After months of deliberation, the three European branches of governance have agreed to delay the end of the sugar quota system to 2017, giving Guyana an extra two years to reform the ailing sugar sector.
The European parliament, EU Council and EU Commission came to the decision last Wednesday after a high level meeting in Brussels, Belgium.
With Europe still the largest market for its sugar, Guyana and other African, Caribbean and Pacific (ACP) countries were anxiously awaiting the decision in regard to the reformation of the Common Agricultural Policy (CAP) and its potential ramifications.
As of January 1, 2014, Europe will make all reforms to the CAP applicable. According to an official statement by the EU Commission, “Sugar quotas will be abolished by 2017, and the organisation of the sugar sector will be strengthened on the basis of contracts and mandatory interprofessional agreements.”
The EU Commission’s decision to reform the CAP is based on increasing aid to “less-favoured areas,” focusing on young famers in the regions. Dacian Cioloş, European Commissioner for Agriculture and Rural Deve-lopment said, “This agreement will lead to far-reaching changes: making direct payments fairer and greener, strengthening the position of farmers within the food production chain and making the CAP more efficient and more transparent. These decisions represent the EU’s strong response to the challenges of food safety, climate change, growth and jobs in rural areas.”
Guyana now has four years—a two year extension from the previously proposed end date of 2015—to reform the sugar sector.
The end of the sugar quota has the sugar industry concerned because it would mean Guyana would have to find additional exporting markets. Of GuySuCo’s current 240,000 tonnes production target for this year, 190,000 tonnes are to go to the European market. However, GuySuCo has produced a dismal first crop of less than 48,000 tonnes of sugar—a far cry from its 70,000 tonnes target. The situation has prompted President Donald Ramotar to acknowledge that the sugar sector is at a “crisis” level—a first for a sitting president during the PPP/C’s terms in government. The government had promised a review of the GuySuCo’s board and management after repeated called by critics to review the state owned corporation’s financial situation.
GuySuCo’s management has said previously that due to the lack of sugar production, agreements with countries in the region have not been developed. Management has said after taking care of the EU quota and the domestic market, then facilitating other sales would be possible. Industry analysts have been critical of this lack of potential revenue. However, GuySuCo has continuously cited inclement weather and lack of workers as being major challenges to sugar production, although more recently the agronomy itself has been called into question.
The ACP countries were previously pushing for the EU to decide on a 2020 deadline for the end of the quota system, arguing that market instability was likely if the 2015 deadline wasn’t extended.
On June 20, Guyana signed a €23.355M ($6.3B) financing agreement for funding from the European Union to support the sugar industry’s reforms. The funding provided through the multiannual programme Action Pro-gramme on Accompanying Measures for Sugar Protocol Countries used to be cognisant of specific sugar projects, however, the EU has recently began scaling back on project-based funding and instead has transitioned to budget support.