In this week’s column I intended to conclude the evaluation of costs as a performance indicator. This evaluation is intended to provide a prelude to the evaluation of profitability, which follows next. Hopefully, readers would have already recognised that the relation between the cost of producing sugar (per tonne) and the revenue received from its sale (which is largely determined by the ruling sugar price) is one of, if not the most critical determinant of the industry’s profitability. The annual unit cost of producing raw sugar, both for the industry as a whole and for the individual estates, which was presented last week, is on the whole, well in excess of not only current prices but even peak prices over the previous five decades and more. For purposes of this presentation peak prices have been empirically deemed to be those in excess of US20 cents per lb.
As the examination of performance indicators goes forward in this series, it will become clearer to readers that, weaknesses of several factors (including land, labour, and capital) contribute to the very high unit cost of producing sugar. GuySuCo’s Strategic Plan however, has identified “falling production levels” as the main contributor to the
