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More Sugar Questions

Feb 18, 2013 Editorial

When the EU unilaterally abrogated the Sugar Protocol between it and the ACP countries including Guyana back in 2005, it cut the price of our sugar by 36% over four years. One of the drivers for its volte-face was a WTO dispute finding which found that the EU sugar regime was in breach of its WTO obligations.
But while the reform involved the reduction in the European sugar price, sugar producers were partially compensated for the cut in support prices.
As we were reminded three days ago, the EU also established “accompanying measures for Sugar Protocol countries affected by the reform of the EU sugar regime”.
They assisted several ACP Countries, including Guyana, through a multi-annual strategy for the period of 2006-2013, to enhance the competitiveness of the sugar and cane sector, promote the economic diversification of sugar-dependent areas, and/or address broader impacts generated by the adaption process.
The amount of money set aside for the assistance was € 1 244 million for the period of 2006-2013.
We received $24.7B since 2006 with a further $5.6B last December, with one year more to go on the support program. A further amount, up to €23.4M, is scheduled to be disbursed in 2013 on signing of the Financing Agreement for the 2012 /2013 programme.
At the time of the price cut, we, like all patriotic Guyanese railed at the ‘perfidy’ of the EU but we must accept that they did not actually throw us to the dogs. The $31.3 billion that we received up to now was not chicken feed and we have to ask exactly what was done with all that money.
The strategy adopted by the government and the industry was to expand production in the Berbice region (the Skeldon Modernisation Plan) and to ‘diversify within the industry.’
We will not comment further on the first part of that strategy save to say that even though we might concede that the series of unfortunate events that crippled the operation of the factory might have been unforeseen, the dashed expectation that cane farmers would contribute one-third of the new production (600,000 tonnes of cane annually at least) certainly was not.
What we would like to discuss is the ‘diversification’ strategy and the use of the EU money to execute same.
The government had devised a “Guyana National Action Plan (GNAP)”, which focuses on adaptation of the sugar industry by measures which include the upgrading of sugar factories, adding value through sugar packaging and co-generation of power, increasing sugar production and mechanising field operations, thereby enhancing the competitiveness and productivity of the sector.
Up to now all we have been told is the diversification was to add value to the sugar we were producing by packaging it in sachets and bags so that our famous ‘Demerara Brown Sugar”  could be sold at higher prices at the retail level.
The Enmore Packaging plant was built at a cost of $2.5 billion so that there was some $22.2 billion left over to spend. No so incidentally, the Enmore plant has never operated at its 40,000 tonnes annual capacity and last year it was revealed that bulk sugar was being exported to fill contracts with the plant lying idle most of the time. Only 10,000 tonnes were packages in 2012.
But just as germanely, there has been no co-generation of power to be supplied to the national grid: the Skeldon co-gen was built out of the famous US$200 million loans. We have been hearing about ‘mechanisation of field operations’ but that has certainly not led to ‘enhanced competitiveness and productivity of the sector.’
If anything, field productivity has declined from the days of the colonial Bookers when over thirty-three tonnes of cane per acre was produced to the present (at best) twenty tonnes. We will not mention the drop of productivity in the factories that used to produce one ton of sugar from ten tonnes of cane to the present eleven-plus tonnes.
Where has all the money gone?

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