Sugar remains the ‘sick man’ of the Guyana economy

Finance Minister’s 2021 half year report:

Dr Ashni Singh
Dr Ashni Singh

The enduring weaknesses of a sugar industry that continues to be besieged as much by political controversy as by chronic underperformance are among some of the key features of the 2021 Ministry of Finance Mid-Year Report made public recently by Senior Minister in the Office of the President with responsibility for Finance Dr. Ashni Singh.

While the Report alludes to an eye-catching 14.5% real growth in the country’s Gross Domestic Product (GDP) over the first half of 2021, it is the repetition of what has become the routinely poor performance of the country’s sugar industry that is the main attention-getter in the Report given what, over the years, has become the industry’s overwhelming socio-political significance.

Last week, Dr. Singh delivered the not unexpected news of sugar’s decline, by 22.4% during a first half of this year in which it produced a mere 29,650 tonnes of sugar.

Conscious, no doubt, of the fact that the failure of industry to change the downward trajectory of its performance is likely to be a talking point for analysts in the period ahead, Dr. Singh sought to place the very recent performance of the industry into a perspective that ring-fenced it with mitigating reasons, not least, “record high levels of rainfall, which resulted in waterlogged soils, particularly at the Albion Estate, and strike action that resulted in over 5,600 man-days being lost.”

Among other reasons which the Finance Minister advanced for the woes of the sugar industry include what he said was a 30% mortality of mature cane at the Albion Estate, a 10% decline at Uitvlugt and a 5% decline at Blairmont, circumstances which he attributed to weather-induced flooding.

The sugar industry, for one reason or another, is never too distant from the political limelight. In August last year President Irfaan Ali used his inauguration speech to assert that what he described as the country’s “once greatest contributor to our nation’s economy,” had been “beaten down to its knees, and the workers tossed to a heap of unemployment and misery.” Simultaneously, he declared what he said was his administration’s intention to “raise up the industry and to help it and its workers resume the once proud place in our economy.” Informed observers would hardly have missed the overt political underpinnings of what the President had to say about the sugar industry upon entry into office.

Sugar aside, the Finance Minister said that non-oil GDP had grown by 4.8%, the challenges associated with the advent of COVID-19 and the effect of the mid-year floods notwithstanding. He said, however, that the heavy flooding had impacted severely on the agriculture, forestry, and mining sectors adding that the effects of the still raging pandemic are likely to have a say on the second half economic performance of the country.

Some of the other features of the half-year report include the disclosure of the estimated 7.8% growth in rice production despite its weather-related challenges though “other crops” declined by 7.3% over the same period primarily on account of failure to cope with inclement weather. The livestock industry grew by an estimated 10.6 percent though, disappointingly, the fishing industry shrunk by an estimated 6.6 percent and the forestry sector by 7.1% during the period under review.

With regard to the mining sector, the Report stated that the mining and quarrying industries grew by an estimated 23.1%. The manufacturing, construction and services sectors all recorded growth during the first half of 2021.