Dear Editor,
I noticed that the PPP propaganda machine despite gross misrepresentation failed to vilify me and the APNU opposition for allegedly saying that we want the sugar Industry to close down; in fact what I had proposed was a way to keep it alive. And below is how.
The US heavily taxes ethanol from Brazil in order to keep it from competing with corn ethanol in the United States. Actually the United States imposes a 54 cents per gallon tariff on all imported ethanol, so it doesn’t specifically target Brazilian ethanol. The reasoning behind this tariff is that if foreign ethanol was introduced to the United States at market value the ethanol programme in the US would be undermined.
Ethanol produced from sugarcane is cheaper to process because it doesn’t need to make the transformation from carbohydrates to sugar, which is then fermented to make ethanol.
In our case we would probably have a huge advantage since our ethanol would gain duty free entrance to US markets because of the Caribbean Basin Initiative (CBI). This was a unilateral and temporary United States programme initiated by the 1983 Caribbean Basin Economic Recovery Act (CBERA) since under the revisions of the CBERA protocols, Guyana remains until 2020 one of the 17 CBERA beneficiary countries which can export to the US duty free. And the US appetite for ethanol is insatiable.
Brazil is considered to have the world’s first sustainable biofuels economy and is the biofuels industry leader on this planet. Its sugarcane ethanol programme is considered a model for other countries, and the residual cane-waste (bagasse) is used to produce heat and power, which results in a very competitive price and a high-energy balance (output energy/input energy).
These people are our neighbours; they want to partner with us. Especially because of the CBI. For the 2008-09 harvest it was expected that 44% of Brazil’s sugarcane will be used for sugar production and 55% will be used for ethanol production. My online Wikipedia encyclopaedia tells me that “Ethanol is generally available as a by-product of sugar production. It can be used as a biofuel alternative to gasoline, and is widely used in cars in Brazil. It is an alternative to gasoline, and may become the primary product of sugarcane processing, rather than sugar.”
At the factory sugar production uses much more power and equipment and is therefore much more expensive than producing ethanol. I believe that to produce ethanol from sugar cane only requires around 30% of the power that is required to produce sugar, with much less capital investment in the factory and therefore ongoing maintenance costs. We cannot currently efficiently mechanise the harvesting of sugar cane in Guyana, and we cannot afford to pay the huge cost of manual labour currently in effect for manufacturing sugar, so we have to find a way to survive so that we can ‘live’ with it. There are numerous other benefits, but space precludes me from outlining them. I am still of the view that somewhere in our future when we see the light, aquaculture will be on the agenda; it must, since we have too many natural gifts not to do it.
Since we will be using much less bagasse to make the ethanol it is very possible that we could also have a surplus of bagasse which could be used to do other things, not least of which is to generate electricity which would for the first time in this country be truly co-generated, and fed into the national grid.
It’s logical and it’s workable but it takes men of vision to manage an industry, and there is no vision in GuySuCo. Their new plan 2013-2017 sees only the manufacture of sugar; they are clearly subscribing to the concept that they must keep doing the same nonsense over and over again hoping for a different result, spending millions of US at Blairmont and Enmore to install packaging plants for the special sugars, but these packaging plants are sitting idle due to low sugar production making the corporation unable to meet its quotas.
Also I must question why, when we are in such a bad economic situation, facing an ever increasing wage bill, that this corporation is forcing itself to maintain a plant and four-ratoon rotation, ie, they plant the cane reap it once and it becomes 1st ratoon; then they allow it to grow back or ratoon and reap it again and allow it to regrow so now it’s a second ratoon, etc; and then when they get to the fourth ratoon, they throw it out and restart the process of planting canes all over again, ie, a 20% replant programme.
These people are simply assuming that we had a 20% replant policy in the industry forever, but I recall that when we had properly qualified people working in the industry and the price of sugar was low, as a matter of policy we ran longer ratoons, especially if the plant canes were not yielding properly. Some farmers who are making money from sugar cane are running 8-9 ratoons profitably in this era of low prices and expensive labour. Any manager currently working in the industry who does not know that recovering the cost of ploughing and replanting a plant field including the cost of the cane tops to do it, will not realise a full return on investment until after the second ratoon. Furthermore, if the price is not good, the recovery of the money to make a plant field may not be recoverable until after the fourth ratoon. So throwing out a cane field after the fourth ratoon may no longer be applicable to this Guyana industry. Editor, I am yet to find in this industry a manager at any level who understands the logic of this which led to the policy of low price longer ratoons, high price shorter ratoons, or 20% replant.
These are the kinds of concepts which a creative and competent management team must explore to improve the corporation’s dire situation, and it would be visible in their turnaround plans. This longer ratoon possibility is not in the 2013-2017 plan and I am saying again, the person they are telling us will turn this industry around is totally incapable of doing it, and the 2013-2017 plan will not work since it lacks the essential ingredients to make the industry more economical and competitive. This is however not at conflict with the union’s call to grow more cane in the field, to reintroduce flood fallowing, etc. If you have a well prepared plant field with good yield it will inevitably give good yielding ratoons. Rushing to maintain this 20% replant regime even if it means doing it badly with poor plant field yields and therefore poor ratoon yields is madness! Rushing to convert regardless of damage to the fields has the potential to cause an even bigger disaster than the Skeldon situation in GuySuCo.
Finally, I come to a quick calculation which is based on broad aspects of our sugar cane industry, and is not intended to be proof of anything, but can be quoted since it is broadly based on actual figures.
At website http://en.wikipedia.org/wiki/ Sugarcane I see the following: “1 ton of b&c sugarcane is transformed into 70 litres of ethanol.” (b&c is burnt and cut.) 70 liters is 18.49 gallons, so one ton of sugarcane yields 18.49 gallons of ethanol in Brazil, and the world market price for ethanol today is US$2.849 per gallon. My previous research said 10 gals/ton cane, but 18.49Gl/tonne is even better.
In 2012 we made 218,000 tonnes of sugar from 2,725,000 tonnes of sugarcane. I am using an industry figure of around 12.5 tonnes of cane to make a tonne of sugar.
The Bank of Guyana 2012 Annual Report tells us that this 218,000 tonnes of sugar had a value of $24.578 billion.
If we had produced anhydrous ethanol from this 2,725,000 tonnes of cane or 2,682,000 UK long tons of cane, we would have produced 2,682,000 x 18.49 or 49,590,180 gallons of ethanol @ US$2.849 a gallon, or US$141,282,422 x207 = G$29.245 billion. Instead of the $24.578 billion we earned producing sugar, we would have earned almost 5 billion dollars more than our sugar earnings, the industry may not have made a loss and we might have had surplus bagasse to generate electricity for the national grid to reduce the cost of electricity in this country.
I would just like to add that in his budget speech our Minister of Finance told us that between 2005 to 2013 he transferred, in secret – since none of us know of it and neither do the workers or the board of GuySuCo – US$195 million, and yet the production went down from 325,432 tonnes in 2004 to 218,141 tonnes. Really? Does the Minister not see something wrong with this picture? I hope that the US$195 million does not include Skeldon; that would be really laughable.
Yours faithfully,
Tony Vieira
