Sugar cane should be replaced with palm oil

Dear Editor,

The sugar industry worldwide has seen its profitability decrease significantly. This has hampered Caribbean countries that have been heavily reliant on this commodity since the 17th century. Many Caribbean countries used their lands for housing sectors while others tried to do both diversification and modernization of the sugar industry. Guyana tried to modernize the industry but this so far hasn’t had the impact that was expected as the country still pumps billions of dollars in revenue into this sector. Recently the country took the position to partly shut down the industry to conserve on money being pumped into this sector. This move has been met with a significant outcry from the workers of the sugar industry as they will be left unemployed when the industry is partly shut down and the government is yet to find an alternative to provide jobs for them. The government hasn’t given Guyanese a good idea of what the lands from sugar cane  will be used for.

A product that can replace the dying sugar industry and save many of the jobs is palm oil. Palm oil use dates back close to 5,000 years in Egypt where the commodity was used for cooking. The plant, Elaeisguineensis or red palm oil has been cultivated historically in western and central Africa in the tropical climatic conditions that Guyana has.There are numerous palm oil species being grown in Guyana. However, most, if not all are predominantly used as ornaments. The palm oil industry saw a huge increase in popularity in Europe after the British started using it as a lubricant for machinery during the industrial age. This created a huge demand for the product that caused production on an industrial level in tropical countries like Malaysia and Indonesia. Today palm oil’s usefulness reaches wide boundaries and has helped the Malaysian and Indonesian middle class find ways out of poverty. This crop could potentially help Guyana significantly if it replaces the sugar industry in many ways.

Palm oil is used in a wide variety of products which include soaps, candles, margarine, ice cream, pharmaceuticals, cosmetics and many other products. This would bode well for Guyana since, if palm oil demand decreases in a certain area there will still be many others with the demand. This goes in contrast to the sugar industry that was being produced almost exclusively as a sweetener. This gives palm oil an economic edge over sugar cane as a crop.

Palm oil will also help in promoting a green economy in Guyana as the crop when mature captures as much carbon dioxide as a rainforest tree. In detail, 1 hectare of palm oil collects 30 tons of carbon dioxide and releases 21 tons of oxygen yearly. This compares to most mature trees that absorb about 6 tons carbon dioxide per hectare yearly according to the Canadian government in 2005. Additionally, it is a significant producer of biodiesel. In comparison to other crops that produce biodiesel, palm oil produces 635 US gallons of fuel per acre while corn produces 18, soybean produces 48, rice produces 88, olives produce 129 and coconut 287 according to the Global Petroleum Club estimates.

Profitability as it relates to the production of palm oil and its potential if used on GuySuCo lands are the most important thing. Recent records of GuySuCo profitability show a depressing picture of what may be seen in the future. Palm oil, on the other hand, continues to make major strides economically. Global palm oil production over the last 20 years has sextupled (grown 6 times). To put this into perspective, Okomu Oil Palm Company from Nigeria which operates on 14000 hectares is just about 1000 hectares larger than Albion Estate. Last year Okomu made revenue of about US$39 million with US$28 million profit; in September of this year, the company had already recorded revenue of about US$47 million.  If 28000 hectares of GuySuCo’s 37000 hectares of land was to be used, our country would have the potential to gross more than US$50 million per year in profits.

The cost of having a fully operational processing plant would not incur huge capital. The initial investment could be approximately US$50 million. The Okomu Palm oil company currently has US$66 million in assets which include tractors, the processing facilities and other auxiliary equipment. If GuySuCo is allowed to convert into a palm oil manufacturer, many of its assets can be reused such as pontoons, tractors and a large amount of other machinery which can be used to transport palm kernels from the fields and other manufacturing processes. The initial investment capital may be less due to assets GuySuCo already has. With a yearly investment of $12 billion (about US$58 million) being put into GuySuCo, it would not be difficult for the government to start a project like this.

The labour force at GuySuCo is large and replacing those jobs by using palm oil will be challenging. The Okomu Oil Company in Nigeria employs about 1000 individuals which is about 5% of the estimated 20000 individuals that will be left unemployed due to the closures at the estates. However, many additional industries can be formed from palm oil such as soap manufacturing, cooking oil and others, because of the crop’s versatility. This will not only create jobs but will create better paying jobs altogether. Additionally, many manufacturing plants for palm oil products will try to set up closer to the estates so as to minimise transportation costs, therefore their labour force will come from communities that make up the sugar belt. They will also require skilled personnel in various fields like business, management and science, and this will create employment for our university grads.

In conclusion, palm oil as a replacement crop for sugar cane in Guyana is something that should be explored because of its versatility and increasing demand. Additionally, its production can help to galvanize our manufacturing sector and improve employment in many of the sugar belt areas that are expected to feel the impact of the estate closures. This industry will create jobs for university graduates. The cost of replacing sugar cane with palm oil will be relatively inexpensive and its large profitability can help to stimulate the growth of Guyana’s economy.

Yours faithfully,

Michael Philander


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