Inadequate, pricey and not in demand

-low sugar supply slows Enmore packaging plant

Low sugar production and the lack of markets for packaged sugar has seen the Guyana Sugar Corporation’s (GuySuCo) Enmore packaging plant functioning at a low level.

The US$12.5 million sugar packaging facility’s potential is tied to the sugar production of the Enmore estate but over the years, that has been low and the plant has not reached its full capacity. The plant, which was made possible due to assistance from the European Union, was originally intended to package up to 80,000 tonnes of sugar annually.

In 2011, when the factory was commissioned, GuySuCo was packaging roughly 8000 tonnes of sugar and three years on, it is packaging around 12,000 tonnes annually at the Enmore facility. The small packaging plant at Blairmont is responsible for 8000 tonnes but paired with the Enmore plant’s capabilities, these figures are nowhere near the promised production.

Stabroek News understands that for the first crop this year, the Enmore plant packaged approximately 6000 tonnes of sugar. The facility could comfortably package all the sugar from both Enmore and Blairmont but GuySuCo has not signalled whether packing activities at Blairmont would cease.

According to the revised 2014 sugar production targets that were provided by GuySuCo’s CEO Rajendra Singh during a meeting of the Economic Services Committee of Parliament in July, the East Demerara estates have a total production target of 30,774 tonnes of sugar.

Enmore, which is the estate responsible to supplying to the packaging plant, had an annual target of 19,598 tonnes. Given this, with no mechanism in place to ensure that sugar is sent to Enmore from the other estates for packaging, the plant cannot possibly package 80,000 tonnes annually.

Moreover, the packaging plant’s capabilities are tied to the markets but several issues arise here. Enmore packages sugar at a cost of US$0.37 per pound which is considerably higher than the world market price for bulk sugar which rested at around US$0.18 per pound for the past few months. In addition, the lax approach as it relates to the enforcement of the Common External Tariff within the states of the Caribbean Community, has placed GuySuCo at a disadvantage.

Currently, regional importing of sugar from around the world costs less than importing from Guyana because the 40% tariff which would have ensured that GuySuCo’s pricing is competitive, is not being enforced in some markets. Given the resultant lack of markets, the packaging plant currently runs a single shift even though the plant is capable of being a 24/7 operation.

Running the plant at less than the optimal capacity also increases the cost of production.

But due to the limited supply of sugar, there is little need for the plant to be operational for more than a few days a weeks and for more than one shift, according to an industry insider.

GuySuCo’s current contractual obligations are the 184,000 tonnes of sugar supplied to the British company Tate and Lyle for the European Union (EU) market and the 24,000 tonnes for the domestic market. With the partially revised 2014 sugar target being set at 219,000, a mere 3000 tonnes more than what was originally targeted following a revision of the 2013-2017 Strategic Plan target of 278,752 tonnes, it would mean that the plant would only be packaging 11,000 tonnes of sugar in 2014 if the target is met.

It had been intended that the plant would have

packaged roughly 40,000 tonnes of sugar for the local market from 2012 with former President Bharrat Jagdeo at the time hailing the plant as an industry lifeline. Sugar is a subsidized commodity in Guyana and the local market does not exceed 24,000 tonnes annually so the envisioned 40,000 tonnes target was an odd production goal.

Now, GuySuCo is once again focusing on its EU quota which needs to be fulfilled.

Meanwhile, GuySuCo is nearing 100,000 tonnes of sugar for the year with the second crop underway. All eight estates have commenced grinding and the second crop levels have already exceeded 16,000 tonnes of sugar.

 

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