severe setbacks including improper harvesting of the cane by the GDF soldiers and the migration of sugar workers to other industries and countries mainly, Suriname.
In 1976, Guyana had a production potential of approximately 380,000 tons but then initiated a planned reduction to 250,000 tons in 1980 because of shrinking markets.
Besieged by inclement weather, persistent labour issues and a lack of capital investments, by 1990, sugar production in Guyana had dropped to a meager 132,000 tons. Since 1992, the sugar industry now operating as a privately run corporation has increased production to in excess of 300,000 tons.
Today, without preferential pricing in the European and USA markets, we have an industry which by all economic standards is not economically viable. The sugar estates and infrastructure have basically gone beyond their economic and mechanical lives and are limping along on heavy governmental financial support. The promise offered to the Skeldon area by the new Skeldon Sugar Estate has all but fizzled with numerous failures and continual technical glitches.
Enter biodiesel and ethanol. We have seen many countries effectively and economically infused ethanol and biodiesel into their local and export markets. In the US, ethanol is mainly produced from corn while in Brazil ethanol is produced from sugar cane. In the US, ethanol dilution into gasoline hovers around 10 – 15% while in Brazil the concentration is much higher. Guyana has the potential to benefit significantly from the biodiesel and ethanol markets including:
1. A large percentage of the population is directly or peripherally dependant on the sugar industry. Therefore, job creation would be the first and foremost benefit.
2. The bio fuel industry will be a direct attribute to Guyana’s ambitions within the low carbon development strategy.
3. With the adoption of an E10 policy, there is a direct reduction of the fossil fuel which will be imported into the country resulting into preservation of precious foreign currency savings.
4. The direct or multiplier effect of this new industry with increased employment; allow foreign currency savings and provide for sale or trading of earned carbon credits.
5. Cogeneration of electricity to feed into power grid system thus further lowering fuel consumption and carbon emissions.
This will all go to support a new life to an ailing industry and the entire economy. However, bio fuel production facilities will require significant capital investments most likely from foreign sources. Such investments will only come to a country with a stable and democratically elected government – a government that supports and fosters a free market system.
Therefore, the answer may be bio-fuel but the question should be: – Is Guyana political climate conducive to such investment?
Doodnarine Seenarine

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