Accompanying a letter to the editor by EB John in SN of July 18 was an interesting picture of a group of GuySuCo officials who went to Brazil in the 1980s to study that country’s successful production of ethanol. (Guyana was ahead of the learning curve! What happened?)
Years later the EU ended its sugar subsidy. Guyana, faced with a production cost of 40 cents a pound for raw sugar and a world market price around 17 cents a pound had a serious problem. Fortunately, it was not an unsolvable problem. All industries face this problem. Technology revolutionizes production methods and your method becomes obsolete, consumer demand declines, etc. But business leaders always plan ahead; they find new products, diversify, change with technology, and their companies survive and prosper.
(This week’s Business Week has an article on oil. Several companies predict oil production will peak in 2040-50 and consumer demand will decline. Then what? Oil countries will drink the oil? Of course not. They begin planning alternative methods of survival: diversify into petroleum and chemical-based products. Kuwait doesn’t have to; they have enormous amounts of money sitting in SWF. These countries have time to plan for a future transition out of oil).
That ethanol can be made from sugar cane is a proven fact. That ethanol can be mixed with gasoline at certain proportions and be used to power cars is a proven fact. Brazil makes the machines and patented the processes for all of this. Brazil has already invented the wheel so to speak.
So, why didn’t Guyana begin to make ethanol the moment the EU started the process to end the sugar subsidy?
It appears the gentlemen in the SN picture recommended against making ethanol for whatever reason. SN needs to do a little investigation into this matter. These gentlemen would have written a report for GuySuCo, and that report should now be made available to the public.
Former Minister of Agriculture Leslie Ramsammy told several meetings of Guyanese in New York that he purchased an ethanol plant from Brazil for $85 million (US$425,000) and set it up at Albion to make ethanol. What became of this plant?
GuySuCo said in a press release the plant at Albion was for experimental purposes only, not to actually produce and market ethanol. Tony Vieira, who frequently comments with great expertise on sugar, expressed surprise at this comment from GuySuCo. Mr Vieira said Brazil “had already invented the wheel”. GuySuCo doesn’t have to reinvent anything.
I am an activist on Guyanese causes, and no matter how hard I try I cannot find a good explanation as to why GuySuCo, (with all its super-salaried CEOs and managers) could not make an easy transition into diversified products (ethanol, packaged sugar, bagasse for electricity, more molasses for rum production), and survive in this steadily changing and competitive world. I suspect the real reason is bad policy-makers and managers in the sugar business.
There is a lot more to be known about why ethanol was not done in Guyana. A successful transition to ethanol would have certainly obviated the need to sell bulk sugar at 17 cents a pound on the world market. Every gallon of ethanol produced would have saved Guyana US$7 which is the cost of a gallon of imported gasoline.