Agriculture Minister Robert Persaud has said that Guyana’s ambition of creating a strong agro-business sector is unlikely to be realized in circumstances where high electricity costs account for the lion’s share of overall operating costs. “We will never be able to develop an agro industrial base unless and until we have cheap and reliable electricity,” he said.
The same applies to the broader manufacturing sector. Several major manufacturing entities have repeatedly made the point about reduced competitiveness owing to high energy costs. Some have invested in power generating facilities in an effort to circumvent both the unreliability and costs associated with buying power from the Guyana Power and Light Company. Smaller entities that have been unable to afford the cost of installing independent power generating systems have literally been put out of business by GPL’S erratic power supply regime.
The other point made by the minister had to do with the fact that the absence of relatively cheap electricity serves as a disincentive to potential overseas investment in the agro-processing sector. Most of the domestic investments in processing tend to be relatively small. The absence of cheap electricity has impacted negatively on the advent of large-scale investments in agro processing that can result in significant additional earnings for the country.
As far as local investors are concerned, this is a pretty depressing short-term assessment of the prospects for the sector. In fact, according to Minister Persaud, “it makes more sense to produce the raw material and export it – to Trinidad for example – for processing and return it to Guyana. That would be cheaper than processing here. That is the economic reality of the situation.”
The minister’s frankness would, of course, be far from comforting particularly for small inves-tors and potential investors in the agro business sector who may have begun to see some prospects for agro-manufacturing arising out of increased agricultural production. The pronouncement by the minister has also come at a time when there appears to be an expanded market for value-added agricultural products both inside and outside the region providing of course that the final product measures up to the required quality and marketing standards.
What is perhaps most significant about the minister’s pronouncement, however, is that it helps to answer the question regarding the sluggishness of the country’s agro-business sector. Some entities in the sector have managed to keep their heads above water; others sustain themselves at a break-even point; while others still rise and fall quickly, succumbing particularly, though not exclusively, to high operating costs. The reality – as the minister put it – is that as long as we are unable to access cheaper, more reliable energy, our agro business sector will essentially be on a highway to nowhere.
It brings us to the question of Guyana’s hopes of reducing energy costs, which, historically, have depended on success in our oil exploration pursuits and the various hydroelectricity initiatives that have been either envisaged or undertaken but which, at least up until now, have not borne any meaningful fruit.
What all this means – and the minister has conceded this – is that the growth and development of the agricultural and agro business sector is inextricably linked to the fortunes of the energy sector since it would make little sense to significantly increase the scale of agricultural production in circumstances where there is no infrastructure with which to add value to the excess amounts that we produce.
The comment on the link between cheaper energy and the growth of the agro business sector made by Minister Persaud may seem a small one (and one suspects that this is not the first time that it is being made). But what it clearly does is to put into perspective the huge extent to which we depend on the creation of an energy sector that can provide a cheaper and far more reliable power supply to take the productive sector forward.
