The Guyana sugar industry: The point of no return

Tipping point

Alarmed at the crisis state of the sugar industry in 2011, I devoted more than a score of Sunday columns in that year (May 29 to October 16) to its discussion and drew attention to the crying need for radical reform and restructuring. A year later, in 2012, the situation had worsened and my alarm had grown considerably. I therefore decided to re-visit some of the issues in the industry raised in my 2011 columns. This was accomplished in an additional dozen Sunday columns in that year (September 2 to December 23). At this point of time (the beginning of 2014), I am now more than ever convinced that the crisis in the sugar industry has passed its tipping-point or point of no return. This means that all hopes for a rational, considered and ordered reform and reconstruction of the industry are lost.

As a rule, all industries and businesses go through life cycle changes. As I shall show in forthcoming columns GuySuCo and the wider sugar industry are at the industrial life cycle stage of post maturity and long-term secular decline. As presently configured the country’s sugar business can no longer go forward as a viable commercial endeavour.

 Previous topics

Those previous columns in 2011 and 2012 had addressed several vitally important topics in some detail, including the following which are summarily listed below.

guyana and the wider worldThe first topic was the explosive expansion of the global sugar industry and specifically the tropical cane sugar industry under a ‘transitional’ WTO-led international trading regime, which today still remains more or less dominated by inter-governmental trading arrangements. The temperate beet sugar industry has, however, contracted. The global context is therefore vital for the future of Guyana’s export-oriented sugar industry.

The second topic addressed revealed that, in comparison to the rapid global growth in production and exports of sugar, stagnation and decline have been the hallmarks of Guyana’s sugar industry. These have lasted over three decades. Third, the columns also showed that, even a cursory examination of the key performance indicators of the country’s sugar industry, would reveal the major forces driving its trending decline in output and exports. Those key performance indicators that were examined included human resources utilization (labour and management); savings utilization (investment capital and financing); productivity (technical and technological); national resources utilization (geography and environment); as well as cultural (social and political).

The fourth topic which was addressed is the set of strategies designed by the authorities to turn around the sugar industry. These strategies are mainly the Sugar Modernization Project (SMP) and the later Turnaround Plan (Blue-print) initiated by GuySuCo’s Interim Board in 2009. The SMP includes the construction of the Skeldon Factory along with its related Berbice agricultural fields restructuring, as well as the more recent construction of the Enmore Packaging Plant. The fifth topic was GuySuCo’s operations. These operational considerations were examined in some detail, based on internal data from GuySuCo, which I was able to access.

The sixth topic that I had addressed in my previous Sunday columns focused on the evidence, which revealed how deep-seated the defects and deficiencies in the present sugar industry are. These, it was shown, have had a long gestation period. In turn this has produced strong interests, invested in the perpetuation of GuySuCo as it is presently configured. Present circumstances, therefore, pose immense obstacles hindering efforts aimed at promoting change of a fundamental and transformative nature in the industry.

The seventh topic addressed in those earlier columns sought to situate the present day sugar industry in the context of Guyana’s wider economic structure.  Here the limitations of the sugar sector are clearly revealed. Over the decades, sugar’s contribution to GDP, export earnings, and tax revenue has fallen well behind that of other traditional commodity sectors such as gold, rice, and bauxite, as well as the services sector.

Finally, the earlier columns paid considerable attention to the huge sums of money that had been allocated to the sugar industry by the European Union (EU). I had calculatedly treated this as conscience money paid by Britain and the EU as compensation for their unilateral revocation of the EU-African-Caribbean-Pacific countries (ACP) Sugar Protocol, from which they had previously drawn considerable benefit. As this benefit declined over the years, the EU resorted to treating the Sugar Protocol as a form of subsidy, which it claimed was no longer consistent with the efforts to reconstruct a WTO-led international trade regime! These large sums directed to Guyana’s sugar industry by the EU have to be seen in the light of the additional massive bailouts provided by the Government of Guyana to GuySuCo in recent years.

All the issues listed above will be once again carefully and systematically addressed and updated in my columns during the coming weeks.


In conclusion I draw to reader’s attention a basic theme, which the earlier columns had sought to highlight. That is, the present configuration of the industry is leading it to produce less and less sugar at a higher and higher cost! Given the inevitably resultant losses, this is clearly an unsustainable commercial dynamic for GuySuCo’s operations. In light of this both the EU’s continuing sugar assistance and government’s bailouts of GuySuCo can be viewed as seeking to rescue the industry from total collapse. Such a situation however represents, in essence, a classic case of throwing good money after bad. As worldwide experience has shown, while it is hard politically for governments to stop providing unwarranted subsidies to state industries, it is far worse for them to yield to those interests that are driving the need for the subsidies. The misallocation of national resources implicit in this posture is inevitably bad for everyone economically, but it will eventually also carry a devastating political cost, given the size and configuration of the sugar industry in Guyana’s political economy.

Next week’s column will continue from this observation.




Vladimir’s Venezuela – Leveraging loans to Caracas, Moscow snaps up oil assets

CARACAS/HOUSTON (Reuters) – Venezuela’s unraveling socialist government is increasingly turning to ally Russia for the cash and credit it needs to survive – and offering prized state-owned oil assets in return, sources familiar with the negotiations told Reuters.

Urbanization 2.0

By Carl Bildt CHICAGO – We are now in the final days of the industrial age.

Men’s health

During Men’s Health Week, the man/woman in the street were asked to speak on their lifestyles and what they do to maintain their health or to encourage their significant others to lead healthy lifestyles.

By ,

Drug use/abuse: A more humane approach needed…

By The Caribbean Voice There are no reliable statistics on the amount of persons engaging in the use of illegal drugs or those described as addicts.

Crude oil production: royalty rates, profit-sharing, and accounting arrangements

In last week’s article, we referred to the two recognized methods of accounting for costs relating to the exploration, development and production of crude oil and natural gas: the “successful efforts” (SE) method and the “full cost” (FC) method.

By ,

Your browser is out-of-date!

Update your browser to view this website correctly.

We built using new technology. This makes our website faster, more feature rich and easier to use for 95% of our readers.
Unfortunately, your browser does not support some of these technologies. Click the button below and choose a modern browser to receive our intended user experience.

Update my browser now