Introduction
Last week I argued the realisation of sufficient economies of scale for Guyana’s sugar industry to make it globally competitive is unlikely simply because these would not result in a substantial lowering of the long-term average cost of production at output levels of 450,000 tonnes. Recall 1) Guyana’s external marketing options lie in the Economic Partnership Agreement (EPA), CARICOM, the United States Sugar Regime, and the “residual” world market for raw sugar and 2) there are a score of global sugar producers, which operate from output levels, double the size of 450,000 tonnes and rising to 40 million tonnes annually. If significant scale economies can be had at 450,000 tonnes, then these would multiply at the much larger volumes of output prevailing among these substantially larger producers.
Readers should also note the benefit from economies of scale in sugar production is a practical and not simply theoretical matter. It would depend therefore, on the actual, not hoped for, lowering of the average cost of production,
