EU customer warns COI… GuySuCo must bring costs down to remain alive

Aug 01, 2015 News

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Guyana’s biggest buyer of sugar has warned that cane sugar is facing its toughest test yet.
Europe’s Tate and Lyle officials, appearing earlier this week before members of the Commission of Inquiry (COI) of the Guyana Sugar Corporation (GuySuCo), said that one of the biggest threats remains in another popular type of sugar–beet.
It is being grown right in Europe. It is rivaling cane sugar in the market.
Tate and Lyle has been one of Guyana’s oldest customers for cane sugar. Meeting with the COI’s commissioners were Allan Wood, Global Head of Commodity Trading; Duncan Tate, Vice President, Trading; and Mac McLachlan, Vice President of International Relations.
The officials told COI members that recent developments in Europe have made the sugar market very volatile with the primary consideration being market price.
With the removal of preferential prices which African/Caribbean/Pacific (ACP) group, of which Guyana is part of, and had enjoyed, the developing situation dictates that producers have to be more efficient and that demands disciplined management.
The Tate and Lyle officials noted that the price situation will become even more complex for Guyana when the cap on beet sugar production is deregulated.
“They advised that the EU will be dominated by beet. Cane sugar will have to compete with beet. Even in countries that are major producers of cane sugar, some factories have been closing,” the COI statement said yesterday.
The Tate and Lyle officials cited countries like India which is subsidizing sugar production. “Given these circumstances, they deemed the sugar market very complicated with too many variables to attempt predicting sugar prices. They emphasized that the cost of production must be brought down to be competitive. Tate and Lyle officials indicated their willingness to provide technical advice to GuySuCo.”
The COI, chaired by Vibert Parvatan, explained the Tate and Lyle meeting was to gather information.
The commission has been meeting with key stakeholders in the sector to forge the way ahead for the sugar industry, which has been steadily sliding downhill for the last decade.
The cash-strapped state-owned company has been drawing political fire for producing sugar at more than double what it is selling for.
Government has plugged more than US$50M in the last five years into sugar industry with workers leaving in droves. Production has fallen to a two-decade low.
The commission said several questions were raised by its Chairman, Vibert Parvatan. These included the factors which would impact on sugar prices over the next three years; whether the current world market price at US$0.113 cents per pound and the current EU price for GuySuCo in the region of US15 cents is expected to level out and what could influence such a scenario.
Tate and Lyle was also asked about its current relationship with GuySuCo and the future possibilities.
The United Kingdom-based company was also asked whether it would consider investing in the sugar industry and give the current challenges, whether any help can be forthcoming.
In addition to the COI members at the meeting, present also were Professor Clive Thomas, the new Chairman of GuySuCo. Members of the Interim Management Team, Errol Hanoman, and Paul Bhim, also attended the meeting.
On Monday, the commission will be meeting with officials of the workers’ unions in the sugar industry – Guyana Agricultural and General Workers Union (GAWU); Guyana Labour Union (GLU) and National Association of Agricultural, Commercial and Industrial Employees (NAACIE).
They will also hear from Head of the Private Sector Commission, Major General (ret’d) Mr. Norman McLean, and George Allen, a former GuySuCo executive, who in recent years has been working in the Jamaican industry.
On Tuesday, the commission will meet with Dr. Yesu Persaud, former Head of Demerara Distillers Ltd (DDL) and former Deputy Chairman of GuySuCo. Dr. Persaud now heads the Consultative Association of Guyanese Industry (CAGI).
Other persons who are expected to address the Commission include the Chief Fisheries Officer, Denzil Roberts and Dr.Oudho Homenauth, Chief Executive Officer, National Agriculture Research and Extension Institute (NAREI) and an official from the livestock division.
Attorney-at-law/accountant, Christopher Ram, is also set to make a presentation to the COI. On Thursday, Yusuf Abdul, General Manager of GuySuCo Technical Services and Jairam Pitam, former Human Resources Director will be answering questions.
With the commencement of the second crop, commissioners have resumed visiting the estates.
The COI was among one of the first actions taken by the David Granger administration since being declared victors in the May 11th polls.
The entire Board of Directors, headed by Shaik Baksh, and the Chief Executive Officer, Dr. Rajendra Singh, were sacked.

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