The decline of sugar production and the equalising of opportunity

Mar 02, 2020 Letters

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DEAR EDITOR,
The European Union (EU) had given the (African, Caribbean and Pacific) ACP states, as former colonies of the European powers, preferential market access under the EU-ACP Lomé (1975) and Cotonou (2000) preferential trade arrangements for the importation of sugar, rice and bananas, inter alia, into the EU markets. This to a large extent has characterised the monocrop exports of the ACP states and created their dependence on the EU preferential markets. In Guyana’s case it was sugar. Then came the creation of the WTO multilateral framework in 1995 and the case against the EU preferential prices to the ACP states was bought by Australia, Brazil and Thailand (2003); the WTO ruled that this was a violation of the General Agreements on Tariff and Trade (GATT). This pressured the EU to institute a new WTO compatible agreement with the Caribbean region -The Economic Partnership Agreement (EPA) which was signed in 2008.
The problem the ACP states face, including Guyana, is that their structural vulnerabilities is as a direct result of their monocrop export dependence on the EU markets, which dates back to mercantile system under colonial rule. In effect, they did not effectively insert their economies in trade liberalisation. With the EPA, the Caribbean states are now required to give EU products market access to their economies while their preferential market to the EU phases out in 2033. The EPA must translate to 90 percent fully liberalised bilateral trade between the EU and the ACP to become a WTO compatible agreement. In 2007, seven interim agreements between the EU and the ACP grouping were negotiated and the Caribbean EPA was signed in 2008 (CARICOM Secretariat; Dawson 2013, p.2 Heron; EU).
With a signed EPA, the region was able to off-set the European Development Fund (EDF) for trade capacity building in technical assistance in hard and soft infrastructure to facilitate competitive trade, globally (Fontagne et al 2010, p.1). Guyana has received, during 2006-2013 GYD 34 billion for the restructuring the sugar industry for competitive trade on the world market, given the phasing out of the preferential trade arrangements.
This background is given to point out that there exist external factors for the decline of the sugar industry and that this was known since in the early 2000s by the government of the day.
· Guyana is not the only country with job loss in the sugar industry
The EPA liberalised agricultural export- rice, sugar and bananas in Europe market, in phased reduction of 10, 15 and 25 years. The Caribbean countries have however struggled to engage with the international trading system because of their economic vulnerability (export concentration and production instability) which is difficult to change in the short run. In Trinidad and Tobago and Saint Kitts and Nevis, the restructured sugar industry production cost remained high and ultimately shut down, leaving thousands of farm workers without livelihood. In Barbados there was a mismatch between processing capacity and cane supply which saw a dysfunctional industry restructuring with redundant workers who were not absorbed into the service sector (Richardson, et al. 2013). In Saint Lucia, Dominica and Saint Vincent and the Grenadines the liberalisation of the EU banana MFN market access have impacted devastatingly on the market share of banana and they have been unable to compete in open markets (Bishop, 2011). Only Guyana managed to remain in production of sugar albeit at lower production levels for exports.
Sugar production fell from an average 320,000 tonnes between 2002 and 2004 to below 250,000 tonnes in subsequent years.
In 2003, production fell to its lowest since 1940, with only 186,000 tonnes being produced. The industry’s cost of production rose much higher than the market price for sugar, totalling over $50B in losses between 2010 and 2014 (Guyana Chronicle, September 17, 2019). Most of the Islands countries have transformed their plantation lands into golf fields and massive hotels for the tourism industry, of which trade in services is covered under the EPA. These statistics show that Guyana is not the only country that has had to right-size the sugar industry with attendant losses to thousands of farm workers. It must be reiterated that the closure of sugar estates was inevitable and also the closure of four sugar estates preceded this administration for the same reason – sugar was not profitable with the loss of the EU preferential prices and our own dependence on a monocrop export market.
· All is not loss – equalizing opportunity with conditional cash transfers
Our people share a unique culture that was shaped by the incidences of colonialism, slavery and indentureship which institutionalised centuries of plantation life as a primary means of survival. To a large extent, the communities close to sugar estates have continued working the plantation fields in primary production; and we have not diversified nor modernised the sugar industry in the era of competitive trade and globalised market. Needless to say, we were hard hit with open trade as with other sugar producing states in the ACP- Guyana is no exception. This economic means of survival has accommodated generations to work the plantation fields as the main income earner, in estate areas which is an inherent practise with unequal opportunities. Our young boys were conditioned to follow the path of their fathers and grandfathers to seek estate jobs; and our young women were conditioned to support this economic structure by becoming housewives. What this has done and what has been happening is the fostering of an intergenerational transmission of poverty when sugar became unprofitable and jobs were lost.
The world has changed drastically from the mercantile system and job opportunities in Agriculture as a science and other areas in Science, Technology, Engineering and Maths (STEM) are available for our young people and their generations to come. We have allowed the plantation fields to take away from the innovative and creative abilities of thousands of persons who passed this on to their generations. They were not given an equal opportunity to study and work in the formal sector. The APNU+AFC Manifesto Conditional Cash Transfer is intended on equalising the opportunity for citizens who are affected in such conditions:
· Conditional Cash Transfers (CCT) based on a feasibility or pilot study including, but not limited to, Nutritional Support; Housing Support; Public Transport and a Single-Parent Support Programme; vouchers for day-care and elder-care services and adult remedial classes and training; increased stipends for students attending Technical Institutes, Nursing Schools, School of Home Economics, Guyana School of Agriculture;
· Cash transfers through the Public Education Assistance Service (PEAS) and,
· Cash Transfers for the purchase of essential items.
This is a redistribution policy for equalizing opportunity – that an extra dollar of income means more to the poor (better welfare, increases utility) than for the rich. In effect, an extra dollar of income is worth more to a poor person than a rich person through redistribution policies such as social safety nets including conditional cash transfers that could reduce inequality.
If we value democracy and we value social welfare, we will place a heavy value on equality which correlates with the decrease in crime, increase health and happiness in a population.

Regards,
Dianna Rajcumar

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