Sugar export figures for EU raise questions

Agriculture Minister Dr Leslie Ramsammy yesterday said Guyana has shipped 195,000 tonnes of sugar to the European Union (EU) for the year, raising questions about the figure.

Ramsammy did not elaborate when he made the disclosure of the shipment figure at the People’s Progressive Party’s weekly press conference at Freedom House.

Following a disastrous first crop, GuySuCo has been acutely aware of the 167,000 tonnes of sugar needed for the EU quota. However, with GuySuCo’s production at just over 155,000 tonnes of sugar to date, the figure quoted by Ramsammy suggests that it includes sugar produced in 2012 as well as 2013.

This in itself seems to pose an issue considering GuySuCo produced just under 219,000 tonnes of sugar in 2012 and still had its international and domestic quotas to meet. Some 80% of Guyana’s sugar exports go to the EU, 15% to the Caribbean Community and 5% to the United States. Ideally, GuySuCo needs to produce at minimum of 232,000 tonnes of sugar; 208,000 tonnes for export including the 167,000 tonnes to the EU and 24,000 tonnes for local consumption.

While Ramsammy said that GuySuCo has shipped 195,000 tonnes of sugar, critics are asking where exactly this sugar came from. Government has stated previously that GuySuCo averages 8,000 tonnes of sugar on a weekly basis. However, this figure is grossly inaccurate according to critics, who say that if GuySuCo could manage this production level on a weekly basis, the state-owned entity would not be facing a $5.2 billion deficit because sugar production would far exceed annually set targets.

One industry insider stated that the only way the figures could fully be understood was if the shipping manifests were made available. He said that the lack of transparency has made GuySuCo a joke and all those involved continue to try and hide the truth. He said that the fact was that if GuySuCo was exporting its EU quota without any hiccups and producing at 8,000 tonnes a week, there would be none of the current problems afflicting the industry.

Since GuySuCo is contractually obligated to meeting its EU quota, if sugar production falls below an appropriate level the local market is the first to suffer. It has been necessary in the past for Guyana to import sugar from Caricom countries to sell locally while all domestic sugar production was sent abroad to satisfy quotas.

GuySuCo’s Chief Executive Officer Paul Bhim has stated that the supply to Guyana’s local market was not threatened.

GuySuCo’s inability to perform does not bode well for the future of sugar, especially after 2017, when Guyana and other ACP countries will lose the preferential pricing they currently enjoy.

Guyana’s Brussels-based Ambassador to the European Union PI Gomes told Stabroek News that Guyana had to be concerned with moving forward and looking toward 2017 when the sugar industry was primed to change drastically from the status quo.

Speaking about this year’s production, he said the 167,000 tonnes and details surrounding this delivery would be determined by the commercial broker along with GuySuCo and Tate and Lyle, GuySuCo’s EU refiner. “The contract with Tate & Lyle and GuySuCo may have had penalties for undersupplying the “amount agreed,” which isn’t correctly a “quota” in the old sense when the Sugar Protocol operated,” he explained.

Gomes noted that GuySuCo’s obligation was for the “commercial contract” and that ACP countries have been below the regional safeguard that least developed countries agreed to of 3.5 million tonnes. ACP countries did not reach more than 2.2 million tonnes last year.

He explained that Guyana as part of the ACP network does have duty and quota free exports to the EU. However, “Our key focus has to be to get production and productivity up as prices are good at present and over [the] next few years. So by 2017 when EU beet farmers, who have quotas till 2017, the market will be very unstable as many EU beet will jump into a lucrative market and prices will come down…plus many of them have re-tooled factories to refine both beet and cane sugar.”

 

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