Four years to ‘fix’ sugar industry

Jun 28, 2013 News

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…as EU to end quota system in 2017

By Leonard Gildarie

In what is being regarded as a compromise, Europe – the country’s biggest bulk sugar customer – has agreed to end the quota system by 2017, giving Guyana just four years to fix the industry.
The decision was taken Wednesday during a critical meeting of the European Parliament, the EU Council of Ministers and the European Commission in Brussels, Belgium.

It means that the forum would have disagreed with a January decision in which the European Parliament’s Committee on Agriculture and Rural Development voted to extend the sugar quotas, for the African, Caribbean and Pacific (ACP) Group of States, to 2020.
Guyana is part of that ACP sugar-producing grouping that is affected. The sugar quota system stretched back to the 1970s.
Previously, Europe had set 2015 as the deadline for ending the sugar quota system.
According to a statement from Wednesday’s meeting, sugar quotas “will be abolished by 2017, and the organisation of the sugar sector will be strengthened on the basis of contracts and mandatory inter-professional agreements.”
According to sugar officials in Guyana yesterday, the decision will mean that the Guyana Sugar Corporation (GuySuCo) and Government will have to find their own market and negotiate prices, after September 30, 2017.
Currently, Guyana has a 190,000-tonne sugar quota to Europe, but has been finding it hard to meet, as production fell steadily over recent years. Last year was the worst in terms of production since the ruling party took power a little over 20 years ago.
Wednesday’s meeting has been deeply worrying to sugar-producing countries which depend on Europe’s protected market. Prior to that meeting, the ACP countries warned that there would be market instability and acute risks to developing economies, if Europe stuck with its 2015 deadline.
The ACP sugar-producing states include Barbados, Belize, Republic of Congo, Fiji, Guyana, Cote d’Ivoire (Ivory Coast), Jamaica, Kenya, Madagascar, Malawi, Mauritius, Mozambique, St Kitts and Nevis, Suriname, Swaziland, Tanzania, Trinidad & Tobago, Uganda, Zambia, and Zimbabwe.
The EU meeting on Wednesday was to reach an agreement on reforming the Common Agricultural Policy (CAP), post-2013.

EU’s jobs
According to a statement from the meeting, Europe was convinced that the agreement will lead to far-reaching changes in its policies.
“These decisions represent the EU’s strong response to the challenges of food safety, climate change, growth and jobs in rural areas. The CAP will play a key part in achieving the overall objective of promoting smart, sustainable and inclusive growth”, said Dacian Cioloº, European Commissioner for Agriculture and Rural Development.
Many of the member states of EU, including Spain and Greece, have been facing severe financial problems, forcing the union to take cost-cutting measures.
Europe, since announcing plans to break the quota system and an accumulative 37% price cut, had been releasing moneys targeting projects that will make sugar industries of the ACP countries more sustainable.
Last week, EU signed off on a Euro 23.355M financing agreement, making it around Euro 115M that the country would have received to help GuySuCo recover.
The 37% price – starting seven years ago – had threatened to shut factories down in Guyana, but government had decided to bank its money on the industry, saying that too much was at stake. Several Caribbean countries, including St. Kitts, have pulled out of sugar.
Initially, the EU moneys targeted specific sugar projects to improve efficiency, but the EU has started disbursing to the government itself.

No way out
The US$12.5M Enmore Sugar Packaging Plant is one of the projects.
The Opposition has been critical of the disbursements, saying that government is to be faulted for the state of the industry, as it did not use the EU funds to bolster the operations of GuySuCo.
The EU has warned that conditions are in place to ensure the moneys go towards the sugar industry. These include areas of mechanisation, conversion of lands, drainage and other support for private farmers.
Guyana is expected to collect a similar tranche next year, the last of the support. This particular amount is for the 2012-2013 period.
It is estimated that more than 115,000 persons rely on the sugar industry for their livelihood, whether as GuySuCo employees, private cane growers, suppliers or service providers, as well as their respective dependents.
Sugar is among the top three export earners for the country, with prices better in the last two years or so, an ironic situation when production was falling.
The government has admitted that its US$200M Skeldon factory modernization has failed to jumpstart the industry after suffering several technical problems.
Recently, President Donald Ramotar called on workers and unions to help pull the industry back to sustainable levels, even offering lands in a cooperative deal.

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