Another deception in the making: Halting the flow of ‘conscience money’ to sugar


Communications I have received concerning last week’s column have all expressed indignation at the remarks, which were reportedly made by the European Union (EU) Ambassador when speaking about GuySuCo and the Guyana sugar industry.  I am convinced that these few private expressions of outrage pale in comparison to what would have occurred if similar statements had been publicly uttered elsewhere in Caricom.  There, because of the vibrancy of the professional and intellectual classes, academia and activists in NGOs, trade unions, and similar social movements, I am confident that a torrent of condemnation would have been heaped on the publication of such ill-conceived condescending and misspoken public utterances by an official EU representative.

By pure coincidence, several analysts across the region have been recently expressing considerable apprehension at what they perceive to be yet another EU deception about to be perpetrated against Caricom member states. As these columns have repeatedly advised, Caricom’s relations with the EU cannot be taken on trust alone.  Like several other regional analysts, I am anticipating that the EU’s next stratagem will be designed to terminate the payments of conscience money (as I termed it last week), to ACP sugar exporters affected by its unilateral denunciation of the Sugar Protocol (SP). As I write this column regional governments are being alerted that the EU is planning to provide future assistance to poor developing countries in what it describes as a differentiated manner.  This means paying principal attention to the poorest and least developed countries (LDCs), as defined by current internationally agreed development criteria.

If such an approach is taken, Caricom countries (except possibly for Haiti) will then be accorded the status of Middle Income Developing Countries and will therefore no longer be eligible for most of the proposed EU assistance to developing countries.  At this point of time, the intention of the EU is to focus its future assistance on the LDCs. From all indications this policy shift will come into effect in 2015, the year when EU assistance to the ACP countries under the Cotonou Agreement of 2000 is scheduled for joint review!

In light of the earlier EU unilateral denunciation of the Sugar Protocol (and of course the ACP weak-kneed acquiescence) this new threat should not be minimized.  EU unilateral action along these lines is a real possibility, regardless of existing agreements.  In other words, we cannot assume that, because EU assistance to ACP sugar producers is in large measure the dispensation of conscience money, this ethical injunction would deter it.

Indeed I would go further and point out that there are other international precedents where according Caricom countries Middle Income Developing Country status has been used to graduate them from enjoying rich country assistance to poor countries.  For years now, the World Bank has graduated Caricom countries, thereby denying them access to concessionary lending. In similar fashion, efforts are afoot at the World Trade Organization (WTO) to deny Caricom (as Middle Income Developing Countries) the benefits of special and differential treatment (SDT) for their external trade.

Escalation of commitment

Returning to the main argument; throwing good money after bad, as I have labelled EU assistance and national budgetary support for GuySuCo and the sugar industry, expresses a situation whereby there is the growing escalation of financial commitments to GuySuCo and sugar, without concomitantly calling for, or obtaining a binding undertaking from the authorities, to evaluate the cost-benefit of continuing along this road.

This is not good for sugar workers or other major Guyanese stakeholders. GuySuCo and the entire sugar industry require several urgent fundamental reforms. Right now, a search should be ongoing to discover meaningful alternative approaches for agricultural restructuring and sugar reform.  The country cannot afford the blind pursuit of supporting the sugar industry as it is presently constructed.

To be frank, the present profile of financial assistance to GuySuCo appears to be the simple-minded one of rewarding GuySuCo for failure (and, by implication, being duped by its repeated excuses of “bad weather” and “malicious industrial conflicts”). Weak organisation, poor management, neglect of R&D, and a weak to non-existent regulatory and oversight framework for GuySuCo must be forcefully acknowledged as the prime considerations responsible for the industry’s plight. Despite GuySuCo’s regularly expressed concerns about malicious and ill-intended industrial conflicts, the reality is that the main purpose behind the investments in mechanisation is to find a way to cope with rising unit production costs and the growing scarcity of labour.

By similar parity of reasoning, the Skeldon Sugar Modernization Project (SSMP) is more than the “prestige project” GuySuCo boasts about, and which it laments has been hampered by unfortunate delays and setbacks!  It should be seen as a concerted, purposeful and consistent drive to improve the output of sugar cane (yields); raise productivity in the sugar factories (tonnes cane per tonne sugar); reduce the unit cost of production (at the field and factory level); and improve the quality and consistency of raw and packaged sugar.


The logic behind the foregoing considerations is to frame GuySuCo’s aims as 1) increasing cane and sugar output over the medium to long-term; 2) increasing productivity (at the field, factory, and management level); 3) returning the industry to profitability (thereby reducing the need for governmental or other subsidies; and 4) placing the industry on a self-sustainable expansion path.

These therefore, are the most important barometers by which the future of the industry (and the national resources involved in it) should be measured and evaluated.

Beginning next week, the remainder of these columns on sugar will examine the extent to which these aims are being fulfilled.

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